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The policy making processes of the European Community Kuypers, Rutger Adriaan Cornelis 1992

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THE POLICY MAKING PROCESSES OF THEEUROPEAN COMMUNITYbyRUTGER ADRIAAN CORNELIS KUYPERSB.A., The University of British Columbia, 1988A THESIS SUBMITTED IN PARTIAL FULFILLMENT OFTHE REQUIREMENTS FOR THE DEGREE OFMASTER'S OF ARTSinTHE FACULTY OF GRADUATE STUDIESPOLITICAL SCIENCEWe accept this thesis as conformingto the required standardTHE UNIVERSITY OF BRITISH COLUMBIAApril 1992© Rutger A. C. KuypersIn presenting this thesis in partial fulfilment of the requirements for an advanceddegree at the University of British Columbia, I agree that the Library shall make itfreely available for reference and study. I further agree that permission for extensivecopying of this thesis for scholarly purposes may be granted by the head of mydepartment or by his or her representatives. It is understood that copying orpublication of this thesis for financial gain shall not be allowed without my writtenpermission.(Signature)Department of  Political ScienceThe University of British ColumbiaVancouver, CanadaDate  April 30, 1992DE-6 (2/88)iiABSTRACTThe thesis looks at the policy making processes of the European Community by testingfour theoretical explanations against three cases. The reluctance to reform the CommonAgricultural Policy, import restrictions on Japanese cars, and car exhaust emissions standards arethe three cases examined. Institutionalist, pluralist, Marxist and liberal economic theories areapplied to these cases to determine which best accounts for EC policy outcomes. The analysis ispreceded by a brief look at the institutional organization of the EC and the processes used toform policy.The conclusion is drawn that institutionalist theory is best suited to explain the policyoutcomes. The struggle between the three main institutions of the EC -- the Commission, theCouncil of Ministers, and the European Parliament -- and the competing visions of a future ECthat they represent are crucial to an understanding of EC policy processes. Pluralist explanationsprovide some insights into EC policy making, but the prominence of agricultural and carmakerinterests conveys an influence of interest groups that may not hold true for other policy outcomes.Marxist and liberal economic theory both suffer the same fate: they help explain the broadambitions of the 1992 project, but fail to explain specific policies.TABLE OF CONTENTSABSTRACT^ iiTABLE OF CONTENTS^ iiiLIST OF TABLES vLIST OF FIGURES^ viACKNOWLEDGEMENTS viiINTRODUCTION^ 1CHAPTER 1: INSTITUTIONS^ 10InstitutionsThe Commission^ 12The Council of Ministers^ 16The European Parliament 17The European Court of Justice 18COREPER^ 18The Economic and Social Committee^ 18Consequences of the Institutional Organization 19The National-Supranational Balance of Power^ 22Power Distribution Amongst Member-states 24CHAPTER 2: POLICY PROCESSES^ 28Agenda Setting^ 28Policy Formation and Decision Making^ 28Implementation^ 36iiiivCHAPTER 3: COMMON AGRICULTURAL POLICY REFORM^40Institutionalist explanations^ 45Pluralist explanations 47Marxist explantions^ 50Liberal economic theory 50Conclusion^ 51CHAPTER 4: CAR IMPORTS FROM JAPAN^ 53Institutionalist explanations^ 57Pluralist explanations 59Marxist explantions^ 61Liberal economic theory 62Conclusion^ 64CHAPTER 5: EXHAUST EMISSIONS STANDARDS^ 66Institutionalist explanations^ 68Pluralist explanations 70Marxist explantions^ 73Liberal economic theory 74Conclusion^ 75CONCLUSION^ 76BIBLIOGRAPHY^ 84BIOGRAPHICAL INFORMATION^ 91LIST OF TABLESTable 1.1^Directorate Generals of the Commission^ 15Table 1.2^Council Votes by Member-state^ 15Table 1.3^European Parliament Seats by Member-state^ 15Table 2.4^Breaches of Green Rules as of May 1991 39Table 3.1^Domestic Welfare Effects of EC Policy Changes^43Table 6.1^Case Results^ 77VLIST OF FIGURESFigure 1.4^Comparative Statistics: France, Germany, the UK and Italy^25Figure 2.1^General Policy Flowchart^ 29Figure 2.2^The Consultation Procedure 33Figure 2.3^The Co-operation Procedure^ 34Figure 3.2^Employment by Sector: France, Germany, the UK and the EC^43Figure 4.1^Western Europe's Car Market: % share of sales ($)^54Figure 4.2^Car Markets: Japanese Share of Sales^ 54Figure 6.2^Case Results Graph^ 82viviiACKNOWLEDGEMENTSI would like to acknowledge, with gratitude, the following people: George Hoberg, mysupervisor, for guidance and support; Lonny Carlile, for suggestions and patience; ChristianEgenhoffer, for his insights into EC policy making; Eric Hansen, for proofreading; and Varun Singh,for his help with printing.On a more personal note, I would like to thank: Marie, for keeping my spirits up; Samanthaand Sascha, for just being cool; Rick, for enduring the constant mess; and my friends, for support inthe face of neglect. And finally, to my parents, who made it all possible.1INTRODUCTIONThe adoption of the Single European Act (SEA) in 1986 ushered in a new era ofcommunity building for the European Community (EC). The flurry of activity surroundingpreparations for 1992, the official date for the creation of a barrier-free internal market, hasaroused many questions regarding the policy making processes of the EC. This paper willexamine these processes and the institutions in which they operate. The main purpose of thisthesis is to answer some basic questions regarding the role of various factors in EC policyoutcomes. This will be attempted by testing five theoretical explanations against three policyoutcomes.In the interest of avoiding issue specific explanations, three policy cases were chosen forexamination, rather than one. EC policy-making can be viewed as a two stage, two proceduresystem. Almost all policies are formulated at the Commission, one of the three prominentinstitutions of the EC, and this comprises the first stage. Most policies continue on to the secondstage where they may be decided upon by one of two procedures: the Consultation Procedure orthe Co-operation Procedure. In order to encompass the two main decision-making proceduresthat a policy may follow, cases were selected from each of these procedures. The policy-makingprocedures of the EC are somewhat complicated and will be explained in greater detail below.Import restrictions for Japanese cars were formulated in the Commission and did notfollow either of the two decision-making procedures. This highly visible and contentious issue isconsidered by many to be the proof case for EC trade policy, pitting two different policyorientations -- protectionist and free-market -- against each other.EC reluctance to reform the Common Agricultural Policy (CAP), a system of pricesupports and subsidies for the agricultural sector, has proven a formidable obstacle in the latest2round of GATT negotiations. The CAP was one of the founding successes of Europeanintegration and the struggle to contain it provides some important insights into EC decision-making. The reluctance to reform provides the focus of this analysis. 1 Policies concerning theCAP are formulated in the Commission and decided upon by means of the Consultationprocedure.The decision on EC car exhaust emissions standards was formulated in the Commissionand decided by means of the Co-operation procedure. This case and the reluctance to CAPreform provide an opportunity to contrast the two main EC decision-making procedures -- theConsultation and Co-operation procedures -- and to see if the same theoretical explanations holdtrue for both procedures. It is anticipated that the Co-operation procedure will encompass anincreasing share of EC policy decisions. Hence, this case may provide some important clues tothe nature of future EC policy-making.Four theoretical explanations will be examined for each of the policy outcomes:institutionalist, pluralist, Marxist, and liberal economic theory. Institutionalist theory emphasizesthe role of the state in policy outcomes. The view that "the organization of political life makes adifference" is asserted by March and Olsen.2 Skocpol, in her survey of institutionalist literature,recognizes two broad orientations of recent institutionalist theory. 3 The first orientation assertsthe role of the state in terms of its autonomy and capacity. As we will see, the EC does not farewell with either of these characteristics. For example, Skocpol lists sheer sovereign integrity,1 During the researching of this paper the resumption of the Uruguay round of GATTnegotiations was announced, but there is little sign that the EC is prepared to introducesubstantial reforms. Financial Times, February 27, 1991, p. 11.2James March and Johan Olsen, "The New Institutionalism," American Political ScienceReview, 78(1984), p. 747.3Theda Skocpol, "Bringing the State Back In," eds. Peter Evans, et al, Bringing the State BackIn (Cambridge: Cambridge University Press, 1985), p. 8.3administrative-military control, and a state's means of raising and deploying financial resources asthree measures of the state capacity. 4 The EC, reigned in by member-states wary of ceding anymore sovereignty, does not satisfy any of these measures. Clearly, this area of institutionalisttheory does not hold much promise for the analysis.The second orientation deals with "the impact of states on the content and workings ofpolitics."5 This orientation forms the foundation of the institutionalist analysis to follow, and iswell represented by the view that Atkinson and Coleman take of Canadian industrial policy. Theyargue that "policy outcomes...depend on the institutional arrangements relating state agencies,interest groups, and industry structures."6 On a more general level, they state that, "political lifein general, and the preferences of political actors in particular, are likely to be heavily influencedby institutional experience." 7 This view is reinforced by Hall's account of economic policy inBritain and France, which extends "an approach to political analysis that stresses the way in whichinstitutions structure state-society relations and the direction of policy." 8The institutionalist explanations pursued here emphasize two main aspects of institutionalorganization: the rules that govern policy formation and the power struggle between the EC'smain institutions. It is anticipated that rules will matter because they determine how muchinfluence each institution can exert over policy. This is important because each institutionrepresents a different set of interests and vision of the EC. The power struggle between the4lbid, pp. 16-17.5 lbid, p. 8.6Michael Atkinson and William Coleman, The State, Business, and Industrial Change inCanada (Toronto: University of Toronto Press, 1989), pp. 9.7Ibid, pp. 5-6.8Peter Hall, Governing the Economy (New York: Oxford University Press, 1986), p. 259.4institutions -- its intensity is symptomatic of the state in its formative stages -- is anticipated toaffect policy outcomes as the institutions use the policy process as an arena for this struggle.Policy considerations will be affected by how the institutions perceive the policy outcome to affecttheir share of power.Pluralist theory, which stems from the larger body of group theories of politics, holds thatpolicy outcomes reflect the resource-weighted preferences of interest groups. As Garson notes,earlier group theories featured a vision of society being "composed of a large number of groups,"with the absence of a group claiming to "represent the 'general' will of society." 9 The state isviewed as serving as a "relatively neutral agency for determining and implementing collectivedecisions," and is free from elite or class domination. 10 The reemergence of group theories inthe fifties led to the development of pluralist theory. In contrast to earlier group theories,pluralism does not require that the state be neutral. Garson notes that "group theoristsincreasingly reoriented their approach to emphasize governmental actors as interests in the groupprocess, not arbiters." 11 This is evident in Dahl's vision of the US government as "numerousgroups of officials in competition and conflict with another." 12 Garson also notes that thepluralist critique views the state as less than sovereign; rather it is one of many associations insociety. 13 These two key features of pluralism -- the state viewed as many interested actors and9G. David Garson, Group Theories of Politics (London: Sage Publications, 1978), p. 24.1°Ibid.11 Ibid, p. 88.12R. H. Dahl, A Preface to Democratic Theory (Chicago: University of Chicago Press), 1956,p. 137.13Garson, p. 18.5as one of many associations -- are well suited to the EC. As we will see below, the EC does notspeak with a unified voice, nor does it possess a wealth of sovereignty.A final note on the pluralist analysis concerns the failure of pluralist theory to explain whysome interest groups succeed while others fail. Olson's logic of collective action -- that thedistribution of costs and benefits of collective action on policies affects the success or failure of aninterest group -- will be applied to the cases to help account for variations in interest groupeffectiveness. 14 Though not considered a pluralist, Olsen's work serves as a useful addition tothe pluralist analysis.Common to Marxist literature is the view that the state acts on behalf of the capitalistclass, as opposed to the working class. Policy outcomes are seen as being the preference of, or inthe best interest of capitalists. The government maintains the conditions in which profitablecapital accumulation is possible and legitimizes the capitalist system to avoid working class revolt.There is a significant degree of variation in Marxist literature regarding the relationship betweenthe state and the capitalist class. Structuralists, such as Block, view the state as acting on behalfof the capitalist class as a result of state-business-society structures, rather than in a conscious anddeliberate manner. 15 Block notes the existence of a causal mechanism that forces the state toact in the favour of the capitalist class. Simply stated, the consequences of economic failure --reduced tax revenue and electoral losses -- ensure that governments work to promote business. 1614Mancur Olson, The Logic of Collective Action  (Cambridge: Oxford Press, 1965).15lnstrumentalists, on the other hand, view the state as acting on behalf of capitalists in aconscious, even conspiratory manner. Although he rejects the caricature of the state as "acommittee for managing the affairs of the whole bourgeoisie," Panitch notes that the state plays adeliberate role in maintaining socio-economic inequality. Leo Panitch, "The Role and Nature ofthe Canadian State," in Leo Panitch, ed., The Canadian State (Toronto: University of TorontoPress, 1977), pp. 3-4, 23.16Fred Block, "The Ruling Class Does Not Rule," Socialist Revolution,  7 (1977), p. 15.6Block emphasizes that the state "must be able to take actions against the particular interests ofcapitalists," in order to "act in the general interest of capital." 17The structuralist variant of Marxism will provide the basis of the analysis to follow. Policyoutcomes will be tested to see whether they adhere to basic Marxist criteria: that they facilitatecapital accumulation or legitimize the capitalist system. They will not, however, be required toreflect a class-consciousness on the part of the state. Also, policy outcomes will be analyzed tosee whether they are in the general interest of capital, rather than serving the particular interestsof capitalists.Although the EC has had its roots firmly planted in security related concerns, economicconcerns dominate the latest phase of community building. As Webb notes, "the emotional andsymbolic goal of putting an end to Franco-German enmity has now been overtaken by morematerial and prosaic calculations." 18 The 1992 project embodied by the SEA is largely aresponse to European economic troubles of the early 1980's. The 'Eurosclerosis' of these years --characterised by high unemployment -- and the high growth of the Japanese and NewlyIndustrialised Countries economies created an atmosphere in which European integration couldbe pursued more vigorously than ever before.The 1992 project is based on liberal economic principles. The Commission White Paperthat presaged the SEA emphasizes the benefits of free markets. Gilpin states that "Liberaleconomic theory is committed to free markets and minimal state intervention." 19 Both freemarkets and limited state intervention feature prominently in the 1992 project. The importance17Ibid, p. 9.18Carole Webb, "Theoretical Perspectives and Problems," in Policy-Making in the EuropeanCommunity, eds. H. Wallace, W. Wallace, and C. Webb (London: Wiley and Sons, 1983), p. 3.19Robert Gilpin, The Political Economy of International Relations (Princeton: PrincetonPress, 1987) p. 27.7of liberal economic theory to the 1992 project is, however, no guarantee that economicconsiderations will determine policy outcomes. Broad statements of intent impose no direct costs,but specific policies do. It is anticipated that the EC's commitment to liberal economic theory willbe tested as the political costs of policy proposals are considered.Given these considerations, the thesis will explore the extent to which liberal economictheory influences EC policy-making. This analysis tests the effectiveness of a group of relatedideas as a causal agent in the formation of policy. Within the European context, the idea ascausal agent is present in Garrett's analysis of member-state compliance with EC law. 20 On thesubject of economic theory as causal agent, Hall has explored the influence of Keynesian theoryon policy. He notes that "ideas are generally acknowledged to have an influence over policy•^ealmaking.^Each policy will be analyzed from a liberal economic perspective to determine theinfluence of this group of ideas over policy outcomes. 22A study of the EC policy making process would benefit from an analysis of public opinion.However, assessing the role of public opinion in forming EC policy outcomes is a complex andexhaustive task. Ideally, public opinion data on each of the three policy issues in each of themember-states would be examined. This task is not within the means of this thesis for tworeasons. First, existing public opinion data is of a general nature. For example, there is much20Geoffrey Garrett & Barry Weingast, "National Autonomy, European Law and the InternalMarket: Norms, Institutions and European Integration," paper prepared for the SSRCWorkshop on Ideas in Foreign Policy (Stanford: 1991), p. 37.21 Peter Hall, The Political Power of Economic Ideas (Princeton: Princeton Press, 1989), p. 4.22This analysis confines itself to liberal economic theory -- characterised by a belief in thebenefits of open markets and the efficient allocation of capital -- in recognition of its dominancein economic theory and due to the constraints of the paper. Within the context of the EC,economic nationalist perspectives have been argued by 'New Protectionists' such as Hager andStrange. See Wolfgang Hager, "Protectionism and Autonomy: How to Preserve Free Trade inEurope," in International Affairs, 58: 1982, and Susan Strange, "Protectionism and WorldPolitics," in International Organization, 39:2 Spring 1985.8evidence of support for environmental policy but little data that links that support to specific,technically oriented policy such as exhaust emissions. In the absence of such data, a pan-European opinion poll would have to be conducted. Such a requirement runs up against thesecond obstacle that the analysis faces: constrained resources.The difficulties posed by public opinion analysis do not necessarily preclude some analysisof an explanation for policy outcomes based on public opinion. Impediments to the influence ofpublic opinion on policy will be examined in chapter 1. Moreover, references to public opinionwill made in the case analyses and some conclusions will be drawn regarding the influence ofpublic opinion on EC policy making. It will be shown that, despite the absence of public opiniondata, the policy process of the EC is not very conducive to the influence of public opinion.The first chapter of the paper provides an overview of the institutions of the EC. Thefunctions, balance of power, and relationships between the three main institutions -- the Councilof Ministers, Commission, and European Parliament -- will be examined. A second group ofinstitutions -- the European Court of Justice, COREPER, and the Economic and SocialCommittee -- will also be examined. Though they are not central to EC policy-making processes,their roles must be understood to complete the framework within which decisions are made. Thechapter will conclude with a look at the consequences of the institutional organization and thenational-supranational balance of powerof the EC.The second chapter provides an introduction to the policy- making processes of the EC.A distinction will be made between two main policy-making stages. The first is the stage at whichEC policies are formulated by the Commission to be presented to the other institutions asproposals. The complexity of and variation in policy processes at this stage are such thatgeneralization of policy processes is difficult. At the second stage, policies are subject to one of9two general procedures: the Consultation procedure or the Co-operation procedure. TheConsultation procedure is used to develop proposals into final policies through closed doorbargaining between the Commission and Council of Ministers (CoM). The Co-operationprocedure, introduced by the SEA, is a formal and more open procedure that allows greater inputfrom the Commission and the European Parliament (EP). The issue of implementation will alsobe addressed, drawing attention to the considerable shortcomings of this aspect of EC policy-making.Next, each case will be described and tested against each of the theoretical explanations.A conclusion will follow to assess the strengths and weaknesses of each theoretical explanation.The order in which the theoretical explanations are addressed gives some indication of how theyare expected to fare. Institutionalist explanations are expected to apply to the cases quitesuccessfully, as are pluralist explanations. Marxist and liberal economic explanations, on the otherhand, are not expected to apply as successfully. The analysis to follow is but a cursory glance at acomplex and changing state. Hopefully, some valuable insights and conclusions will be gainedfrom this exercise.101.^INSTITUTIONSTo understand the roles of the EC's three main institutions it is useful to draw acomparison between them and the three main institutions of the government of the United States.The Commission is somewhat like the executive of the US, both have a President, departmentsresponsible for particular policy areas, and a supporting bureaucracy. The Council of Ministers(CoM) can be compared to the Senate as it is where states are represented. Finally, theEuropean Parliament (EP) is much like the House of Representatives, with each MP elected byuniversal suffrage.But here is where similarities end. The European institutions are significantly lessdemocratic and accountable than their US counterparts. Moreover, there is little equilibrium inthe balance of power between the institutions. Ironically, the only truly democratic institution ofthe three, the EP, is also the least powerful.There are a number of other institutions that will be described briefly. They are generallysmaller than the big three and perform auxiliary roles in the policy process. Some would arguethat the European Court of Justice deserves a place amongst the first tier of EC institutions. But,as will be shown, it lacks the political resources to significantly affect policy content or outcomes.The design and jurisdiction of EC institutions is contained in the founding treaties of theEC. The EC, as it is generally referred to, is an amalgam of three legally distinct communities:The European Coal and Steel Community (ECSC), the European Economic Community (EEC),and the European Atomic Energy Community (Euratom). The ECSC dates back to 1951 and wasformed by the 'original six' -- Belgium, France, Italy, Luxembourg, The Netherlands, and West11Germany -- to unify them in these strategic sectors. 1 The ECSC remains, though amended, asthe blueprint for the institutional design that exists today.This design was broadened in 1957 by the Treaty of Rome, which established the EEC.Concern for Western European security was again a driving force as the 'original six' joined ineconomic union. As Kerr notes, the Treaty's immediate objectives were to "get rid of all obstaclesto the free movement of people and of resources between the member-states, and to promoteeconomic growth throughout the Community." 2 Most of the policies being formed in preparationfor 1992 are envisioned in the Treaty but were not carried out until recently.Euratom was also established in 1957, with the task of "creating the conditions necessaryfor the speedy establishment and growth of nuclear industries." 3 It recognized the importance ofnuclear technology to industrial competitiveness and to western European security.The three communities were amalgamated by the Single European Act (SEA) adopted in1986. The SEA provided the "necessary political impetus and legal framework to achieve a trulyunified market by 1992." 4 The 1992 plan placed unprecedented demands on the EC institutionsin terms of the volume and broadened scope of the policies to be made. The SEAaccommodated these demands with two major changes. First, the requirement of member-statesto be unanimous on policy decisions was replaced by a qualified majority requirement on mattersdealing with the completion of the internal market. Second, the powers of the EP were1Anthony J. C. Kerr, The Common Market and How it Works (Oxford: Pergamon Press,1986), p. 5. The ECSC was founded by Robert Shuman, the French Foreign Minister, who saw itas a way to deter aggression from the east without rearming Germany.2Ibid, p. 7.3Treaty Establishing the European Atomic Energy Community, Article 1.4The Commission, Europe Without Frontiers: Completing the Internal Market (Luxembourg:Official Publications of the EC, 1989), p. 23.12significantly expanded with the introduction of the Co-operation procedure. This procedure andits significance will be explained in greater detail below.The CommissionThough the Commission does not have final say on most policy matters, it is the heart ofthe policy-making process and of the EC itself. The functions of the Commission can beseparated into three main tasks: to promote European integration, to act as guardian of theTreaties, and to formulate and implement EC policies. In its role as the "driving force behindEuropean integration," the Commission sets strategic goals, formulates policy, drafts legislation,prepares the budget, and manages EC politics. 5As guardian of the Treaties, the Commission may investigate, summon, execute summaryjustice and refer those held in breach to the Court of Justice. 6 Due to its limited resources, theCommission depends on aggrieved parties or other external observers to report infringements ofEC law. As will be shown later, the Commission's inability to enforce policy effectively is a majorweakness in the EC policy process.The Commission is divided into 23 Directorate Generals (DGs), which are presided overby 17 Commissioners. DGs are divided along issue categories, much like ministries in aparliamentary system. The imbalance of DGs to Commissioners is accounted for by combiningtwo smaller DGs in some Commissioners' portfolios.Commissioners are nationally appointed, two from each of the larger states (France,Germany, Italy, Spain, and Britain) and one from each of the seven smaller states. A newCommission is appointed every four years and terms are renewable. Commissioners are to act "in5Peter Ludlow, "The Institutions of the European Community," The Annual Review ofEuropean Community Affairs 1990, ed. Peter Ludlow (London: Brasseys, 1991), p. XVIII.6Ibid, p. IXX.13the general interests of the Communities" and prohibited from seeking or taking instructions fromany Government. 7 This constitutional view of Commissioners stands in contrast to the reality ofCommissioner conduct. In reality, Commissioners walk a line between serving the EC and servingtheir national governments.National influence is ensured in a number of ways. First, Commissioners are often chosenon the basis that they will "keep an eye out for national interests." 8 If they fail to do so, they runthe risk of not being re-appointed. This was the fate of Lord Cockfield: he had been appointedby Margaret Thatcher, but was not reappointed because she felt he had 'gone native.' 9 For thoseCommissioners that intend to venture back into national politics, failure to serve the nationalinterest may adversely affect their future political fortunes. Williams notes that someCommissioners "look to their national government for the advancement of their careers," and thatthese Commissioners are especially vulnerable to national influence. 10 This influence extends tothe President of the Commission, Jaques Delors. Williams claims that he intends to run for thePresidency of the French Republic and that his actions must be acceptable to French voters andto his French Socialist Party peers. 117ECSC Treaty, Article 9.8Neil Nugent, Government and Politics in the European Community  (Durham: DukeUniversity Press, 1989), p. 56.9lbid, p. 56. Lord Cockfield was one of the key actors in the emergence of the SEA, an actthat pursued European integration further than Thatcher advocated.10Shirley Williams, "Sovereignty and Accountability in the European Community," in ThePolitical Quarterly, V. 16, N. 3, July-September 1990, p. 312.11Ibid.14Conversely, a Commissioner who acts 'consistently and blatantly' as a nationalspokesperson risks losing credibility with other Commissioners. 12 The esteem with which aCommissioner is held by his or her peers is a sizable determinant of political power within theCommission.There are other factors that effect the perception, and, hence power, of a Commissionerby his or her peers. A Commissioner's consistency and level of activity on issues are crucial tothis assessment. 13 A Commissioner is also assessed on the basis of his or her state of origin.Commissioners from more economically developed states are held in higher esteem.Commissioners from poorer states face an uphill struggle as they strive to overcome nationalstigma. A member-state's record of implementing EC laws may also have an effect on itsCommissioners influence. This is often cited as a cause for Italy's disproportionately lowinfluence at the Commission. 14As an institution the Commission must be wary of how it is perceived by member-states,most of whom are reluctant to transfer sovereignty to it. If it attempts to act too strongly againstnational interests, member-states may retaliate by weakening the Commission's powers. In light ofthis, the Commission may seek the cooperation of the EP in instances where the Commission'spolicy objectives differ significantly from those of the member-states. In this scenario theCommission may tone down a proposal in anticipation of EP demands for a more ambitiousproposal. Once the EP opinion has been presented the Commission may strengthen the proposal,12Nugent, p. 56.13Personal interview with Christian Egenhoffer & Gabriele Jauernig, CEPS, June 12, 1991,Brussels.14It should be noted that the considerable influence of Commissioner Carlo Ripa de Meanastands as evidence against this. Ironically, he is the Commissioner for the Environment and yethis home state, Italy, is second only to Spain in breaching EC environmental policy. "The dirtydozen," The Economist, 20 July 1991, p. 52.Table 1.1DIRECTORATE GENERALS OF THE COMMISSIONDG I^-External RelationsDG II -Economic & Financial AffairsDG III -Internal Market & Industrial AffairsDG IV -CompetitionDG V -Employment, Social Affairs, & EducationDG VI -AgricultureDG VII -TransportDG VIII -DevelopmentDG IX -Personnel & AdministrationDG X -Information, Communications, & CultureDG XI -Environment, Consumer Protection, & Nuclear SafetyDG XII -Science, Research & DevelopmentDG XIII -Telecommunications, Information Industries & InnovationDG XIV -FisheriesDG XV -Financial Institutions & Company LawDG XVI -Regional PolicyDG XVII -EnergyDG XVIII -Credit & InvestmentDG XIX -BudgetsDG XX -Financial ControlDG XXI -Customs Union & Indirect TaxationDG XXII -Coordination of Structural PoliciesDG XXIII -Enterprise PolicySource: Peter Ludlow, ed. The Annual Review of European Community Affairs, p. 273.Table 1.2COUNCIL VOTES BY MEMBER-STA lb10: Germany, France, Italy, & Britain (each)8: Spain5: Belgium, Greece, Netherlands, & Portugal (each)3: Denmark & Ireland (each)2: LuxembourgSource: The Commission, The institutions of the European Community, P. 5 .Table 1.3EUROPEAN PARLIAMENT SEATS BY MEMBER-STATE81: Germany, France, Italy, & Britain (each)60: Spain25: Netherlands24: Belgium, Greece, & Portugal (each)16: Denmark15: Ireland6: LuxembourgSource: The Commission, The institutions of the European Community, p. 6.1516citing EP pressure for the change. In this way, the Commission may fulfil its policy objectiveswithout incurring the wrath of member-states determined to keep the Commission on a shortleash.The Council of MinistersThe Council of Ministers (CoM) or Council, as it is commonly referred to, is less activethan the Commission in policy formulation but has more power over final decisions. The term`Council' actually refers to a number of CoMs, each composed of Ministers from member-stategovernments. The composition of each CoM depends on the policy area at hand. For example,the CoM deliberating over CAP reform is composed of member-states' agriculture ministers. Themost important CoM is the European Council, which meets twice a year and is composed of theheads of each member-state.On most policies, the CoM has the final say and "defines by whom and in what way [they]should be implemented." 15 It deals almost exclusively with Commission proposals and thendictates the terms of implementation for the Commission to implement and enforce. Prior to theSEA, decisions were only possible through unanimity, a feature that tended to produce lowestcommon denominator policies, but are now made on most subjects by qualified majority. 16 Toachieve a qualified majority a policy proposal must receive 54 out of a total of 76 votes. The votedistribution by member-states is shown in Table 1.2.The CoM is a target for those who criticise the EC for its lack of democracy. Pinderlikens the CoM to an executive body rather than an elected assembly. He notes that the CoM"negotiates behind closed doors and approves without debate many of the texts prepared by the15Ludlow, "The Institutions of the European Community," p. XVI.16Ibid, p. XVI.17officials."17 Moreover, the government people sent to the CoM are not all elected people, someare Lords or State Secretaries. 18The European ParliamentThe European Parliament (EP) is the voice of democracy in the EC. Its 518 deputies areelected by universal suffrage every five years and distribution is related, albeit inconsistently, tothe population of each member-state. 19 Before the SEA it was a voice heard but seldomheeded. Prior to the SEA, the EP was confined to advisory status: the CoM was required toseek its advice on policy matters but was under no formal obligation to heed it. Despite havingsome power over the passing of the budget and the power to dismiss the Commission, the EP wasvilified as "impotent, irrelevant, and a waste of time and money," by the European press. 2° EPelections were viewed as national referenda and campaigns focused on national issues rather thanissues of a pan-European nature. 21During the 1980's the EP has striven to increase its legislative power within the EC. Ithas inferred for itself a right of initiation, a right that was not provided by the Treaties. 22 Withthe introduction of the Cooperation procedure, included in the SEA, the EP has acquired thepower to amend and reject policy proposals. Nonetheless, the powers of the EP lag far behind17John Pinder, "The European Community, the Rule of Law and RepresentativeGovernment," in Government and Opposition, Spring 1991, p. 204.18Ibid.19The Commission, The institutions of the European Community (Luxembourg, EC OfficialPublications, 1989), p. 6. See Table 1.3 for vote distribution.20Juliet Lodge, "Ten Years of an Elected European Parliament," in The 1989 Elections of theEuropean Parliament, edited by Juliet Lodge (London: Macmillan, 1990), p. 1.21Ibid, p. 2.22Ibid, p. 12.18those of the CoM and the Commission. For example, its ability to amend or reject policy dependson Commission support and applies only to policies decided via the Co-operation procedure.The European Court of JusticeThe 13 members of the ECJ serve six year terms and are appointed 'by common accord ofthe Governments of the Member States.' 23 They have the power of judicial review, allowingthem to decide whether EC policy is compatible with the Treaties. They are also called on by theCommission to decide whether or not a member state, business or individual is in contradiction ofEC law. The power of the ECJ is limited by the fact that it has "no real traditional coerciveauthority to enforce EC law on sovereign governments." 24COREPERCOREPER (Commite des Representents Permanents) is closely associated with the CoMand was formed to provide a permanent presence for member-states at the EC level. It is agroup of national experts who examine Commission proposals and negotiate member-statepositions based on the expert advice. These positions are then submitted to the CoM that willdecide on the policy. Simply stated, COREPER lays the groundwork for the CoM and ensurescontinuing member-state influence throughout the entire policy process. According to Kerr, thisis often where real CoM decisions are taken. 25The Economic and Social Committee23The ECSC Treaty, Article 32d.24Geoffrey Garrett, "The European Internal Market: the political economy of regionalintegration," paper prepared for Ford Foundation Workshop on Multilateralism, StanfordUniversity, 1991, p. 27.25Kerr, p. 65.19The Economic and Social Committee (ESC) is a consultative body with 189 members whorepresent "employers, trade unions and other interested groups such as farmers andconsumers."26 Although the CoM is required to seek its opinion, there is no constitutionalrequirement to abide by its recommendations. One practical role of the ESC is to provide anindication of the positions of relevant interest groups on policy proposals. This helps to avoidconflict at later stages of the policy process.Consequences of the Institutional OrganizationThe organization of EC institutions has four interrelated consequences: a lack ofdemocracy in its key institutions, a lack of public knowledge concerning deliberations and votingat the Council and Commission, a poor flow of information between the EC and Europeancitizens, and inconsistencies in the way national politicians operate at the national andsupranational level. Williams defines the 'democratic deficit' of the EC as the "gap between thepowers that have been conferred to the Community level and the control of the electedParliament over them."27 She notes that this gap is filled by national civil servants and byorganized lobbies which mainly represent business. In practice, this means that substantialinfluence is exercised over EC policy by actors who are unaccountable to any elected body.Without such accountability, there exists little reason for them to act in response to publicopinion. The 'democratic deficit' of the EC has drawn criticism from inside the EC as well. TheEP has been at the helm of attempts to improve the democratic measure in the EC. MEP26The Commission, The institutions of the European Community (Luxembourg: OfficialPublications of the EC, 1989), p. 10.27Williams, p. 306.20Fernand Herman stated that, "decision-making behind closed doors and without any publicaccountability could hardly be considered satisfactory." 28The closed nature of Commission and Council proceedings present another obstacle to theinfluence of public opinion. Debates are not public and there are no minutes available of them.Furthermore, there are no official records of votes. This gives EC officials some immunity frompublic scrutiny for they can not readily be associated with their voting activities at the EC level.The absence of public debate also serves to dampen media interest in Council meetings. 29Voting records may be pieced together with information leaked by EC insiders, but thisrequires effort and contacts. Those who supply and report information risk being ostracized fromEC circles. Egenhoffer notes that in cases where Commissioners are concerned aboutaccountability they can solicit the voting intentions of other Commissioners; with this informationin hand, they may in many instances vote against personal preference with the knowledge thattheir vote will be in the minority and their preferred policy will triumph. 3°The poor flow of information between the EC and European citizens is another obstacleto the influence of public opinion over EC policy. French and English are the dominantlanguages spoken in the corridors of the Commission, and used for the initial issuances ofdirectives and papers. 31 Securing accurate information in other languages is a difficult taskshortly after policy decisions have been made. Williams notes that national newspapers and28Fernand Herman, "Political and Democratic Accountability", transcript of speech deliveredas part of Business Policy Seminar N.32, "The Agenda of the Intergovernmental Conferences:What can be achieved?" at the Centre for European Policy Studies, Brussels, February 26, 1991.29Ibid.3°Personal interview with Christian Egenhoffer, Research Coordinator at the Centre forEuropean Policy Studies (CEPS), June 24, 1991, Brussels.31"Jezt wird Deutsch gesprochen," The Economist, August 17, 1991, p. 46.21television stations rely almost entirely on national government sources for their EC information.She reports that "each minister tells his or her own national media what s/he wants them tohear."32 By the time government documents have been released -- they are published in theOfficial Journal of the EC -- and the details can be scrutinized, EC policy-makers have moved onto new issues. At this point, reopening policy issues due to public demand is unlikely.The gap between what occurs and what is reported also surfaced in the interview withEgenhoffer. On meeting a Brussels correspondent for a German business magazine, he askedwhy the magazine's EC articles always ended with some anti-EC section, complaining about"Eurocrats, Eurocracy, and centralism." The correspondent replied that, "that's what they do inHamburg," claiming that if he did not write it himself, editorial staff in Germany would add theanti-EC section. The correspondent was said to have claimed that it was what the Germanmarket wanted, so the magazine created it out of "pure commercial interest." 33 Egenhofferstates that this is but one example of the "filtering" that occurs to coverage as it moves fromBrussels to the rest of Europe.The differences between what is seen in Brussels and in the rest of the EC also exist inthe actions of politicians. Schwalba-Hoth likens some of the politicians operating at both thenational and EC level to the old Italian divinity, Janus. Janus was represented with two faces,each looking in opposite directions. Schwalba-Hoth explains that the addition of a supranationallevel of government has allowed national politicians to push through policies that they wereunable to pursue earlier. The face shown to the national audience is one of reluctance, butacquiescence to EC policy for fear of exclusion. The face shown in Brussels is one of32Williams, p. 309.33Personal interview, Christian Egenhoffer.22encouragement for policies that are unpopular at home.34 In this scenario, public choice iscircumvented by manipulating a popular fear of exclusion from the EC.As is evident from these examples, the institutional organization of the EC places someformidable obstacles between European citizens and policy-makers. These obstacles suggest thatthe EC can operate well outside the boundaries of public opinion, protected by a cloak of secrecyand a lack of accountability. Even if the analysis of public opinion and policy outcomes reveals aresponsiveness of the EC to the wishes of its citizens, there is little guarantee that this willcontinue. The constraints that the EC does face stem from its relationship with member-stategovernments. It is to this relationship that the thesis now turns.The National-Supranational Balance of PowerOne important concern of this paper is the distribution of decision making power betweennational governments and institutions at the supranational level. The effectiveness of the policyanalysis to follow is dependent on some clarification of this key issue. Moravcsik provides aconvincing case for the preeminence of national actors in his account of the negotiation of theSingle European Act (SEA). He describes how European institutions were kept out of theprocess by excluding Parliamentary representatives from decisive forums.35 Important ECofficials, such as Jaques Delors, were included only after the outlines of documents were"proposed, negotiated, and approved...by the heads of government themselves." 36 This view is34Personal interview, Frank Schwalba-Hoth, Director of Greenpeace, Brussels, June 26, 1991.35Andrew Moravcsik, "Negotiating the Single European Act: national interests andconventional statecraft in the European Community," International Organization, 45:1 (Winter1991), p. 45.36Ibid, p. 46.23echoed by Lodge, who urges that in order to understand EC policy "the power of nationalgovernments to promote or frustrate agreement [must] be realized." 37Scharpf states that the primacy of national control stems from the federalist design of theEC. He likens this arrangement to the German federal system, in which the national governmentshares power with the Lander governments(ie. states or provinces). 38 Scharpf's point that thesignificant difference between the EC and German federalism is that the "European Community ismuch weaker in relation to its member governments," serves to underscore the primacy ofnational contro1. 39Given these observations, it is tempting to assume that the EC serves little more than arubber-stamping role for nationally formulated policies. But this is not the case. The EC's role indeciding whose national preferences succeed and whose fail assures it a considerable amount ofdiscretion in the policy process. Moreover, Moravcsik and Sharpf's accounts of the EC policyprocesses do not fare well as indicators of common EC policy processes. They both rely on ECconstitutional deliberations as empirical cases. These deliberations are not representative ofgeneral EC policy processes, rather they are the means by which these processes are formed andrevised. That these deliberations directly affect the sovereignty of member-states, by definingwhat will be relinquished, ensures that member-states will play an uncharacteristically dominantrole in their proceedings.The influence of national governments over the policy-making process of the EC has somesignificant implications for analysis. Policy preferences are understood to be formed at the37Juliet Lodge, Institutions and Policies of the European Community (London: Pinter, 1983),II xiii.38Fritz W. Scharpf, "The Joint-Decision Trap: Lessons from German Federalism andEuropean Integration" in Public Administration, Vol. 66 (Autumn 1988), p. 243.39Ibid, p. 244.24national level and the role of the supra-national institutions is to provide a forum for bargaining.Hence, policy preferences will be examined within the national context and the EC will beconsidered as the mechanism which transforms these preferences into policy. In light of this,analysis of the distribution of power between member states within the institutional framework ofthe EC poses is crucial to policy outcomes.Power Distribution Amongst Member-statesThere is considerable support for the view that EC policy outcomes are mainly the resultof tripartite bargaining between France, Germany, and the United Kingdom. Tugendhat statesthat, within the broader context of European history, "it is the fate of the small and relativelyweak countries to be trampled on when their larger neighbours make war and to have theirinterests squeezed when those neighbours make up." 4° He goes on to emphasize theimportance of postwar reconciliation, particularly between France and Germany, as a conceptcentral to European union. Moravcsik states that the SEA resulted from interstate bargainsbetween these three countries and that "from its inception, the EC has been based on interstatebargains between its leading member states." 41 Initially, these bargains were the bilateralagreements of France and Germany, but since the accession of the UK decisions have beentrilateral in nature. Egenhoffer echoes this tri-partite view of EC policy-making by stating that,for most policy issues, "if two of the three want the policy they get it." 42The exclusion of Italy from the core decision making trio warrants an explanation. Interms of GDP size, population, and geographic area Italy is on par with, and in comparison withthe UK exceeds, the major EC powers (see Figure 1.4). However, several factors contribute to its40Christopher Tugendhat, Making Sense of Europe (Middlesex: Viking Press, 1986), p. 36.41Moravcsik, p. 21.42Personal interview, Christian Egenhoffer.1800-1600-1400-1200-1000-800-600-400-200-0GDP (1990)^PopulationMI France^NM Germanyig UK ItalyAreaFigure 1.4COMPARATIVE STATISTICS: FRANCE, GERMANY, THE UK, AND ITALYSource: The World in 1991 (The Economist publications, 1991), p. 101.2526lack of influence within the EC. First, the fragmented nature of the Italian government is amajor obstacle to its degree of influence in the EC. In the words of one of its foremost writers,Luigi Barzini, Italy is "a rickety, divided, shabby, impoverished and backward nation, yet one thatwasted its miserable resources trying to impersonate the great powers." 43 Though heunderestimates the economic progress, in aggregate terms, that Italy has made he effectivelysummarizes the political frustration and impotence that Italy has suffered. 44 Second, and oflesser importance, Italy is one of the worst offenders when it comes to observing EC rules. 45 Athird explanation emphasizes Italian exclusion due to its irrelevance to the central dynamicbinding the tripartite arrangement. This dynamic attaches importance to the structural balance ofpower between the three main nations: France, wary of past aggression, seeks to keep Germanywithin the confines of the EC; but when faced with a growing economic gap between itself andGermany, France sought the inclusion of Britain to the EC, an inclusion that it had previouslyopposed. History provides an obvious case for why France would not have been satisfied with theItalian presence as a balance against German power.The tripartite explanation for EC policy outcomes is not without critics. Paterson notesthat the dominance of a particular national government varies sector by sector. He states thatGermany wields much influence over environmental policy while Britain does not. 46 French43Luigi Barzini, The Europeans (Hammondsworth: Penguin, 1984), p. 29.44For further support of this argument see Tugendhat, pp. 105-10.45Tugendhat, p. 111. That this factor is of less importance in explaining Italy's lack of powerwithin the EC is reinforced by France's equally poor record of compliance. EC requirements forthe liberalization of financial markets were a major source of EC complaints levelled at Italy andFrance. For details, see "Capital ideas for southern Europeans," The Economist, 5 July 1986, pp.65-6.46William E. Paterson, "Britain, France, West Germany and the Development of theEuropean Community", Politics in Western Europe Today, eds. D. W. Urwin & W. E. Paterson(London: Longman, 1990), p. 204.27influence, on the other hand, appears to have waned during the 1980s. 47 Paterson suggests thatthe three states exercise a "disproportionate influence" on the EC but that "none of the three, oreven two acting in concert, is able to manage Community policy in any overall or coordinatedway. "48 As we will see, the cases suggest that this latter view of the disproportional but limitedinfluence of the EC's three prominent member-states holds true.47Ibid.48Ibid.282.^POLICY PROCESSESAGENDA SETTINGMost EC policy has found its way onto the policy agenda by way of broad policy directivesissued by the European Council. For example, most EC policies that have come out in the lastseveral years or that are now being formed are a direct result of the SEA, itself a product of theEuropean Council. The Act envisages a completed internal market by the end of 1992 andhence, most EC policy activity since then has been devoted to fulfilling this goal. The policy onJapanese car imports is one such policy; harmonized import restrictions are necessary to allow fora common market. Action on environmental policy was also called for by the European Councilof Paris in 1971. 1If and when the internal market is completed, the agenda setting aspect of the policyprocess will probably resemble that of other western democratic federations. The Commissionand the CoM have the constitutional right to initiate policy. At the Commission, action on anissue may be called for at a meeting of Commissioners, or their chefs des cabinets. It may occurthrough Council by request of a member state. Action on issues may also be called for duringdebate of the EP. 2 Though the EP has inferred the right of initiation upon itself, it has no legalbasis for this right in the Treaties.POLICY FORMATION AND DECISION MAKINGThere are two main stages in the formation of EC policy, with two major variations at thesecond stage (see Figure 2.1). The first stage of the policy process occurs at the Commission1Anthony J. C. Kerr, The Common Market and how it Works (Oxford: Pergamon Press,1986), p. 70.2Ibid.Figure 2.1FIRST STAGEBroad PolicyStatementsCalls For CoM Commission EPSpecificAction 111r - - - -IPolicyProposalFormulationSECOND STAGEDecision Makingand ReformulationProceduresOUTPUT29*CommissionV ConsultationProcedureCooperationProcedureTreaties, andPolicies ofan Administrativeor TechnicalNatureDirectivesorRegulationsGENERAL POLICY FLOWCHARTCouncil ofEuropeCommission30level and plays a role in almost all EC policies. At this stage, "a multiplicity of actors interact withone another via a myriad of channels."3 It is common for an initial policy draft to be drawn up atthe junior level of the Commission, in the appropriate DG. The draft is then passed upwardsthrough superiors until it reaches the Commissioners for a decision. 4 Along the way it may berevised many times. Lodge notes that Commission proposals "represent the culmination of anextensive process of consultation with leading representatives of Euro-level interest groups,national experts, senior civil servants, and politicians." 5Nugent outlines five main factors that determine the nature of a proposal's formativeprocess at the Commission: the proposed status of the matter under consideration; the degree ofgenerality or specificity of the policy issue; the newness, importance, controversiality or politicalsensitivity of the issue; the balance of policy responsibilities between the EC and national levelgovernments; and the circumstances and perception of circumstances surrounding an issue. 6The status of the matter under consideration refers to whether policy will result in EC lawor in lesser technical or administrative regulations. The formation of EC law is characterised bymore fixed processes. Policies of a non-legal nature are "characterised by the considerablediscretion available to key decision makers." 7The degree of generality or specificity determines what levels of EC officials will becomeinvolved in the policy formation. Policy considerations of a more general nature are dealt with by3Neil Nugent, Government and Politics in the European Community (Durham: DukeUniversity Press, 1989), p. 231.4Personal interview, Maeve Doran-Schiratti, DGI - External Relations, Commission, Brussels,June 6, 1991.5Juliet Lodge, The EC and the Challenge of the Future (London: Pinter, 1989), p. 38.6Nugent, p. 324.7Ibid, p. 235.31higher level officials, while highly detailed and technical regulations are dealt with by lowerranking officials. 8The newness, importance, controversiality and political sensitivity of an issue is related tothe complexity of the process used to deal with it. The more any of these characteristics apply,"the more complex policy processes are likely to be." 9 This is especially evident in the cases ofCAP reform and car import restrictions.The balance of policy responsibilities between the EC and member-state levelgovernments affects policy formation by increasing the importance of and attention paid to EClevel processes in instances where the EC commands a significant level of responsibility. 1°Finally, the circumstances and perception of circumstances surrounding a policy issueaffect the process used in its formation. Prevailing economic and political circumstances mayaffect policy as may the perceptions of key political actors. Nugent notes that the shift of the EC,in steel production policy, form free market promoter to interventionist manager was largely aresult of changing conditions in the world steel market. 11At the second stage of the EC policy process, policies follow one of two main procedures:the Consultation procedure or the Co-operation procedure. These occur after a Commissionproposal has been tabled. Only policies that fall under the exclusive jurisdiction of theCommission, such as external trade, do not go on to this second stage. On external trade matterseach member-state acts as signatory to an agreement, so the Commission must consult with themto ensure smooth passage of the completed treaty. Policy matters of an administrative or8lbid, p. 236.9lbid, p. 236.10Ibid, p. 237.11 Ibid, p. 238.32technical nature also tend to fall under the sole jurisdiction of the Commission. This type ofCommission legislation is "usually subject to much less review and discussion." 12The Consultation procedure (Figure 2.2) is a vague and complicated process whichpreserves the dominance of larger member-states by concentrating decision-making power in theCoM. Once the Commission has tabled a proposal, the CoM is free to make amendments.Amended policies are returned to the Commission for approval. If the Commission rejects theamendment, the CoM may override the veto by a unanimous vote. The CoM must seek theopinions of the EP and, in some cases, the ESC, but it is not legally required to act on theseopinions.Prior to the SEA, the Consultation procedure required unanimity at the CoM. AsMoravcsik notes, this tended to produce "lowest common denominator policies," that smallermember-states agreed to out of fear of EC exclusion. 13 The SEA altered this votingrequirement to a qualified majority system, requiring 54 out of 76 CoM votes for passage ofpolicy. CAP reform policies are subject to this procedure.The Co-operation procedure (Figure 2.3) was introduced in the SEA as a means toincrease the role of the EP in the policy process. 14 In this procedure the EP has two readingsof a proposal. At the first reading it may accept, reject, or amend a policy. It is during this firstreading that the EP has its best chance at significantly affecting a Commission proposal. 15 After12Ibid, p. 235.13Andrew Moravcsik, "Negotiating the Single European Act: national interests andconventional statecraft in the European Community," International Organization, 45:1 Winter1991, p. 25.14Juliet Lodge, "European Community Decision-Making: Towards the Single EuropeanMarket," in Politics in Western Europe Today, eds. D. W. Urwin and W. E. Paterson (London:Longman, 1990), p. 218.15Ibid.EconomicandSocialCommitteeCoM ^EPCommissionopportunityforamendmentCoMforconsiderationDIRECTIVEorREGULATION3Figure 2.2THE CONSULTATION PROCEDUREPROPOSALfrom theCommission33Source: Peter Ludlow. ed. The Annual Review of European Community Affairs 1990,  p. XXII.Figure 2.3THE CO-OPERATION PROCEDUREPROPOSALfrom theCommissionCoM_Sr_EP CommissionopportunityforamendmentC Economicand SocialCommittee341CoMforconsideration9COMMONPOSITIONstEPSecondReadingCommissionopportunityforamendmentCoMFinalAdoptionDIRECTIVEorREGULATIONSource: Peter Ludlow, ed. The Annual Review of European Community Affairs 1990, p. XXII.35the EP's first reading the Commission may issue a view on the EP opinion and may amend theproposal. Next, the CoM may adopt a 'common position' with a qualified majority. 16During its second reading, the EP may once again accept, reject, or amend a proposal. Arejection or amendment may be overruled by a unanimous vote in the CoM, and an amendmentmay be revised by the Commission. In order for the EP to have its amendments remain intact itmust cooperate with the Commission, CoM, or at least one member-state. If the Commissionopposes an EP amendment, it can only survive if the CoM accepts it unanimously. If the CoMopposes an EP amendment, it can only survive if the Commission and at least one member-statesupports the amendment; the support of a member-state acts to prevent the unanimity that wouldallow the CoM to override the amendment. This latter strategy was used in the case of carexhaust emissions: the EP amendment for stricter standards survived because of support from theCommission and from Denmark.By enhancing the powers of the EP, the Co-operation procedure represents a steptowards narrowing the 'democratic deficit' of the EC. Nonetheless, the skilled maneuveringrequired by the EP to affect policy outcomes suggests that there is much room for improvement.The Commission supports 78% of EP amendments, of which the CoM accepts just over half. Theresult is that less than 50% of EP amendments remain intact in the final policy. 17The differences between the Consultation and Co-operation procedures place greatimportance on the mechanism that determines which procedure is used. In most cases, this isquite straightforward. Procedures are assigned to particular policy areas in the Treaties of Rome.Hence, whether a policy is to be determined entirely by the Commission, by the Consultation16This term is applied to the policy outcome agreed upon by the CoM.°Juliet Lodge, The 1989 Elections of the European Parliament (London: Macmillan, 1990),p. 21.36procedure, or by the Co-operation procedure is determined by the "legal base of the issue." 18For example, the SEA assigns environmental policy to the Co-operation procedure, so policiessuch as exhaust emissions standards are decided using this procedure. Trouble arises where apolicy is perceived to touch upon more than one policy area, with each area prescribed to adifferent procedure. A theoretical example of such a conflict could concern negotiating fishingquotas with non-EC states, to preserve an endangered species. Trade agreements with outsidestates are constitutionally assigned to the Commission. 19 However, because the negotiationswould deal with an environmental concern, the EP may argue that the policy should be decidedusing the Co-operation procedure. As Doran-Schiratti notes, the EP would argue its case beforethe ECJ, which has the power to resolve such a dispute. 2° Unfortunately, there is littleinformation to be found on this significant aspect of the policy process. It would certainly providea fruitful avenue for future research.Each of the three policy cases to be analyzed went through the first stage of the process,but only two were required to go on to the second stage. Japanese car import restrictions policywas formed and concluded in the Commission. The other two were subject to different policyprocesses: policies regarding CAP reform were decided via the Consultation procedure and autoexhaust emissions standards were decided via the Co-operation procedure.IMPLEMENTATIONThe EC has a poor record on ensuring implementation of its policies. The Commissionhandles the lion's share of implementation at the EC although the CoM may, according to the18Ibid, p. 11.19Nugent, p. 240.20Personal interview, Maeve Doran-Schiratti, DGI - External Relations, Commission, Brussels,June 6, 1991.37Treaties, reserve some implementation tasks for itself. The means by which a policy isimplemented are dictated by the CoM. The main problem with implementation stems from theinability of the Commission, along with the support of the ECJ, to enforce EC policy. Garrettnotes that:"the sanctions at the disposal of the Commission and the ECJto enforce their decisions are very limited. The Commissionmay only fine firms, not governments. ECJ decisions arepurported to bind national governments, but since the EC isnot a Euro-state, the ECJ has no real traditional coerciveauthority to enforce EC law on sovereign governments."21Instead, the ECJ must hope that the "transparent and highly publicized" nature of transgressionswill pressure member-states to defend their reputations as 'good European citizens'. 22Nowhere is this problem more evident than in the area of environmental policy. The EChas no inspectors of its own to police member-states so it must depend on complaints fromconcerned parties to uncover violations. 23 After reviewing a complaint, the Commission asks foran explanation from the offending member-state. If the response is unsatisfactory, it sends anofficial warning letter. Next, the Commission issues a "reasoned opinion that the government is inbreach of EC law."24 Finally, it may resort to take the offending member-state before the ECJ.21 Geoffrey Garrett, "The European Internal Market: the political economy of regionalintegration," paper prepared for Ford Foundation Workshop on Multilateralism (Stanford: 1991),p. 27.22Geoffrey Garrett and Barry Weingast, "National Autonomy, European Law and the InternalMarket: Norms, Institutions, and European Integration," paper prepared for the SSRC Workshopon Ideas in Foreign Policy (Stanford: 1991), p. 30. Surprisingly, Garrett and Weingast make acase for the effectiveness of poor publicity in encouraging member-states to comply with EC law.There is a substantial body of evidence to the contrary.23"The dirty dozen," The Economist, July 20, 1991, p. 52.24Ibid.The average time between the registration of a complaint and a ruling by the ECJ is 50months.25 Table 2.4 lists the outstanding cases by member-state. 26Implementation problems are not confined to environmental policy. France, Italy, andSpain showed considerable resistance when required to deregulate their financial markets. 27Simon Carroll notes that policies that have no fixed monetary values to member-states are leastlikely to be implemented. 283825Ibid.26"The strain of Spain," The Economist, April 27, 1991, p. 54. Poorer nations such as Spainhave accounted for their high violation rates on environmental policy by complaining that theycan not afford to implement these policies. Spain requested that the EC set up a special fund tohelp poorer member-states meet EC standards.27"Capital ideas for southern Europeans," The Economist, July 5, 1986, p. 65.28Telephone interview, Simon Carroll, EC Lobbyist for Greenpeace, Brussels, September 11,1991.Table 2.4WarningLettersBreaches of Green Rules as of May 1991Reasoned^CourtOpinions^Cases^TotalSpain 30 25 11 66Italy 16 28 9 53Greece 13 31 6 50Belgium 3 17 10 30Germany 1 18 11 30France 9 13 6 28Ireland 12 13 3 28Portugal 8 15 1 24Britain 12 9 2 23Holland 5 15 2 22Luxembourg 1 11 2 14Denmark 2 2 0 4Source: The Economist, July 20, 1991, p.52.39403.^CAP REFORMThe CAP is one of the EC's most significant and most troublesome policies. It issignificant because it helped the EC overcome one of the greatest barriers to unification, theopposition of farm interests, and because it addressed one of the EC's greatest concerns, "thedesire to insure self-sufficiency in food." 1 The objectives and instruments of the CAP are foundin the Treaty of Rome, a fact which underscores its function as a pillar of EC integration. TheCAP's objectives are to increase agricultural productivity through technological progress, toensure a fair standard of living for farmers, to stabilize markets, to ensure availability of foodsupplies, and to ensure reasonable prices for consumers. 2The troublesome aspect of the CAP arises from its inherent incentives for creatingagricultural surplus and its enormous costs. One Commission insider described it as being "avictim of its own success."3 Marsh and Swanney argue that the present system of priceguarantees used in the CAP ensures a cycle of increasing costs: guaranteed prices lure morepeople into agricultural production, these people compete for constrained resources (ie. land) andpush up resource costs, and the rising costs lead to demands for even higher guaranteed prices. 41 James A. Brander, Government Policy Toward Business (Vancouver: Butterworth's, 1988),p. 132.2Treaty of Rome, Article 39.3Personal interview, Maeve Doran-Schiratti, DGI - External Relations, Commission, Brussels,June 6, 1991.4John S. Marsh and Pamela J. Swanney, "The Common Agricultural Policy," in Institutionsand Policies of the European Community, ed. Juliet Lodge (London: Pinter, 1983), p. 66.41In an effort to rid itself of some of this surplus it is "disposed of on the world market withthe help of export subsidies." 5 As a result, world agricultural prices have fallen and many farmersin non-EC states are unable to make a living due to income reductions. Viewed in a globalcontext, the costs of the CAP accrue to Europeans, as taxes and misallocated investment, and tothe farmers and peoples in other developed and underdeveloped countries, as income lost to adistorted world price.6The cost of the CAP to the US, in terms of lost export markets and the subsidies it mustpay its own farmers, has prompted the US to call for agricultural subsidy reform. Although theissue of reforming the CAP is often portrayed as an EC-US standoff, the Cairns Group and amajority of Uruguay round participants are allied with the US in the call for reform. 7 Thesuspension of the Uruguay round of GATT negotiations, in December of 1990, can be attributedto EC reluctance to this call for reform. The reluctance to reform will provide the focus of thisanalysis.There has also been pressure from within the EC to reform the CAP. Britain is a leadingopponent of the CAP: it is the "only major food importer in the Community," and is required tomake a disproportionately high contribution to the financing of the CAP. 8 The costs of the CAP5Anthony J. C. Kerr, The Common Market and How It Works  (Oxford: Pergamon Press, 1986),p. 83.6 The irony of the EC serving as model market economy for Eastern Europe, while it continuesto "keep out the only products they make competitively," has not gone unnoticed. "EC farm reform:Against the grain," The Economist, July 6, 1991, p. 46.7The Cairns Group consists of: Argentina, Australia, Brazil, Canada, Chile, Columbia, Hungary,Indonesia, Malaysia, New Zealand, the Philippines, and Thailand. Anna Murphy and Peter Ludlow,"The Community's External Relations," found in The Annual Review of European Community Affairs1990, ed. Peter Ludlow (London: Brasseys, 1991), p. 188.8Kerr, p. 87. In this case disproportionate refers to the contribution to the CAP in regards toa nations agricultural output. British contributions to CAP were a major point of contention betweenBritain, France, and Germany in the early 1980's. Christopher Tugendhat, Making Sense of Europe42have continued to rise dramatically over the years; since 1980 they have tripled, from US$8.3billion to US$25 billion estimated for 1991.9 The total subsidy to EC farmers was US$81 billionin 1991, which accounted for 48% of farm incomes. 10 Two other reasons for British support forreform are evident: the agricultural sector as employer (see Figure 3.2) is quite small in Britain,compared to Germany and France, and Britain's agricultural sector has a greater proportion oflarge producers, thus making it less vulnerable to reforms. Its opposition to a proposed CAPamendment that would favour small producers to larger ones is evidence of this latter point. 11France and Germany, on the other hand, are against reform of the CAP and thisopposition is easy to trace. French farmers are the CAP's largest beneficiaries and its benefitswere at the centre of the bargain struck between France and Germany to initiate the EC. 12German opposition to reform is evident in its veto of a minor cereal price cut in 1985, and in itsstrong opposition to reform of monetary compensation amounts. 13 The federalist structure ofGermany and the effectiveness of its agricultural lobby ensure that its national governmentaccommodates the demands of German farmers. 14(Middlesex: Viking Press, 1986), p. 69.9"EC farm reform: Against the grain," The Economist, July 6, 1991, p. 49.10"Agricultural subsidies: Sowing in tears," The Economist, August 10, 1991, p. 56.n"EC farm reform: Against the grain," The Economist, July 6, 1991, p. 46.12-rugendhat, p. 35, and Brander, p. 131.13"Europe's farm subsidies: Milking the sacred cow," The Economist, December 2, 1989, p. 86.Germany was the last nation to implement this drastic measure before the veto was removed in theSEA. Monetary compensation amounts (MCAs) are designed to protect farmers from fluctuationsin their domestic currency. MCAs cost European taxpayers $750 million annually.14 The Christian Democrats are dependent on the rural vote and on their Bavarian allies, theChristian Social Union, to maintain power in the Bundesrat. The Christian Social Union isagriculturally based. Also, German farm interests, represented by the Deutscher Baurenverband, arepromoted with a level of integrated strength unmatched in any other EC nation. General Secretariat,706050403020100 Table 3.1Domestic welfare effects of EC policy changesAnnual net benefitto:Producers of:TotalLibrltn.(1985 US$ billions)PartialLibrltn.Set asidesw/ deficiencypaymentsProdctn.quotaswheat -4.9 -3.0 0.7 -0.2coarse grains -5.0 -0.8 0.4 -0.2ruminant meats -19.2 -2.2 4.6 0.3non-runinant meats -7.0 0.1 0.6 0.1dairy products -14.9 -7.4 5.7 -1.3sugar -3.8 -3.1 1.5 -0.5Tax-payers 6.6 4.5 -22.9 9.4Consumers 62.4 17.2 -4.2 -3.4Total 14.2 5.3 -13.6 4.2Weighted policyobjective function -22.4 -5.6 -5.0 3.7Welfare effects are estimated equivalent variations in income derived from a comparisonof five simulated policy alternatives with a reference projection to 1987 in which allpolicy regimes are assumed unaltered since 1982.Source: R. Tyers, "Policy Preferences and trade policy reforms," European Economic Review, 34(1990), p. 1416.Figure 3.2% EMPLOYMENT BY SECTOR: FRANCE, GERMANY, THE UK, AND EC43MI France1101 BritainSource: OECD Economic Surveys,  (Paris: OECD Press, 1990).Agriculture IndustryIN GermanyECServices44The US negotiating team has isolated four main areas for reforming the CAP: they wantall border measures to be converted into tariffs and then subsequently reduced; they want an endto export subsidies and restrictions; they want the elimination of all forms of support that distorttrade; and they call for the harmonisation of sanitary and physiosanitary measures over time andon the basis of sound scientific evidence. 15 The Cairns Group echoed these demands andincluded a call for special measures to assist net food-importing developing countries.The EC has called for the preservation of the basic mechanisms of the CAP. 16 Insteadof heeding a return to freer markets, EC proposals emphasize altering the balance of trade bychanging prices and support allowances. Recent reform proposals from the EC farmcommissioner, Ray MacSherry, would cut prices guaranteed to farmers and compensate for theselosses with direct grants. If these proposals pass the CoM -- this is unlikely, as it is anticipatedthat they will be watered down -- they still do not represent a substantial reform of the CAP.Rather than make a sizable cut in EC farm support, the proposals merely shift the burden ofsupport "from rigged prices to the EC budget." 17 They are also expected to have little effect onthe problem of overproduction, because "the new guaranteed prices will probably remain higherthan the marginal cost of production for the most efficient farmers." 18Economic and Social Committee of the European Communities, European Interest Groups and theirRelationships with the Economic and Social Committee  (Westmead: Saxon House, 1980), p. 202.15Murphy and Ludlow, p. 177.16These are the dual-price mechanism and the system of export subsidies and variable levies onimports which insulate it from the world market. Murphy and Ludlow, p. 176.17"Agricultural subsidies: Sowing in tears," The Economist, August 10, 1991, p. 58.18Ibid.45Tyers presents an insightful analysis of CAP policy reform options from a liberal economicperspective. 19 The four policy options he explores are: total liberalization, partial liberalization,set-asides with deficiency payments, and production quotas. Their welfare effects on producers,tax-payers, and consumers are calculated, as well as a net welfare sum. In order to account forpolitical preferences of policy outcomes, a consideration that this paper will deal with shortly,Tyers introduces a weighted policy objective function. The results of this investigation (see Table4.1) indicate that the use of production quotas best serves EC interests when economic andpolitical objectives are taken into consideration. The significance of the Tyers study rests in hisconclusion that both economic and political objectives may be satisfied by reforming the CAP.The EC response to external and internal pressures for reforming the CAP has beenminimal. Even if recent proposals survive CoM scrutiny they hold little promise for solving theproblems that the CAP has created. The reluctance to substantial and effective reform of theCAP will form the focus of the analysis.INSTITUTIONALIST EXPLANATIONSInstitutionalist analysis is somewhat contradictory on the issue of reforming the CAP. Onone hand, the organization of the state, by focusing policy making power in the hands of thoseopposed to reform, and the bureaucracy of the state, which is threatened by reform, can be seento influence the policy. On the other hand, the state's inability to resist strong interest grouppressure from the farm lobby suggests that the state is lacking in autonomy and capacity. Skocpolstates that, "Often [autonomous state] actions are considered more capable addressing the`capitalist class interest' or 'society's general interest'...than are governmental decisions strongly19Rod Tyers, "Implicit Policy Preferences and the Assessment of Negotiable Trade PolicyReforms," found in the European Economic Review,  Vol.34 1990, pp. 1399-1426.46influenced by the push and pull of demands from interest groups, voting blocs, or particularbusiness enterprises." 20The institutional organization of the EC plays a significant role in the reluctance to reformthe CAP because it places decision-making power in the institution clearly opposed to it, theAgricultural Council, and not in the institution that would promote it, the EP. The ministers thatmake up the Agricultural Council perceive policy outcomes in terms of how they affect theiragricultural sectors. Considering that reforming the CAP will reduce the size of agriculturalsectors in many member-states, reform would be perceived as a loss for agricultural ministers andtheir constituents. Furthermore, the institutional organization of the EC has fostered a groupdynamic among agriculture ministers dealing with the CAP. Ludlow notes that the AgricultureCouncil has "seemed immune to influence from even the highest levels [of government]," and thatthis immunity stems from the cohesion that has developed over the course of their regularmeetings. 21 The broadly based benefits of reforming the CAP --lower taxes and prices forconsumers and the redirection of capital into more productive sectors -- are more visible andrelevant to the EP. However, the EP's influence over reforming the CAP is minimal becauseCAP changes are decided upon by means of the Consultation procedure, which virtually excludesEP participation. If CAP issues were subject to the Co-operation procedure, the EP may haveplayed a decisive role in promoting reform.The Commission, like the EP, is also responsible for acting in the general interest of theEC, but two factors discourage it from promoting CAP reform. The first factor concerns the role20Theda Skocpol, "Bringing the State Back In: Strategies of Analysis in Current Research," inPeter Evans, et al, eds., Bringing the State Back In (Cambridge: Cambridge University Press, 1985),p. 14.21 Peter Ludlow, "Introduction," The Annual Review of European Community Affairs 1990,  p.XVI.47of the CAP bureaucracy in defending itself against the threat of reform. The Directorate Generalfor Agriculture (DG VI) is second only to Personnel and Administration (DG IX) in regards tothe size of its staff. It includes eight Directorates and 91 divisions. Any substantial reform of theCAP would cut the size and influence of the Commission. In this light, bureaucratic self-preservation may form an important strand of the institutionalist explanation for the reluctance toreform the CAP. This is consistent with Skocpol's observation, based on a survey of theinstitutionalist literature, that "state actions will regularly take forms that attempt to reinforce theauthority, political longevity, and social control of state organizations whose incumbents generatedthe relevant policies."22 The second factor concerns the Commission's desire to preserve thepolicy that is central to "the basic compromise on which the community is based." 23 More thanan institution of symbolic value, the CAP accounts for 58% of the EC's total budget and anyattempt at reform may be seen as an attack on the EC itself. 24 Krasner provides a suitablesummation of this aspect of the institutionalist explanation by noting that, "institutional changesare never easy to accomplish." 25PLURALIST EXPLANATIONSPluralist explanations for the reluctance to EC reform feature the role of interest groupsin determining this outcome. Differences in the incentives and resources of competing groups are22Skocpol, p. 15.23Tugendhat, p. 46.24"EC farm reform: That's the way the money goes," The Economist, January 26, 1991, p. 45.The CAP share of the EC budget has been much higher (above 80%) in its earlier years, but it hasexperienced a substantial decline in the 1980s.25Stephen Krasner, "Sovereignty: An Institutional Perspective," in Comparative Political Studies21 No. 1 (1988) p. 67.48central to the logic of collective action as outlined by Mancur Olson. 26 The benefits of theCAP -- increased income to farmers -- are narrowly focused, while its costs -- higher prices andtaxes for consumers -- are widely dispersed. The implication of this distribution is that farmershave a greater incentive to pursue their interests in the political arena than consumers becausethe benefits that accrue to them individually are greater than the benefits that would accrue tothe individual consumer as a result of his or her political action.The effect of incentive differences is evident in the different political resources that eachgroup commands. Farmers' interests are promoted at the EC level by two closely relatedorganizations: the Committee of Professional Agriculture Organizations in the EuropeanCommunities (COPA) and the General Committee of Agricultural Co-Operation in the EuropeanEconomic Community (COGECA). COPA, which represents professional agriculturalists, andCOGECA, which represents the agricultural co-operative movement, operate out of the sameoffice and have joint specialist committees and working parties. Both organizations have a"relatively high degree of integration," that is reflected in the "strength and authority which [they]exercise in dealing with the EC institutions." 27Furthermore, the agricultural lobby has more consultative committees than any otherinterest group. Nugent reports that there are 20 committees for products covered by the CAP,plus 10 general committees. 28 Many members of these committees are employees of COPA.Commission dependence on their knowledge and co-operation in implementing the CAP give26Mancur Olson, The Logic of Collective Action, (Cambridge: Oxford Press, 1965).27General Secretariat, Economic and Social Committee of the European Communities, p. 199.28Neil Nugent, Government and Politics in the European Community  (Durham: Duke UniversityPress, 1989), p. 68.49committee members and, hence, agricultural interest groups considerable influence over policyoutcomes.The political resources of the agricultural lobby and its success in thwarting CAP reformalso applies to Andersen et al's notion of `embeddedness'. This theory relates an interest group'slobbying activity to its degree of embeddedness: the extent to which an interest's "capital is tiedto specific production structures and is not easily transferred to other sectors." 29 Andersen andEliassen attribute the European agricultural sector's influence over the CAP to its high degree ofembeddedness.Consumer interests, as Olsonian logic would have predicted, have fewer resources at theircommand. The European Bureau of Consumers' Association (BEUC) was formed 15 years afterits agricultural rival emerged and does not enjoy the same degree of integration. 30 The relativeinfluence of consumer groups vis a vis agricultural groups is reflected in the struggle over farmprice increases. In each year from 1974 to 1978 EC decisions on price increases exceededCommission proposals by an average of about 1%. 31 By its own admission, the BEUC had notonly been unsuccessful in having its demands reflected in these decisions but also in the initialCommission recommendations for farm prices. Had consumer groups outweighed agriculturalgroup influence, then final price increases would have been lower than the Commissionsrecommendations.29Svein S. Anderson & Kjell A. Eliassen, "European Community Lobbying," European Journalof Political Research, 20 (1991), p. 182.30General Secretariat, Economic and Social Committee of the European Communities, p. 356.31 Ibid, p. 421.50MARXIST EXPLANTIONSStructuralist Marxist theory does not apply well the reluctance to reform the CAP. Thedetrimental effects of the CAP to the general interests of capital are evident in Tyers' economicanalysis described above. The billions of dollars spent on farm subsidies could be redirected, inthe form of investment, to facilitate capital accumulation in other, more productive sectors.Furthermore, the CAP does not appear to serve any significant legitimating role for the capitalistsystem.A causal effect can be observed as forcing the state to act in favour of farmers. This isparticulary true of Germany, where the farm vote is an essential part of the Christian Democraticpower base. But it would be wrong to conclude that this is some form of structural bias in favourof capital. To do this would require one to hold that the farmers who benefit from the CAP arerepresentative of the capitalist class. This is clearly not the case. As noted above, the CAPdiscriminates against capital intensive, large farms and favours the small farmer. 32LIBERAL ECONOMIC THEORYThe existence of some form of agricultural policy is not difficult to defend from a liberaleconomic perspective. The strongest defense is based on the danger of food import dependency.The oil crisis of the early 1970's provides a clear example of what dependence on foreign supplyof crucial goods could lead to. However, the same defense cannot be made for the reluctance toreform the CAP. Enormous food surpluses indicate that EC agricultural production issubstantially in excess of self-sufficiency and that a considerable amount of reform, with thepurpose of reducing output, can be undertaken without compromising self-sufficiency. 3332"EC farm reform: That's the way the money goes," The Economist, January 26, 1991, p. 45.33At the end of 1983, EC production in excess of consumption was "15% for cereals, 19% forsugar, 27% for dairy products and 27% for wine." Tugendhat, p. 45. At the end of 1990 dairiessurpluses were over 500,000 tonnes while 700,000 tonnes of unsold beef are in EC storage. "EC farm51Considering that reform does not preclude self-sufficiency, there is little else in liberaleconomic theory to explain EC reluctance. Some other explanations are worthy of only scantconsideration. The desire to preserve the traditional way of life that farming represents need notbe endangered by reform, unless massive over-production is a valued part of that tradition. Thereis also some concern about the cost of economic readjustment, particularly the threat ofunemployment, that reform poses. However, the economic cost of providing agriculturalemployment far outweighs the costs of providing welfare compensation. 34 Governments that arenormatively opposed to this alternative may be able to find cheaper and more productive sectorsin which to create employment. The political costs of either alternative would be substantial andthey help explain why liberal economic theory appears to have little influence over EC policy.CONCLUSIONThe reluctance to reform the CAP is best explained in pluralist and institutionalist terms.Obviously, the reluctance to reform represents a victory by a powerful interest group: farmers.True to pluralist theory -- as opposed to earlier group theory -- the government actors involved(ie. agricultural ministers) are acting for a specific interest and their stance does not fare well, aswe have seen in the liberal economic analysis, for the 'general will'. However, the success of farmgroups rests significantly on an institutionalist aspect of the policy process: that the issue of CAPreform is decided upon by agricultural ministers. Had finance ministers or the EC Commissionerfor Competition played a greater role, the policy outcome may have been different. The notionthat some form of bureaucratic self-preservation is at work also contributes to an institutionalistexplanation of the policy outcome. Hopefully, the following cases will provide a clearer indicationreform: That's the way the money goes," The Economist, January 26, 1991, p. 45.34Bella Balassa & Constantine Michaelopoulos, "The Extent and Cost of Protection in Developed-Developing-Country Trade," in The New Protectionist Threat to World Welfare, ed. DominickSalvatore (New York: North-Holland, 1987), p. 495.of which theoretical explanation is best suited to EC policy outcomes.52534.^CAR IMPORTS FROM JAPANThe formation of a single automobile import policy is one of the major issues faced by theEC on the road to 1992. Presently, EC member-states have a broad range of import policiesranging from almost complete exclusion, in the case of Italy, to an open-door policy, in the casesof Denmark, Ireland and Greece. The effects of differing barriers on the domestic car markets ofthe EC's largest car-making nations are reflected in Figure 4.2. 1 At the centre of this issue is thethreat that Japanese car-makers pose to their European competitors. The issue deals not onlywith barriers to trade, but also with state subsidies to car-makers. The significance of this policyarea is evident in that many non-EC industrialists and government officials "consider theCommission's car policy a touchstone for the whole 1992 plan." 2The conflict that has arisen over car import restrictions boils down to the lack ofcompetitiveness of the European car industry. While Japanese and American carmakers can buildcars in less than 20 man-hours, the EC lags far behind requiring "an average of 37 man-hours tobuild a similar car."3 The US market provides a good example of how European carmakers --particularly those who are most protected at home -- have failed to stand up against Japanesecompetition: Fiat has entered and exited the US market on four different occasions; Renaultbacked out of the market four years ago; and Peugeot has just recently announced its departure1The countries are positioned from most protectionist to least protectionist. Of the four, allbut Germany employ voluntary trade restrictions to limit Japanese market share to 11% inBritain, 3% in France, and less than 1% in Italy. "For fortress, read trade laboratory," TheEconomist, July 8, 1989, p. S30.2"European car imports: We'll tackle it soon, honest," The Economist, September 2, 1989, p.69.3"Ready, steady..." The Economist, September 23, 1989, p. 79.116-14-12-10-8-6-4-2-0 Figure 4.1WESTERN EUROPE'S CAR MARKET: % SHARE OF SALES ($) BY NATIONOther (3.8%)Japanese (11.7%)American (23.3%)Italy (14.27.)Britain (3.0%)Germany (21.2%)Source: The Economist, December 15, 1990, p. 74.Figure 4.2EUROPEAN CAR MARKETS: JAPANESE SHARE OF SALES (%)54France (22.8%)Italy^France^Britain^GermanySource: The Economist, July 8, 1989, p. S30.55from the US, effectively ending French participation in the North American car market. 4According to Womack, Jones, and Roos, the key to the competitive advantage of Japanesecarmakers resides in their development of the lean production process. They claim that carproduction has entered its third era, the 'lean production' era, and that European carmakers haveyet to embrace this production method. 5The policy proposed by the Commission and submitted to the CoM, in December of 1989,was of a liberal nature in that it called for the removal of all quota restrictions by the end of 1992.It sought to replace the quotas with a voluntary monitoring mechanism, administered by theJapanese, to prevent Japanese market share from rising too rapidly. 6 Though the policy carriedwith it the threat of further protectionist measures, such as the perpetuation of 'transitional'voluntary export restrictions (VERs), it represented a commitment to and movement towards amore open EC car market.The policy that emerged after "two and a half years of haggling among EC members," is anamended, more protectionist version of the initial proposa1. 7 Where the original proposalallowed the Japanese share of the car market to increase to 18.7% by 1999, the new proposallimits it to 16%. A significant difference between the proposals is that the new proposal countsJapanese cars produced in Europe as imports and restricts their production, while the original4."Stalling Japan's car makers," The Economist, August 3, 1991, p. 65. It should be noted thatJapanese and European imports to the US compete in the market segments: sub-compact,compact, medium, and sports cars.5James Womack, Daniel Jones, & Daniel Roos, The Machine That Changed the World (DonMills: Collier MacMillan, 1990), p. 11. This book is based on a major M.I.T. study of the futureof the automobile. The first two eras of automobile production were the 'craft production' eraand the 'mass production' era. Womack et al. point out that it took 50 years for Europeancarmakers to convert from craft production to mass production.6"EC car exports to Japan surge," European Trends, November 3, 1989, p. 27.7"Stalling Japan's car makers," The Economist, August 3, 1991, p. 65.56proposal had placed no restrictions on these cars. The final policy ensures that direct imports willremain constant at around 1.2 million units, with market increases coming from Japanese ownedfactories (transplants) in the EC. 8 The policy also promises EC funding for automotive researchand development. This promise contradicts earlier EC attempts to end state subsidies to the carindustry.9 The final policy represents a substantial about-face from the original proposal in thatit replaces a stated commitment to open the European car market with more of the protectionismand cossetting that it had set out to remove.Both Germany and Britain opposed the lower quotas of the final policy. The reasons forGermany's support of the policy reside in their competitiveness, the Germans are Europe's mostcompetitive car-makers and are used to Japanese competition; 1° their lack of existing restrictionson Japanese imports; and their desire to protect their share -- about 50% -- of imports to Japanfrom Japanese reciprocation." Britain, on the other hand, has little in the way of a 'nationalchampion' left to defend and Japan already commands a significant share of the British market.Moreover, the inclusion of Japanese cars made in Europe as imports dealt a serious blow to8lb id.9"European state aid: Loaded down with lolly," The Economist, November 18, 1989, p. 85.The Commission had previously ordered the French government to revoke subsidies to state-owned carmaker, Renault. This prompted French Prime Minister Michel Rocard to do some 'armtwisting' at the Commission for a compromise.iocompetitiveness, in this paper, refers to the ability of a car-maker to produce a car cheaply,as compared to his rival. The amount of labour, in person-hours, that goes into each car and theeconomies of scale of a car-maker a chief determinants of this. For a brief comparison ofregional competitiveness see, "Ready, steady..." The Economist, September 23, 1989, pp. 79-80.11 "Ec car exports to Japan surge," European Trends, November 3, 1989, p. 27. From 1984 to1987, EC car exports to Japan tripled. Most of these are cars over 2,000cc. It will be interestingto see if Germany's commitment to free car markets persists as Japanese competition continues toerode its US market share. Lexus has been challenging Mercedes-Benz in the luxury car market,and Infiniti is outselling BMW after only one year in the market. "Europe's car exports toAmerica: Quitters," The Economist, August 17, 1991, p. 62.57Britain, which is home to most of the Japanese transplant factories. 12 Britain's discontent withthis aspect of the policy is evident in that it maintains, in contradiction to the policy, "thattransplant production will not be limited in any way." 13France's opposition to the original proposal is unquestionable: it expressed "hostility tothe...idea of removing all quota restrictions." 14 The compromises achieved during the policyprocess (ie. lower quotas and promises of subsidies) represent a victory, albeit a modest one, forthe French government. These compromises also challenge the notion that Italy has littleinfluence over EC policy. Italy's alliance with France in opposing the Commission's originalproposal was crucial to the policy outcome.INSTITUTIONALIST EXPLANATIONSBressand argues that the institutional organization of the EC reduces the capacity ofinterest groups to encourage protectionist policies in two main ways. First, a consensus forprotectionism is more elusive due to the "greater diversity of interests in any given sector betweenthe different countries." 15 For example, European carmakers enjoyed different levels ofprotection in different countries, hence those that were more used to competition -- Volkswagen,Mercedes, and BMW -- did not clamour for continued protection with the verve of thoseproducers -- Fiat, Renault, and Peugeot -- that had been well protected. This point is supported12"Ready, steady..." The Economist, September 23, 1989, p. 10. Toyota, Nissan, and Hondahope to produce over 500,000 vehicles a year in Britain by 1995.13"Stalling Japan's car makers," The Economist, August 3, 1991, p. 65. Britain's maintenanceof this inaccurate interpretation threatens to kill the policy and, more importantly, could initiate asignificant cleavage within the EC.14"EC car exports to Japan surge," European Trends, November 3, 1989, p. 27.15Albert Bressand, "Beyond interdependence: 1992 as a global challenge," in InternationalAffairs 66, I (1990), p. 52-53.58by the stalemate that arose among carmakers as they tried to find a common stance. 16 Second,Bressand argues that EC integration has produced a greater openness which he refers to as anelement of 'due process' in policy formation. Protectionism is "more easily implemented as animplicit, discretionary state of affairs," and its implementation is made more difficult by theexistence of a discussion process, the scrutiny of the Commission, and an independent EuropeanCourt. 17 Bressand overestimates the openness of EC policy processes, and the 'scrutiny of theCommission' is constrained because it requires member-state support on external trade matters.Nonetheless, the formation of car import policy was far from a 'discretionary state of affairs'. Theattention and controversy surrounding the policy process led the Commission to delay the policyin hopes of suppressing this commotion.Although Bressand's arguments are supported by some aspects of the formation of carimport policy, the policy itself conflicts with his main assertion: that the organization of the ECreduces the capacity of interest groups to obtain protectionist policy. Instead, an institutionalistexplanation for car import policy can be argued on opposite grounds: that the process used toform the policy was actually conducive to a protectionist outcome. Japanese car importrestrictions were formulated and decided upon by the Commission and required the unofficialapproval of member-state governments. 18 If the policy had been decided upon using the Co-operation procedure, a less protectionist outcome would have resulted. The increased role of theEP in this procedure would have allowed greater representation of European citizens, rather than16"Cars: New European Lobby Set Up With Nissan (UK) but Without Peugeot," EuropeanReport, February 25, 1991, p. 2.17Bressand, p. 53.181 use the term unofficial because there are no signatories to VERs. Because VERs areused to circumvent the GATT, government are reluctant to form and complete them in an officialmanner.59narrowly based sectoral interests. Furthermore, the EP could have counted on the alliance of theCommission, whose commitment to a more liberal policy is evident in its initial proposal, becauseit does not depend on member-state support in the Co-operation procedure.PLURALIST EXPLANATIONSThe pluralist explanation can also be applied to the car import restrictions. Industrialinterests, particularly car-makers, are the most powerful interest group in this policy area and arerepresented by the Roundtable of European Industrialists and by the Union of Industries of theEuropean Community (UNICE).' 9 The resistance of European carmakers to opening theEuropean car market ranges from mild to extreme: Volkswagen -- one of Europe's bettercompetitors -- accepts the eventual opening of the market but supports protection during a fiveyear transitional period, while Fiat and Peugeot/Citroen -- two of Europe's most protected andinefficient carmakers -- are opposed to any opening of the market. 2° The Italian and Frenchcarmakers' opposition to an open market is due to their disproportionate dependence on nationalmarkets: Italy's Fiat sells two-thirds of its cars domestically, while France's Renault andPeugeot/Citroen depend on their home market for almost half of their sales. 21 If theassumption is made that Japanese imports will achieve the same market shares in France and Italy19Wayne Sandholtz & John Zysman, "1992: Recasting the European Bargain," in WorldPolitics 42 (October 1989), p. 116.20"Ready, steady..." The Economist, September 23, 1989, pp. 79-80. Volkswagen's support fortransitional protection may be attributable to its ownership of SEAT, a Spanish car-maker thatmay not be able to weather Japanese competition as well as its parent.21 Ibid, p. 80.60as they do in unprotected Germany, then French and Italian car-makers can expect to losebetween 5 and 10% of their domestic sales.22At the beginning of the policy process, the Car industry had been represented by theCommittee of Common Market Automobile Constructors (CCMC) and the Liason Committee onAutomobile Manufacture (LCAM).23 Since the Commission had introduced its proposal,however, both organizations had been "paralysed by a unanimous decision-making process." 24Peugeot's managing director, Jaques Calvet, had resolved to veto any position that did not call forthe outright banning of car imports from Japan. It appears that Calvet was calling theCommission's bluff: he was challenging the Commission's threat to allow unfettered access ofJapanese cars to the European market in an attempt to significantly reduce the Japanese marketshare proposed by the Commission.Europe's other carmakers apparently did not share Calvet's confidence in his ability tostare down the Commission. Martin Bangemann, the Commissioner for the Internal Market,publicly expressed his impatience with the stalemate over car import policy and reiterated histhreat that without an agreement, the EC car market would simply be deregulated. 25 Shortlyafterwards, the automobile industry formed a new association, the Association of EuropeanAutomobile Constructors (AEAC), without Peugeot and with a decision making rule requiring a22This is a conservative estimate arrived at by multiplying the sum of unprotected andprotected market shares by the share of domestic producers. It is conservative because protectionhas rendered Fiat, Renault, and Peugeot/Citroen less competitive than German national car-makers such as Volkswagen. Ibid, p. 79.23The Liason Committee on Automobile Manufacture ensures links between motor industrymanufacturers' or employers' organizations in the member states. "Cars: EEC Type ApprovalPlan Inches Forward in EEC Council," European Report, February 28, 1991, p. 18.24"Cars: New European Lobby Set Up With Nissan (UK) but Without Peugeot," EuropeanReport, February 25, 1991, p. 2.25"Cars: Bangemann Cracks the Whip," European Report, February 15, 1991, p. 10.61three-quarter majority. In March it called for a seven year, 15% import limit on Japanese carimports to commence in January of 1993.26This episode suggests that, despite its inability to dictate the terms of the policy, the carindustry played a significant role in the outcome of the policy. Egenhoffer supports this view bystating that the Commission would not finalize this policy until the industry position had beensettled.27As for other relevant interest groups, I encountered no evidence of consumer activity onthe issue of import restrictions. Labour, allied with carmakers on this issue, had some input intothe AEAC position through its role in the LCAM. It is anticipated that labour will become muchmore active as the profound affects of this policy become apparent.MARXIST EXPLANATIONSThe struggle over imports of Japanese cars can be seen as a struggle between particularcapital interests and the general interest of capital. Carmakers, especially the less competitiveones, fought to protect their privileged position in European car markets. They fought againstthe principles of the 1992 project -- the benefits of open markets and economies of scale -- whichcan be described as serving the general interest of capital. This policy outcome provides aneffective illustration of the contrast between instrumentalism and structuralism. Aninstrumentalist would emphasize the state's attempts to protect the particular interests ofcarmakers. A structuralist, on the other hand, would argue that the state's attempts to open carmarkets to foreign competition reflect the state's desire to ensure long term capital accumulationby instigating the rationalization of an inefficient industry. Ultimately, the structuralist26"Cars: Commissioners to Take a Stand on March 14," European Report, March 12, 1991, p.12.27Personal interview, Christian Egenhoffer, Research Coordinator at the Centre for EuropeanPolicy Studies, June 24, 1991, Brussels.62explanation is more fruitful. The final policy does represent a movement away from a moreprotectionist status quo, so the particular interests of carmakers were compromised. Astructuralist interpretation, noted for its causal mechanism that ties electoral success to thepromotion of business, is consistent with the view that this policy reflects the attempts ofEuropean politicians to address the economic fears of voters.Marxist analysis of this policy outcome is also helped by considering the policy's effects onthe working class. The inefficiency, measured in person-hours required per car, of Europeancarmakers was a persistent theme of the policy debate. The fact that increasing the efficiency ofEuropean carmakers is a main goal of the policy underscores the EC prioritizing profit over jobs.Increases in efficiency, by definition, mean fewer jobs. From the Marxist perspective, theemphasis on profitability over jobs reaffirms the belief that the state acts in the interest of capital.LIBERAL ECONOMIC THEORYThe existence of import restrictions for cars is difficult to defend on liberal economicgrounds. The issue of strategic importance that provides a defense of agricultural subsidies doesnot apply here. 28 Governments have pursued restrictive policies in an effort to breed 'nationalchampions,' but a policy that imposes economic costs (eg. higher prices & poorly allocated capital)on the basis of pride panders to the electorate's vanity while risking the long-term economichealth of Europe.2928It is important to note that this discussion limits itself to dealing with the production ofpassenger cars. A strategic argument could be made on the basis of military vehicle productionbut this paper assumes a clear distinction between the two.29For persuasive examples of the 'national champion' trap, see Zysman's account of the"enormous wastes of money and deeply damaging misdirections of industrial effort," that occurredunder Charles de Gaulle. John Zysman, Governments, Markets, and Growth (Ithaca: CornellUniversity Press, 1983), p. 147.63The liberal economic argument against the transitional protection provided by the policy iswell supported. The use of VERs by the US against Japan in the 1980's provides an opportunityto assess the costs and benefits of this protectionist measure. Studies of the case point to costincreases for consumers, increased short term profits for domestic and foreign car-makers, andstructural changes in the market. 30 The most significant structural change was the upwardmovement of Japanese car-makers towards larger and more expensive luxury models. BecauseVERs were specified on a per-unit basis, they created an incentive to produce higher value-addedcars. In effect, VERs that were intended to thwart competition in the small car marketencouraged foreign incursions into other, more lucrative segments of the market.Another liberal economic argument against VERs concerns the role of competition as acatalyst for change in the carmaking industry. Womack et al claim that the 'crisis' faced byinefficient producers unsheltered from intense competition is required to prompt a change inproduction techniques and the reorganization of corporate thinking that is a prerequisite for thischange. They point to the crises faced by Mazda in 1974 and Ford in the early 1980's that causedthese producers to embrace lean production. 31Some may argue that import restrictions are justified on the grounds that Japanesecarmakers compete unfairly. This argument posits that the Japanese competitive advantage isbased on factors, such as low worker wages or longer working hours, that would be impossible orundesirable to adopt in Europe. This is clearly not the case. Evidence to the contrary exists in30Dominick Salvatore, introduction to The New Protectionist Threat to World Welfare (NewYork: North Holland, 1987), p. 5. Gilpin, The Political Economy of International Relations, pp.207-208. See also, Robert C. Feenstra, "Automobile Prices and Protection: The US-Japan TradeRestraint," and Bella Balassa & Constantine Michaelopoulos, "The Extent and Cost of Protectionin Developed-Developing-Country Trade," both in The New Protectionist Threat to World Welfare.31Womack et al. p. 237.64the productivity and quality gains that have been achieved in Japanese transplant factories in theUS, with American workers and wages. The argument also fails to explain how Japanesecarmakers continued to prosper and advance despite "currency shifts and a massive movement ofoperations offshore."32CONCLUSIONPluralist theory can be applied somewhat successfully to car import policy. The dominantgroup, carmakers, did manage to affect policy but they were not able to dictate it. This outcomebegs the question: what other groups participated in this struggle? Consumer groups appear tohave been inactive and there are reasons, such as the popularity of 'national champion' carmakers,why action against quotas may have been unpopular. Rather than struggle against a given group,carmakers seemed to be fighting an underlying principle of the 1992 project: that competition isgood for European industry. The attempt to open the European car market could be consideredan example of the government acting in the general interest of the EC or, as the structuralistMarxist analysis shows, in the interest of capital. In this light the state is hardly arbitrating groupstruggle, it is actively promoting a principle that has as its goal the long-term accumulation ofcapital.The strength of an institutionalist explanation of this policy resides in the significance ofthe process used to determine its outcome. Had the process been less closed and discretionary,the outcome may have been less protectionist. There are, however, two weaknesses to thisargument. First, the popular appeal of protecting 'national champions' might have mitigated theanti-protectionist effect of opening the process. Second, even if external treaties were decided bymeans of a more open procedure, there is reason to believe that the EC would not have followedsuch a procedure in this case. As mentioned earlier, VERs circumvent the GATT and to pursue32Ibid, p. 236.them in an official manner would be to openly undermine GATT principles.65665.^EXHAUST EMISSIONS STANDARDSEC action on environmental issues dates back to 1973 with the CoM's adoption of thefirst EC environmental program. The program acknowledged the importance of approachingenvironmental problems, which are often transnational, at the supranational level. EC action onthe environment increased and became more effective with the SEA. The Act strengthened therole of the EC by dictating that the Commission "take as a base a high level of protection," inenvironmental policy. 1 EC environmental policy was also aided by the ruling of the ECJ, in1988, that environmental protection may take priority over trade under EC treaties.2The car exhaust emissions standards for small cars -- those with an engine capacity lessthan 1400cc -- agreed upon by the CoM in March 1991, will provide the third case for analysis.The initial Commission proposal matched US standards of 20g per test of carbon monoxide and5g per test for hydrocarbons and nitrous oxides combined. 3 Car-producing countries rejectedthese standards as too strict. The standards required the installation of a three-way catalyticconvertor, a task which would add to the cost of producing a car and inconvenience carmakerswho would have to add the devices.At the CoM, car producing countries rejected the US standards and adopted a CommonPosition of 30g and 8g per test. 4 During its second reading, the EP amended this position and1 SEA, Article 18.3. The SEA also introduces a 'polluter should pay' principle to EC policy.2David Vogel, "Environmental Policy in Europe and Japan," in Environmental Policy in the1990's (Washington: C. Q. Press, 1990), p. 273.3Caroline Bartle, "Environmental Policy," in The Annual Review of European CommunityAffairs 1990, ed. Peter Ludlow (London: Brasseys, 1991), p. 154. I refer here to the USemissions standards in effect prior to the Clean Air Act of 1990.4lbid, p. 154.67insisted on standards "at least as strict as those of the US."5 The Commission supported the EPstance and produced a revised proposal that matched US emissions standards.In order to restore the less stringent standards that it favoured, the CoM requiredunanimity. As mentioned earlier, the Co-operation procedure requires CoM unanimity tooverrule a policy amendment that is supported by the EP and Commission. However, Denmarkmade it clear that it would not vote for less stringent standards. Council ministers in favour ofless stringent standards realized their inevitable defeat and accepted the more stringentstandards.6The French and British governments clearly opposed the stringent emissions standards ofthis policy, while the German government appeared to be undecided on the issue. 7 Frenchopposition to stringent standards can be traced to its carmakers: Renault and Citroen/Peugeotpreferred weaker emissions standards that did not necessitate the installation of catalyticconverters. British opposition to stringent standards is more difficult to explain. Carroll notesthat Britain has displayed a "reluctance to introduce strict standards," in other environmentalpolicy areas as wel1. 8 He cites the high costs of retooling Britain's aging manufacturing plants asa possible explanation for British opposition to strict emissions standards. German indecision onthe matter can be attributed to a stronger domestic environmental movement and less pressurefrom German carmakers to oppose the standards. 9 German carmakers are more prepared to5 lbid, p. 155.6lbid, p. 155.7Telephone Interview, Simon Carroll, Lobbyist for Greenpeace, Brussels, September 11, 1991.8Ibid.9Derek Urwin, "The Wearing of the Green: issues movements and parties," in Politics inWestern Europe Today,  eds. D. W. Urwin and W. E. Paterson (London: Longman, 1990), p. 124.68meet the standards because most German car models are also produced for export to the US, sothe manufacturing facilities required for meeting US standards already exist. Also, German carsare, on average, more expensive so the additional cost of a catalytic converter represents a smallerproportion of the overall cost of the car and would reduce sales less than would be the case in alower priced car.INSTITUTIONALIST EXPLANATIONSAutomobile emissions standards provides the strongest case for an institutionalistexplanation of EC policy outcomes for several reasons. The first and most important reasonregards the rules of the decision-making procedure used in this case. The unanimity required ofthe CoM to overrule a proposal supported by the EP and Commission is the key to this policyoutcome. Had unanimity not been required the CoM would have ensured passage of the lessstringent standards. This would have been the case if this policy had been decided with theConsultation procedure. The institutional arrangement of the Co-operation procedure allowedDenmark's policy preferences to take precedence over those of France and Britain. Moreover,the institutional arrangement tilted the policy process towards the public good and away fromspecial interest pressure. March and Olsen recognize the ability of institutional arrangements to"transcend special interests." 10The other two elements of the institutionalist explanation emphasize the position of theCommission and EP on this policy. It can be argued that the Commission's insistence onachieving standards equivalent to the US reflect a concern for EC prestige on the internationalstage. This argument is consistent with one of the earlier motives for European integration: tofree Europe from postwar domination by the US. Hence, US equivalent standards are a point of' °James March and Johan Olsen, "Popular Sovereignty and the Search for AppropriateInstitutions," Journal of Public Policy 6 No. 4 (1986) p. 362.69pride for Commissioners. The question of why the Commission did not press for higherstandards, as an expression of international leap-frogging, can be answered in pluralist terms:carmakers desired equivalency on as broad a base as possible in order to minimize variation in carproduction for different markets.EP support of more stringent standards is also consistent with an institutionalistexplanation of the policy outcome. The EP has relentlessly striven to enhance its powers vis-a-visthe other EC institutions. The EC is still in a formative stage -- witness the conferences onEuropean union held during 1991 -- and the balance of power between its three main institutionsis subject to change. Part of the EP strategy is to play a very active role in policy-makingwherever it has the opportunity to do so. Its decision to "infer for itself a right of legislativeinitiative," is an earlier example of the EP's efforts to expand its legislative role. 11 EP influenceover emissions standards stems from the changes introduced by the SEA. Lodge notes that theEP has been intent upon showing that it could use its new legislative power "effectively andresponsibly." 12 The presence of "growing public pressure for tougher environmental standards,"provided further incentive for the EP to act. 13 Hence, the outcome of emissions standardspolicy can be partially explained in terms of the EP's desire to test and expand its legislativepower. Significantly, this is the only one of the three cases where the EP has a substantial,constitutionally enshrined role in the policy process."Juliet Lodge, The 1989 Elections of the European Parliament  (London: Macmillan, 1990),p. 12.12Ibid, p. 17. The EP's intent to do this is evident in the intensity of its legislative activity: iteither rejects or amends just under 50% of Common Positions during the EPs second reading.Ibid, p. 21.13Bartle, p. 154.70PLURALIST EXPLANATIONSTwo main interest groups -- environmental groups and carmakers -- will be examined toassess the pluralist explanation for emissions standards policy. At first glance it is tempting toclaim the passage of the more stringent emissions standards as a victory for environmental groups,but this is not the case. Though environmental interest groups have helped foster theenvironmental consciousness that has led to EC environmental policy, emissions standards policycannot be explained in terms of environmental group pressure. Two main reasons account forthis: environmental groups were not very active on this issue at the EC level and, moreimportantly, they hold little influence over EC policy. Simon Carroll notes that there was littlepressure exerted by environmental groups in Brussels and that most lobbying activity took place atthe national level. 14 An argument for the influence of national-level environmental groups onEC policy is undermined by the position of the CoM: this representative of national governmentswas the only institution to oppose the stringent standards.Environmental interest groups exert little influence over EC policy for three main reasons:the attitude of the Commission towards environmental groups, the lack of information availableduring the policy process, and the heterogeneous nature of environmental groups. Carroll sumsup the attitude of the Commission by stating that it views environmental groups as a "barrier todecision-making rather than an active participant" and that this stems from the Commission'sfailure to accept "that environmental organizations can provide useful information into thedevelopment of a piece of legislation." 15 This view corresponds with Doran-Schiratti's14Telephone Interview, Simon Carroll, September 11, 1991. Carroll's organization,Greenpeace, was inactive on the issue because it views the emissions based approach of the EC tothe problem of car exhaust emissions inadequate. According to Carroll, policy efforts should bedirected toward reducing automobile use.15Ibid.71observation that the influence of an interest group depends on whether or not the Commissionviews the information supplied by the group as being useful. 16The lack of environmental group influence over EC policy is also due to the lack ofinformation available to them during the process. Carroll notes that environmental groups areisolated from discussions and policy formation. Hence, groups are left to comment on policiesafter they have become Common Positions, which are essentially laites accompli'. Carroll claimsthat this places environmental groups in a "confrontational position with the Commission." 17Another reason for the weakness of environmental groups at the EC level is theirheterogeneity.' 8 According to Urwin, European environmental groups differ from each other"in terms of their ideological perspectives, policy objectives, and strategies." 19 The importanceof homogeneity to the success of an interest group is recognized by Olson. 20 Although hefocuses on a group composed of heterogeneous individuals, the same logic can be applied to theEuropean Environmental Bureau (EEB), a group composed of environmental interest groups. AsOlsonian logic predicts, the problem of achieving consensus in a heterogeneous group haveplagued the EEB and have contributed to its ineffectiveness.2116Personal Interview, Maeve Doran-Schiratti, DGI - External Relations, Commission, BrusselsJune 6, 1991.17Telephone Interview, Simon Carroll.18Svein S. Anderson and Kjell A. Eliassen, "European Community Lobbying," EuropeanJournal of Political Research, 20 (1991), p. 184. They add that many of the environmentalmovement's political perspectives "are outside traditional party politics."19Urwin, p. 121.20Mancur Olson, The Rise and Decline of Nations (New Haven: Yale University Press,1982), p. 24.21Telephone Interview, Simon Carroll.72Carmakers, on the other hand, were opposed to the stringent emissions standardsproposed by the Commission but were unable to obtain the less stringent standards that theydesired. Concerned about the cost of catalytic convertors required for the standards, they werebehind the CoM's call for less stringent standards. That carmakers were the agents of the CoMposition is obvious in that member-states had no motive to reject the stringent standards: thecosts of installing convertors are shared by carmakers and consumers, not governments;moreover, the burden of testing is not substantial because tests are only required for each vehicletype, not every new car, and after the car has been driven 80 000kms. 22 Although carmakersdemonstrated their ability to affect the position of member-states and the CoM, they were unableto affect the policy outcome.Pluralist analysis of emissions standards is affected by the definition of group that weemploy. If the 'group' is defined as environmental lobbying groups or carmakers, as we have seenabove, then pluralist explanations do not apply to this case. But if we broaden the definition of`groups' to include social movements, new possibilities emerge. Garson notes the failure of earlygroup theories of politics, specifically that of Bently, to encompass such movements. 23 If we doencompass social movements into pluralist theory, then we can explain the stringent emissionsstandards in terms of the environmental movement that grew in Europe during the 1980's. 2422The Council, Common Position 4102/91, p. 10. The cost burden of these tests could bemade up through a testing fee, as is common in North America.23G. David Garson, Group Theories of Politics (London: Sage Publications, 1978), p. 30.Garson explains that the study of social movements "fell to the departments of sociology andsocial psychology."24A public opinion survey conducted in 1988 found that 74% of Europeans polled consideredprotection of the environment "an urgent and immediate problem." Commission, The EuropeanCommunity and environmental protection, (Luxembourg: EC Official Publications, 1990), p. 2.73However, this explanation blurs the distinction between pluralism and public opinion. 25Moreover, it comes dangerously close to portraying the government as acting in the general willof the people. 26 This would contradict a central criterion of pluralism stated above: that noone actor represents general will of the people.MARXIST EXPLANATIONSEmissions standards do not apply well to Marxist theory if measured by the criterion offacilitating capital accumulation. Although they add to the value of a car, the catalytic convertersrequired to meet the standards do not generate much profit for carmakers. Patent rights forcatalytic converters are held by General Motors of America, and the precious metals that accountfor much of the cost of converters are imported from outside of Europe. 27 The opposition ofcarmakers to stringent emissions is a clear indication of the lack of profit to be made fromrequiring catalytic converters.A stronger argument for a Marxist explanation of emissions standards is based on thecriterion of legitimizing the capitalist system. The effect of pollution and other environmentalproblems on public opinion was well displayed during the 1980's. A Marxist explanation ofemissions standards could emphasize the importance of placating public unrest.From the Marxist perspective, it is significant that the state has approached the problemof car exhaust pollution by regulating emissions. An alternative approach, one favoured by25Garson, p. 28. This is not a new dilemma. The distinction between interest groups andpublic opinion dates back to the early days of group theory.26Public concern for the environment does not, however, equate popular support for caremissions standards. The catalytic converters required to meet the new standards will increase theprice of a new car by US$300, reduce engine power by one to two per cent and increase fuelconsumption by two to three per cent. State Secretary of the Environment, Belgium, "Weetwaarom u nu al voor de katalysator kiest" (Brussels: Belgian Information Bureau, 1991), p. 2.27James Womack, Daniel Jones and Daniel Roos, The Machine That Changed the World (Don Mills: Collier MacMillan, 1990), p. 157.74Greenpeace, would be to reduce air pollution by reducing car usage. Marxists could argue thatthe reluctance to pursue this alternative solution is evidence of the state protecting capitalinterests rather than the health of the working class.LIBERAL ECONOMIC THEORYLiberal economic explanations for car emissions standards pose a different challenge.Economists have only recently started trying to include natural resources in national accounts. 28Some resources (egs. timber, oil, and soil) are possible to attach approximate monetary values to.The value of clean air, however, is practically impossible to assess in monetary terms.Nonetheless, the benefits of emissions standards are easy to identify: lower health care costs dueto reduced incidence of lung disease; less destruction of timber stocks and Europe's "architecturalheritage" due to acid rain. 29The role of economic factors in EC environmental policy is spelled out in the Treaties.Article 130r.3 states that the EC should take account of the "potential benefits and costs ofaction," and that the polluter should pay the costs. The emissions standards are consistent withthese principles, especially the latter. The 'polluter pays' principle ensures that governments willhave to shoulder a very minor part of the cost burden. Given this, it is difficult to explaingovernment opposition to the standards on liberal economic grounds. Although liberal economicconsiderations are of some value in explaining emissions standards policy, they fail to providemuch insight into the policy process or its outcome.28For an account of attempts to include natural resources in national economic accounts see,"Getting physical," The Economist, August 26, 1989, p. 53.29The Commission, "Pollution Knows No Frontiers," (Brussels: Official Publications, 1991), p.1.75CONCLUSIONCar exhaust emissions policy is best explained in institutionalist terms, particularly thevariant of statism that emphasizes the institutional organization of the state. This policy is theonly case in which the EP had a significant, constitutionally entrenched role. In the cases of CAPreform, which was decided via the Consultation procedure, and Car import policy, which wasdecided by the Commission with some input from the COM, the EP had no legal and, hence, nopractical influence over the policies. Had exhaust emissions policy been decided without EPparticipation, the outcome would almost certainly have been different. The unanimity required ofthe CoM to overrule the EP and Commission is another important aspect of the institutionalistexplanation. Had the CoM only required a qualified majority to overrule the EP andCommission, a less stringent policy would have emerged. Simply stated, the rules of the policyprocess matter.As we have seen, other theoretical explanations do not apply very well to this case. Apluralist explanation suffers from the inaction of environmental groups on this issue and from thestate apparently acting in the general will of the public. Marxist theory applies only loosely to thecase: the policy does not facilitate the continued accumulation of capital in all but the mostindirect manner. Although emissions standards could be explained as an attempt to legitimize thecapitalist system, this would fail to explain why the state did not settle for lower standards. Lowerstandards, a significant improvement over the status quo nonetheless, would have fulfilled alegitimating role without adversely affecting capital interests in the way that the present policydoes.76CONCLUSIONInstitutionalist explanations for policy outcomes are well supported by the cases. Carexhaust emissions standards provide the best evidence of this: had the Co-operation procedurenot been used to decide this policy or had unanimity not been required of the CoM to overridethe EP and Commission, the standards would have certainly been less stringent. The distributionof power between the Commission, EP, and CoM is central to institutionalist explanations of ECpolicy outcomes. Where decision making power is focused in the CoM -- the Consultationprocedure -- the preferences of member-states are bound to dominate (eg. CAP reform). Wheredecision making power is focused in the Commission -- as is the case with external Treaties, andpolicies of an administrative or technical nature -- a duty to act in the general interest of the ECis blended with a concern for institutional self-preservation and growth (eg. car import policy).And in the only procedure where decision making power is shared with the EP -- the Co-operation procedure -- member-state preferences, pan-European concerns, and EP efforts toexpand its legislative power jockey for policy influence (eg. emissions standards). Theseconclusions reflect the tension between two competing visions of the EC: the EC assupranational state, embodied by the Commission and EP, and the EC as a loose federation ofsovereign states, incorporated by the CoM. Until its fate is decided, the policy processes of theEC will continue to reflect the uncertainty of an institutional organization in its formative stages.These explanations are rooted in what Skocpol refers to as the second broad orientationof institutionalist literature! Instead of asserting state influence as a result of the autonomy andcapacity of the state, this literature emphasizes the consequences of organizational configurations.The preceding analysis has confined itself to viewing the impact of these configurations on specific1 Theda Skocpol, "Bringing the State Back In," in Peter Evans, et al, eds., Bringing the StateBack In (Cambridge: Cambridge University Press, 1985), p. 8.77Table 6.1SUMMARY OF RESULTSCAP REFORM^CAR IMPORTS CAR EMISSIONSINSTITUTIONALIST^YES^YES^ YESPLURALIST^YES^YES^ NOMARXIST^NO^ YES^ NOLIBERALECONOMIC THEORY^NO^ NO^ N/A78policy outcomes and, to a lesser degree, on interest groups. The challenge remains to examinehow the institutional organization of the EC affects the "formation of groups and the politicalcapacities, ideas, and demands of various sectors of society." 2Pluralist explanations for policy outcomes are also supported by the cases, thoughsomewhat less than institutionalist explanations. The EC is consistent with two key features ofpluralist theory: the state as one of many associations, rather than a singular sovereign entity; andthe state as "numerous groups of officials in competition and conflict with each other." 3Furthermore, the view that policy outcomes reflect the resource-weighted preferences of interestgroups is also evident. Agricultural and carmaker interests both possess considerable politicalresources and are very well represented in the EC. The benefits of their lobbying efforts arequite narrowly distributed and they are both characterized by high levels of embeddedness. InFrance and Italy, state ownership of carmakers -- both in the past and present -- has fostered veryclose ties between the state and carmakers.The lack of success of other interest groups -- environmental and consumer groups --suggests a two tiered system of interest group influence. Pross provides a useful theoreticalframework that applies here. He would describe agricultural and carmaker interest groups as partof the "policy community," having acquired a strong voice "by virtue of [their] functionalresponsibilities, [their] vested interests, and [their] specialized knowledge." 4 Consumer,environmental and other less influential interest groups would be part of the "attentive public,"separated from the main channels of influence, "particularly if they are opposed to prevailing2lbid, p. 21.3R. A. Dahl, A Preface to Democratic Theory (Chicago: University of Chicago Press, 1956),p. 137.4A. Paul Pross, Group Politics and Public Policy (Toronto: Oxford Press, 1986), p. 98.79policy trends."5 As we have seen, the closed nature of policy deliberations and the attitude ofpolicy-makers to interest groups that are not considered 'helpful' both act to keep some interestgroups outside the channels of influence. This suggests that pluralist theory may be of little usein explaining policy-making where powerful interest groups are not active.A final note on pluralist explanations of EC policy outcomes concerns the effect ofdecision making processes on interest group influence. Policy decisions made with the Co-operation procedure, exhaust emissions standards is the example used here, have shown aresistance to powerful group influence. The ability of interest groups to influence policy decisionsmade with this procedure depends on their ability to build stronger ties with the EP. Unless theydo so, pluralist theory may not serve as a useful tool in explaining policies that are decided uponby the Co-operation procedure.Taken individually, none of the three cases provides strong support for a structuralMarxist explanation of EC policy-making. The move to open European car markets to moreJapanese imports provides some support, but the ambiguous nature of the policy outcome placesit halfway between instrumentalist and structuralist Marxism. Taken as a whole, however, thesecases are part of a greater 1992 project that fits very easily into the structuralist Marxistframework. The completion of a barrier-free EC market can be rightly seen as an attempt tofacilitate long-term profitable capital accumulation. Though its policies may adversely affectparticular capital interests, they do so on behalf of general capital interests. Popular concernabout the economic malaise of the early 1980's can be seen as the causal mechanism thatprompted governments to act in the interest of business. In this light, structuralist Marxism helpsexplain the greater picture of European economic integration but falls short in accounting for the5 lbid, p. 99.80cases. Ironically, the liberal economic analysis suffers the same fate: it helps to explain the broadeconomic goals of European integration while failing to explain specific polices.Explanations based on liberal economic theory are largely unsupported by the cases. Thisis somewhat ironic considering that the SEA and its commitment to a single barrier-free market isseen as a response to the 'Eurosclerosis' of European economies during the 1980's. The EC isquick to embrace liberal, free-market strategies in its general policy statements, but unwilling orunable to translate this commitment into policies. The influence of liberal economic theory isevident at the junior levels of the Commission, but as policy ascends and moves on to the otherinstitutions the liberal economic content of policy is displaced by political factors. This isespecially true of car import restrictions: a policy that promised to be a catalyst for uncompetitiveEuropean carmakers was transformed into a shield that perpetuates low productivity and qualitywhile risking the future of the European car industry. The Economist sums it up well by statingthat in the EC, "economics is being buried by politics." 6Given the constraints of this thesis, it was not possible to provide a thorough analysis ofthe influence of public opinion on policy outcomes. However, some general conclusions can bedrawn. The influence of public opinion is given only qualified support by the cases, but there isinsufficient evidence to draw a clear link between public opinion and policy outcomes. Even thestrongest support, the decision to adopt stringent emissions standards, shows policy influenced bygeneral concerns rather than by data relating public opinion to a set of specific policy options. Itis no coincidence that the EP played an active role in the decision that best reflects publicopinion; the EP is the only EC institution directly accountable to the public. A more thoroughexamination of public opinion and policy outcomes is required to determine whether a causalrelationship exists. Considering the 'democratic deficit' of the EC and the poor flow of6"The Community's two unions," The Economist, September 14, 1991, p. 17.81information between Brussels and the rest of Europe, it is anticipated that such an examinationwould not provide much support for a public opinion explanation of EC policy outcomes.Moreover, claims that Europeans are unable to have a hand in the decisions that affect them andare kept unaware of how these decisions are made are troubling, especially for an institution thatoffers itself as a model for the new democracies of Europe.Figure 6.2 illustrates these findings. The horizontal axis represents the balance of powerbetween member-states and the EC. As we have seen, this balance of power is determined bywhich institution presides over the policy process: the CoM represents member-state interests;the Commission maintains a pan-European vision cautiously balanced with member-state interests;and the EP represents pan-European interests. The vertical axis represents the balance ofinfluence between the dominant interest groups and public opinion. ? The trade-off betweendominant interest groups and public opinion occurs because the narrowly defined interest groupbenefits come at a broadly distributed public cost, or vice versa. A diagonal line connects thethree policy outcomes and illustrates the conclusions of the analysis: that dominant interest groupinfluence is strongest where member-states retain most decision-making power, and that publicopinion influence is strongest where EC institutions -- especially the EP -- have significantdecision-making power.Figure 6.1 reflects the predominance of institutionalist explanations over pluralist andpublic opinion explanations of EC policy outcomes by revealing that the value of the latterexplanations is determined by an institutionalist factor: the type of decision-making procedureused. The influence of dominant interest groups or public opinion over a policy issue isdetermined by which decision-making procedure is used. If the Consultation procedure is used,7By 'dominant interest groups', I refer to the first tier of interest groups (egs. agricultural andcarmaker interests) described earlier as members of Pross"policy community'.NATIONALLEVELCar im SUPRA-NATIONALLEVELCAP reform[CoM] [Commiss • n]^[EP]Emissions Standards82Figure 6.2CASE RESULTS GRAPHDOMINANT INTERESTGROUPSPUBLICOPINION83pluralist explanations can be expected to be applied more successfully. If the Co-operationprocedure is used, public opinion explanations can be expected to be applied more successfully.If a policy is decided by the Commission alone, both pluralist and public opinion explanations mayprovide insights to the outcome.Ultimately, institutionalist explanations are most successful when applied to the cases.Pluralist explanations provide some insight into the policy-making process, but the influence ofinterest groups may appear exaggerated given the choice of cases. Agricultural and carmakerinterest groups are more of an exception than the rule amongst European interest groups.Structuralist Marxism and liberal economic explanations suffer a similar fate: though they bothhelp explain the 1992 project, they both fail to explain any of the three cases to a satisfactorydegree. The complexity of European integration, combining so many diverse member-states andplagued by competing visions of the future supra-national state, assures that the rules that governthe policy process provide the most fertile ground for explaining policy outcomes. It is littlesurprise that EC constitutional deliberations, the framing of those rules, are such a contentiousand profound endeavour.BIBLIOGRAPHY"Agricultural subsidies: Sowing in tears." The Economist,August 10, 1991, pp. 56-8.Anderson, Svein S., and Kjell A. Eliassen. "European CommunityLobbying." European Journal of Political Research,20 (1991), pp. 173-93.Atkinson, Michael, and William Coleman. 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