Imelda Maher

The Open Method as a New Mode of Governance: The Case of Soft Economic Policy Co-ordination

Taking economic co-ordination in EMU as a starting point, this article explores the development of the open method of co-ordination, addressing whether it is a new form of governance from two related perspectives. First, to what extent can the method be effectively applied outside the scope of economic policy? Second, will it lead to policy transfer to the EU and hence act only as a transitional mode of governance? Identified at the Lisbon European Council, the method codified practices such as benchmarking, target-setting and peer review developed in the Luxembourg, Cardiff and Cologne processes. The method offers a new approach to governance of the EU as a heterarchical, decentred and dynamic process. It supports and radicalizes the principle of subsidiarity; offers an alternative to the treaty rules on enhanced co-operation; and addresses some of the legitimacy issues inherent in the EU. In EMU, the method arose out of a specific policy framework with a common monetary policy complemented by the coordination of national economic policies. The recent recommendation issued against Ireland is the first example of the operation of the method in EMU and shows how debate can be stimulated and how different and arguably equally valid perspectives defended. The particular experience of EMU with a sound money, sound finance paradigm, a long history of project-building by key elites and the central role of the European Council suggest similar conditions are required for the effective application of the method in other policy spheres. The context within which the method has operated to date is contingent and could change either over time or between policy fields. If so, the very openness of the method may serve to reconfigure the boundaries of competence between the Member States and the Union, after all.

Economic Policy Coordination in the European Union

There are differing views about the need for economic policy coordination in the EU and about the adequacy of the system that has evolved under EMU. This article examines the case for such policy coordination, then describes and assesses the current arrangements for both ‘hard’ coordination - epitomised by the much-maligned Stability and Growth Pact (SGP) - and the ‘soft’ forms of coordination that have evolved in the EU to complement formal rules. Although the system achieves more than is sometimes recognised, it is shown to have weaknesses. Options for reforming the SGP and other facets of the system are discussed.

Soft law and sanctions: economic policy co-ordination and reform of the Stability and Growth Pact

The highly formalized Stability and Growth Pact gives ECOFIN power to impose sanctions on states that breach the Pacts budgetary targets. As the ECOFIN meeting in November 2003 showed, it has considerable but not unlimited discretion. The Commission has called for a more flexible interpretation of the Pact, the strengthening of sanctions against non-compliant member states and successfully litigated the legality of the ECOFIN decision. We argue that the predominance of soft law in EMUs fiscal framework is functionally suited to the uncertainty that surrounds economic co-ordination over the medium term. This suggests an inherent tension in the Commissions proposals: although a more flexible interpretation of the Pact gives more room for fiscal manoeuvre to states that start from healthy budgetary positions, it also makes it more difficult for ECOFIN to measure compliance. This uncertainty re-emphasizes the soft law elements of the Pact, rather than bolstering the efficacy of its sanction mechanisms.

Competition Law in the International Domain: Networks as a New Form of Governance

Central to the internationalization of competition law has been the emergence of transnational networks of competition officials and experts. These networks have operated in three main areas: co-ordination on enforcement; technical assistance; and moves to develop overarching competition principles at the level of the WTO. The debate over the nature of internationalization of competition norms has fallen into three phases: early failures mainly due to the lack of any network; politicization of competition policy within a UN context followed by the emergence of a network primarily focused on the OECD. The current phase concerns coordination and the attempt to develop a competition law regime at the WTO level. This process is spearheaded by the European Union, with the United States of America favouring bilateral agreements on enforcement and technical assistance only. The way the debate has changed over the past ten years and how the two main protagonists have modified their positions, is indicative of the influence and importance of networks which, while they may give rise to formal agreements, can operate through soft power and persuasion. What emerges from the analysis is the centrality of these networks to this important aspect of contemporary international governance. They supplement rather than replace more traditional forms of internationalism and, while they may fundamentally regard themselves as technocratic, deriving legitimacy from outputs, current pressures on international policy making require them to attend to the process aspects associated with legitimacy of democratic regimes.

Economic and monetary union: balancing credibility and legitimacy in an asymmetric policy-mix

There is a double asymmetry in the structure of economic and monetary union (EMU). First, monetary policy is uniform while national economic policies are merely co-ordinated. The credibility of monetary policy is underwritten by an independent European Central Bank, but this is not sufficient as the objective of price stability depends on other aspects of economic policy. Thus greater coordination of national economic policies is needed to secure a credible monetary policy. This highlights the second asymmetry. The emphasis on credibility has been such that due regard has not been given to the legitimacy of the EMU policy architecture. If policy-making is to be effective, credible and legitimate, decisionmakers need to pay attention to four key legitimacy indicators: input, output, values and process. It seems inevitable that the success of the developing policy architecture and its effects, both in its monetary and economic dimension, will be judged against these broader standards.

Adjusting to EMU

List of Tables List of Figures List of Boxes Abbreviations Acknowledgements Preface Notes on the Contributors Introduction PART 1: ADJUSTMENT AT THE EU LEVEL Macroeconomic Policy in the EMU The EMU Constitution Policy Co-ordination under EMU Structural Policies as a Means of Adjusting under EMU PART 2: ADJUSTMENT AT THE NATIONAL LEVEL The Early Years of EMU: Convergence but Uneven Adjustment Germany: Painfully Adjusting to EMU? Ireland: Adjusting to Life in the Euro Area without the United Kingdom? Finland: Membership to Encourage Change Sweden: Not Yet or Not Ever? The United Kingdom: Prospering Outside the Euro Area? The New Members - Big Bang or Slow Transition to Stage 3 Adjusting to EMU: Conclusions and Policy Implications Notes Bibliography Index

Innovation, Competition, Standards and Intellectual Property: policy perspectives from economics and law

Abstract The paper identifies the sources of regulatory complexity that lie behind the management of innovation, intellectual property, competition law and technical standard setting processes. It then introduces the remaining papers in the Special Issue. These papers focus on aspects of regulatory complexity in the Australian and New Zealand context. Taken overall the papers suggest that flexible standards of regulation are key to small and medium sized states being able to manage the integrated regulation of innovation, intellectual property, competition law and standard-setting.

British Brinkmanship and Gaelic Games: EU Treaty Ratification in the UK and Ireland from a Two Level Game Perspective

Research Highlights and Abstract Viewed from the theory of two-level games, the European Union (EU) Act (2011) is a rare example of a government tying its hands in international diplomacy. The UK government could find its hands more tightly bound than anticipated under the EU Act, inter alia, due to the enhanced role of the courts in EU treaty ratification. The EU Act could convey bargaining advantages to the UK, but it could also encourage other EU member states to walk away from the negotiating table. The risks posed by tighter ratification rules are borne out by Irelands experience of EU treaty ratification since the Supreme Court ruling Crotty v. An Taoiseach (1987). David Camerons ‘veto’ of plans for a new EU treaty in December 2011 illustrates the difficulties of knowing ex ante when a referendum is required under the EU Act. The European Union (EU) Act (2011) provides for greater parliamentary oversight and the possibility of a referendum before EU treaties can be ratified. This article explores the EU Act from a two-level game perspective, seeing it as a rare example of a government tying its hands in international diplomacy. That the UK government could find its hands more tightly bound than anticipated is suggested by Irelands turbulent experience of treaty ratification in the light of Crotty v. An Taoiseach (1987), a landmark ruling by the Irish Supreme Court and an inspiration for the EU Act. This situation could, the theory of two-level games predicts, bolster the UKs bargaining position in Brussels, but it could also damage the countrys credibility and encourage other member states to walk away from the negotiating table. This last point helps to shed some light on the UKs ‘veto’ of the Fiscal Compact in December 2011.

Competition Law and Transnational Private Regulatory Regimes: Marking the Cartel Boundary

Cartels today are prohibited under competition regimes around the world, although seen historically (in Europe at least) as a public good to be tolerated or even encouraged by governments. Despite the prohibition, illegal cartels are still prevalent, and there are circumstances where cartel-like conduct is allowed under competition rules. This article explores the extent to which such conduct can be both subject to one regulatory regime (competition law) while also carrying out regulatory functions, and hence can be construed as transnational private regulatory regimes (TPRERs). There are three categories of cartel-like arrangements: private contractual arrangements that fall outside the realm of competition law; self-regulatory arrangements designed to exclusively advance the interests of regulatees; and hybrid regimes where private arrangements have been co-opted as a form of regulation which operate in the shadow of competition law and are often seen as advancing competition objectives.

Juridification, Codification and Sanction in UK Competition Law

The Competition Act 1998 radically reforms United Kingdom (UK) competition law displacing discretionary political action with more juridical norms based on the European Community (EC) competition rules. Such alignment is not required under EC law but in fact has occurred in most Member States1 and in all those countries seeking to join the EC in the near future.2 The basis of British competition law has shifted from a control of abuse system to a prohibition system. Under the control of abuse system everything was legal until expressly declared illegal. No penalties were imposed and decisions ultimately could be taken at the political level by the Secretary of State. Under the new prohibition system introduced by the Act breach of either of the two prohibitions on restrictive agreements and abuse of dominance may lead to the imposition of substantial fines in a manner similar to that found under EC law. This reform can properly be seen as a seismic shift in the regulation of competition within the UK leading to a juridification and codification of competition policy backed by a system of sanctions. This article argues that this process of juridification has redefined the role of the Office of Fair Trading (OFT) and created a very powerful regulator in its Director General. Codification takes the form of the Act itself supplemented by guidelines and for the first time a system of precedent through the now juridified successor of the Monopolies and Mergers Commission (MMC) the Competition Commission (CC). While codification facilitates and emphasises compliance, the Act also introduces strong investigative powers and sanctions. Finally, the article concludes that soft harmonisation with EC norms does not lead to complete harmony between the two systems of rules nor should it. In fact, there is continuing strength in the diversity that remains, leading to a greater bedding down of the system into the domestic legal order thus ensuring its acceptance and effectiveness, one where there is recognition that uniformity of legal norms across legal orders is little more than a fiction and that there are aspects of the EC system which can be improved on.