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Category: EU Legal System and Law

The Single Market and the English Lesson

Posted on by claudia

Alfredo De Feo, Scientific Director of the european college of Parma foundation

For more than four years the United Kingdom has formally left the European Union, and by now everyone recognises that the balance sheet of the divorce is heavily negative. According to figures presented by the UK Budget Office, none of the promises of the referendum promoters have been fulfilled: savings in contributions to the EU, less tax plus trade and fewer migrants. The UK continues to pay its debts to Europe (32 billion), has increased immigration from non-EU countries as a result of the departure of much European labour, putting essential services such as hospitals into crisis, trade with non-EU countries has not lived up to expectations, and the reintroduction of borders has led to the recruitment of a hundred thousand additional civil servants, which has increased public expenditure.

For example, from 2009 to 2016, Europe invested over €6 billion per year in the UK, between the European budget and the European Investment Bank, compared to the €2.4 billion made available by the government in recent years (EIB and UK budget office data, reported by Corriere della sera on 1 July). All this explains why the UK, and its citizens, have become impoverished in the last four years.

The British lesson should induce the European ruling class and public opinion to reflect on the benefits that the intuitions of Delors, Mitterand and Kohl to create the Single Market for people, goods, services and capital brought to Europe. A single market that has been imperfectly realised.

The European Parliament has published a mapping of the cost of non-Europe, i.e. the benefits that a completion of the European market would bring to the economies of member states. The study concludes that a deepening of European integration could increase European GDP by more than €2.8 trillion by 2032.

Awareness of this untapped potential led the European Council to request the preparation of a report on the future of the internal market, a report whose drafting was entrusted to Enrico Letta, former Italian Prime Minister and President of the Delors Institute and Rector of one of Europe’s most prestigious business schools in Madrid.

The report, Much more than a market, defines the context in which European leaders will have to confront themselves, identifying three key factors that must guide the deepening of the EU’s internal market: 1) the commitment to an ecological and digital transition that is economically and socially sustainable; 2) the inescapable prospect of European enlargement; and 3) the need to strengthen the coordination of EU defence policies, a policy that cannot be delegated to our NATO partners.

The Report, submitted to the European Council in April 2024, reviews the areas where the internal market needs to be completed or renewed in order to unleash new potential for the single market, presenting a series of concrete proposals ultimately aimed at improving the lives of citizens and economic operators.

These proposals include the extension of the single market to innovation, research and education, and the creation of a European company law, complementary to national laws with the aim of helping businesses, especially small and medium-sized ones, operating or wishing to exploit European markets.

Some of these proposals were taken up by the next President of the Commission, Ursula von der Leynen, in her investiture speech before the European Parliament and included in the mandate given to individual commissioners. It is therefore to be hoped that the proposals contained in the report will become part of the European political agenda in the coming months. 

In conclusion, the Letta report achieves two objectives: the first is to put the importance of the single market back on the table of European leaders and in front of public opinion, also on the strength of the negative British experience; the second is to contribute to the European political agenda of the coming months.

European policy also needs ambitious goals to regain the trust of public opinion, while being aware of a complex framework: a new Commission, a European Parliament strongly influenced by nationalist tendencies, and an international context dominated by crises that are difficult to solve, such as the conflicts in Ukraine and the Middle East, the continuous migratory flows, but also climate change and the satisfaction of energy needs.

European public opinion needs to rediscover an ideal drive as Delors was able to do in the mid-1980s by launching the single market programme. Free movement in Europe is not just an economic factor but serves to revive and strengthen the sense of belonging of European citizens, as the title of the report says much more than a market, it represents an opportunity for European leaders, which we hope they will not miss.

Traduzione automatica rivista da Edward Lynch

Where does european economic integration stand?

Posted on by claudia

Marco Ziliotti, Administrative Director of the european college of Parma Foundation

For more than thirty years – more than a generation ago,  – in a prevailing area of the European continent, which has in the meantime expanded from twelve to twenty-seven states.

People (Schengen Treaty, 19 June 1990), financial capitals (EEC Directive of 1 July 1990) and goods (European Single Market, 1 January 1993) have circulated without borders. For more than twenty years, payments in twenty of these countries have been settled with a common currency, the Euro.

The economic, social, political and cultural effects of the European integration project (a unique experiment in history, because it was not imposed by a hegemonic state, but by the voluntary cooperation of all the member states) have been, and are, undeniably profound, pervasive and to a large extent irreversible. But the road ahead for Europe, if only from an economic point of view, to truly become a common home, capable of fully exploiting its extraordinary potential, is by no means finished.

As far as the movement of goods is concerned, despite the fact that the single market and the single currency have enormously strengthened the supply chains on a continental, to date the total value of intra-EU trade in goods accounts for little more than a quarter of the total value produced; on the other hand, this interchange is worth 60% among the United States of America,.

In Europe, language barriers, the heterogeneity of the legal value of educational and professional qualifications, and the lack of integration between different pension systems still represent serious obstacles to labour mobility. Although an increasing number of young people, choose to – or are forced to seek job opportunities abroad, on average only three out of every hundred Europeans live and work permanently in a Member State other than their country of birth; in the USA, one in four.

Integration with regard to trade in services is still largely unfinished: for instance, the telecommunication and energy sectors have remained, from the outset, outside the Single Market. Partly as a result of this (as strongly highlighted in Mario Draghi’s recent speech at La Hulpe), the failure of European utilities to exploit economies of scale and the poor interconnection between national networks make the bills of European businesses and households much higher than those of the United States, and not only there.

But the most striking example of potential European competitive advantages that remains unexploited due to persistent fragmentation of rules and institutions is the capital market. On the one hand, the historical capacity of private savings, of households in particular, which in Europe remains at a level more than double than that of American households (the saving rates on disposable income in the EU varies between the member states from 10 to 15 per cent; in the United States, recent historical series show it at between 3 and 5 per cent – except for the peak of ‘forced savings’ during the pandemic). Yet 250 billion euros of financial flows leave Europe every year.

The capitalisation of European stock exchanges remains a sub-multiple not only of the American ones (Nyse and Nasdaq), but also of the Asian ones (Tokyo, Shanghai, Hong Kong, Singapore). The reason is obvious: when an Italian company is listed in Milan, it is in fact accessing predominantly domestic savings (stock market capitalisation of the Piazza Affari stock exchange: 800 billion euros; stock market capitalisation – ‘market cap’ – of the Nyse on Wall Street: 25 billion dollars, of which almost one third are non-American companies).

Once again, the key word in the problem is integration: it is very true that a German saver can buy shares in Italy and vice versa, but this remains a ‘foreign investment’. The Italian and German capital markets are controlled by different supervisory authorities (Consob and BaFin; the European authority ESMA has only coordinating powers); the rules governing the operation of German and Italian companies (company law; crisis and insolvency codes) remain distinct; just as the taxation on business income produced in Italy or Germany, or any other European state, is different, with a variability across Europe – from 9% in Hungary and 12% in Ireland, to 35% in Malta – that is unparalleled among the various US states (with a minimum tax rate of 21% and a maximum of 30%).

Despite the extraordinary progress made, given its democratic rules of governance, Europe is still in limbo. In today’s competitive and geopolitical environment, returning to its original values would be disastrous for its individual member states. All that remains is to move forward, with the utmost determination and with the awareness that the “particular” disadvantages of integration are far outweighed by the advantages of general interest.    

The Members of the EP at work

Posted on by claudia

Alfredo De Feo, Scientific Director of the European College of Parma Foundation

Now that the European citizens have elected the 720 Members of Parliament, how can the newly elected Members influence the decisions of the Parliament?  

First, they will discover that the so-called multilingualism, where everyone can speak their own language, is a chimera. Indeed, theoretically, speaking one’s own language is a right certainly guaranteed in plenary sessions but not sufficient to ensure good integration into the parliamentary work. The administration provides Members with interpreter and translation services; additionally, each Member can hire assistants to help them in communicating with their peers. However, if a Member cannot express themselves in one of the “vehicular” languages, or rather “in the vehicular language”, they risk being marginalized in the parliamentary work. 

The new Member will then discover that the organization of political work in the EP revolves around two pillars, two sides of the same coin: political groups and parliamentary committees.  

The parliamentary committees are divided by thematic areas, mirroring the committees of national parliaments. Members will be assigned to parliamentary committees based on their competencies and preferences. The composition of the committees will thus be proportional to the composition of the plenary assembly. Having specific expertise in a certain area will increase the possibility of influencing decisions. 

In the committees, besides the President and Vice Presidents, a central role is played by the spokespersons of the groups, one or two per group, who have the task of finding the most unified positions within the group and then defending the results achieved in the committee within their own political group. The groups’ spokespersons also decide the group responsible for each report or opinion and choose the rapporteurs and shadow rapporteurs. Those positions are key to leave a mark on parliamentary work. 

For this reason, specific expertise in the European issues addressed by the parliamentary committee is essential to be able to aspire to hold one of the aforementioned roles and influence the decision-making process. Indeed, expertise counts; the impact of each Member will be proportional to their competence and way of interacting with their peers. 

Work in the committees is certainly fundamental, as the EP’s position on the legislation to be adopted is prepared in the committees, but it is not sufficient, as the plenary votes are determined by the positions of the political groups. 

To be influential, the Member must know how to find their points of reference within the group. Obviously, each group has its own organization, which generally includes a role for national delegations and some thematic areas, which generally cover the competencies of several parliamentary committees. Again, Members who want to assert national specificities must find the support of the political group, which will then have to negotiate compromises with other groups to achieve the required majority in the plenary. 

In conclusion, we hope that the new MEPs will rapidly adapt to the EP working method to value their expertise and to integrate well into the parliamentary committees and their respective political groups to actively participate in the democratic construction of Europe. 

European elections and the appointment of the President of the Commission

Posted on by collegio

Alfredo De Feo, Scientific Director of the european college of Parma foundation 

One of the central issues of the upcoming European elections is the appointment of the next President of the Commission. The candidate proposed by the European Council, taking into account the results of the elections, should be appointed by the European Parliament.

Since 2014, to reinforce the link between candidates and elections, the European parties have been appointing their candidates for the Presidency of the Commission (lead candidates). The candidates have then presented their vision of Europe and their responses to transnational challenges.

These debates are certainly interesting, as they force the candidates to present their ideas and their recipes, but they still have a great limitation: they do not attract the attention of public opinion in the various countries. Firstly, there is a language barrier, which is difficult to overcome, and secondly, the leaders of national parties have little motivation, especially when they are candidates, to put forward the candidate of the European party to which they are affiliated.

The European Parliament had put forward a proposal, supported by the most federalist circles, to create a single transnational constituency where each European party would present a single list with its own single candidate. In this way, the leading candidate of the party with the most votes would have a popular investiture, a kind of European premiership.

In reality, there is another limitation, the absence of a single electoral system, each country organizes its elections internally as it sees fit. In addition, proportional voting certainly makes the European Parliament representative of national public opinion, and this is a good thing, but not necessarily suitable for electing the best candidate for President of the Commission, whose main quality should be his/her capacity of mediator between the ‘Senate’ (national governments) and the lower house (the European Parliament).

The future President of the Commission must, however, have the ability to coalesce a parliamentary majority, probably making concessions to the right and the left, only in this way he/she will be able to have a majority in the European Parliament, a majority that could lose during the term of office, in case the motion of censure is activated, as it happened, in 1999 with the Santer Commission.

The best example of the Commission President’s ability to compromise came in 2019. Ursula von der Leyen was not among the Leader candidates expressed by the European parties, but none of them had the necessary parliamentary majority to be elected. The European Council nominated Ms von der Leyen, who was confirmed by only nine votes. After that, she negotiated her government programme with the parliamentary groups after the elections, obtaining a solid parliamentary majority.

To conclude, as it is often the case in Europe, the ideal solution is not achievable and remains a goal, but there is (almost) always a sub-optimal solution that advances the democratic process and European integration.

In previous years, the President of the Commission was formally appointed by the European Council. In practice, the appointment took place in a private room of the Council, or more often in a small room in some hotel between two or maximum three Heads of State, you can guess the names! The Treaty of Lisbon put an end to this practice and the European Parliament, with the majority that will emerge from the ballot box, has a decisive role. The citizens’ vote will have an important influence on the future of Europe.

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