Steps towards a supranational polity
Alec Stone Sweet
Introduction
With the Treaty of Rome, European states designed a set of policy domains related to trade and the regulation of markets, a complex of governmental organizations, and a binding set of substantive and procedural rules to help them achieve the construction of a European Economic Community.
Although the treaty traced the broad outlines of this new Community, it was the purposeful activities of representatives of national governments, of officials operating in the EC’s organizations, such as the Commission, and of leaders of transnational interest groups that subsequently produced the extraordinarily dense web of political and social networks that now functions to generate and sustain supranational governance. But it was the European Court of Justice (ECJ), the judicial organ of the European Union (EU),1 that fashioned a judicially enforceable constitution out of international treaty law, transforming the EU in the process (Weiler 1991). The constitutionalization of the Treaty of Rome not only provoked the gradual emergence of a quasi- federal legal system. It fundamentally altered, within a very wide zone in Western Europe, how individuals, groups and firms pursue their interests, how judges resolve disputes, and how policy is made at both the national and supranational levels. This chapter examines how the EU legal system has been constructed and operates, focusing on the impact of constitutionalization on European integration and governance.2
The Treaty of Rome and European integration
With the 1957 Treaty of Rome, six European states established a political system to facilitate market and political integration. Integration originally referred to the process through which a common market would be achieved and regulated by EU law and institutions of government. Today the European common market consists of: (1) a zone of free movement, wherein restrictions on the movement of labour, goods, services and capital within the area have been abolished; (2) a collective external customs policy, whereby goods imported from outside the area are subject to uniform treatment; (3) an EU- wide regulatory system, whereby common legislation and other public policies
are made by the EU’s governing bodies; and (4) a common currency and monetary policies. As integration has deepened in existing areas, and spread to new domains, the word integration has come to mean the overall process through which a European economy, society and polity are being constructed.
The EU is now made up of twenty-five states, following enlargement in May 2004 to ten new Eastern, Central and Southern European states.
Although a constitutional treaty was agreed in June 2004, we do not know yet whether it will be approved by the twenty-five member states. In the meantime, the EU is made by its treaties. The treaties comprise the EU’s constitution. Like all written constitutions, these texts distribute governing authority among functionally differentiated institutions and establish procedures to produce legislation. The EU, however, does not fit easily into traditional typologies of comparative or international politics. It blends, in complex and fluid ways, elements of governance found in international law and organization with elements akin to national constitutional law and federalism. Simplifying, institutionalized forms of interstate cooperation, or
‘regimes’ (Krasner 1983), are commonly understood in intergovernmental terms. Representing sovereign states, national governments establish and maintain these regimes in order to create social benefits and to solve collective problems. Intergovernmental analyses of the EU focus on the crucial position of the member state, a position bolstered by the presumption in international law that a state cannot be bound without its consent (Moravcsik 1991). The EU system, however, can also be understood in supra- national terms. The focus here is on how the regime’s own institutions, such as the Commission and the ECJ, work to structure intergovernmental bargain- ing, as well as to generate political outcomes on their own and through their interactions with private actors. As integration has proceeded, the supra- national mode of governance has steadily expanded and the importance of intergovernmentalism has been reduced (Sandholtz and Stone Sweet 1998;
Stone Sweet et al. 2001). One purpose of this chapter is to show how the ECJ and the EU legal system have steadily expanded the supranational aspects of the EU, while reducing the intergovernmental ones.
The EU is governed principally by four institutions: the Commission, the Council of Ministers, the European Parliament, and the ECJ. The ECJ is a constitutional court based roughly on the European model of constitutional review (Stone Sweet 2000). It resolves legal disputes that arise between the various EU organs, between EU institutions and the member states, and between the member states themselves. That is, the Parliament can bring a dispute that it has with the Council to the ECJ, member states can sue each other, and the Commission can take member states to the ECJ for non- compliance with EU law. The ECJ also provides authoritative interpretations of European law to national judges, by way of a preliminary reference procedure that resembles German, Italian and Spanish ‘concrete review’. The fifteen members of the ECJ, which sits in Luxembourg, are appointed by the member states and serve six-year, renewable terms.3
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The evolution of integration must be understood in light of permutations in the Community’s decision-making processes. Simplifying, the original understanding of these processes distinguished between amendments to the treaty and regulations and directives – called secondary legislation – made pursuant to the treaty. Amendments would be governed, as in traditional international law, by the rule of unanimity, that is, every member state would possess a veto. Secondary legislation, including most legislation concerned with the construction of the common market, would be proposed by the Commission, and then amended and adopted by a qualified majority (about two-thirds) of the weighted votes of the Council. Unanimity is an inter- governmental mode of governance, whereas qualified majority voting tends towards supranationality, since a member state can be bound by a policy it has not voted for.
The Treaty of Rome fixed a timetable for the completion of the common market, establishing two types of integration process. The first is commonly referred to as negative integration: the obligation of all member states to remove barriers to free movement within EU territory. States were obliged by the treaty progressively to reduce and ultimately to eliminate (by the end of 1969) all import tariffs and quotas, for example. The second type is called positive integration: the creation of new rules to regulate problems common to all member states. The two processes were meant to go hand in hand.
Successful negative integration would erase whole classes of national laws and regulations, leaving important ‘holes’, which positive integration would then fill with EU laws. The kaleidoscope of disparate national laws that functioned to hinder trade in 1958 – such as taxes, duties, and rules governing health, licensing and environmental protection standards – would be replaced by uniform, or ‘harmonized’, Euro-rules by the end of the 1960s. Most harmon- ization, according to the treaty, would proceed, beginning in 1966, by qualified majority voting.
This is not what occurred. Just as the deadline approached, France’s president, Charles de Gaulle, provoked a constitutional crisis. De Gaulle distrusted the supranational elements of the EU, including the Commission and qualified majority voting. The crisis was resolved by the ‘Luxembourg Compromise’ of January 1966, an intergovernmental understanding among the member states. The compromise permits a member state, after asserting that ‘very important interests are at stake’, to demand that legislation be approved by unanimity rather than by qualified majority voting. In other words, each member state, on the grounds of national interest, could veto EU legislation. The veto strengthened the intergovernmental element of the EU – the Council and the member-states – but, despite perceptions of stagnation and ‘Eurosclerosis’, integration nonetheless steadily proceeded in the 1970s (see Fligstein and Stone Sweet 2001).
Qualified majority voting was reinstated as the dominant legislative process for achieving the common market by the 1986 Single European Act (SEA), and extended to other areas by the 1992 Treaty on European Union (TEU).
Since the early 1980s, the EU has developed a powerful momentum of its own evidenced by, among other things, institutional reform bolstering the position of the Parliament, the development of juridical notions of European citizen- ship and rights, the emergence of a formal treaty basis for foreign policies and new modes of political cooperation in policing and border control, and the move to a European central bank and a common currency.
The constitutionalization of the treaty system
The ‘constitutionalization of the treaty system’ refers to the process by which the Treaty of Rome has evolved from a set of legal arrangements binding upon sovereign states into a vertically integrated legal regime conferring judicially enforceable rights and obligations on all legal persons and entities, public and private, within EU territory. Today, legal scholars and judges conceptualize the treaty as a constitution, and this is the orthodox position (e.g., Lenaerts 1990; Mancini 1991; Weiler 1981, 1991). In its decisions, the ECJ has, since the 1960s, implicitly treated its terms of reference as a constitutional text and, today, explicitly refers to the treaties as a ‘constitutional charter’ or ‘the constitution of the Community’ (Fernandez Esteban 1994).
The ECJ is the supreme interpreter of EU law. Its tasks are to enforce compliance with that law, and to ensure that it is applied in a uniform manner across the EU. With constitutionalization, these two tasks have become one and the same. Although the outcome was not intended, the vast bulk of the ECJ’s caseload is generated by preliminary references sent by national judges responding to claims made by litigants before them. This procedure is governed by art. 234 of the Treaty of Rome. According to art. 234, whenever an EU legal norm is material to the settlement of a dispute being heard in a national court, the presiding judge may – and final courts of appeal must – ask the ECJ for a correct interpretation of that law. This interpretation, called a preliminary ruling, is then applied by the national judge to settle the case. The procedure is designed to enable national courts to understand the nature and content of EU law, and to apply it correctly and uniformly throughout EU territory.
The constitutionalization process has been driven – almost entirely – by the relationship between private litigants, national judges and the ECJ, inter- acting within the framework provided by art. 234. Simplifying, there have been two waves of constitutionalization. In the 1962–79 period, the ECJ secured the core, constitutional principles of supremacy and direct effect. It made these moves despite the declared opposition of some of the member states (see Stein 1981). The doctrine of supremacy (Costa, ECJ 1964) lays down the rule that, in any conflict between an EU legal norm and national rule or practice, the EU norm must always be given primacy. Indeed, according to the ECJ, every legal rule coming within the purview of the Rome Treaty, from the moment of its entry into force, ‘renders automatically inapplicable any conflicting provision of . . . national law’ (Simmenthal II, ECJ 1978). The
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doctrine of direct effect holds that, under certain conditions, EU rules confer on individuals rights that public authorities must respect, and which must be protected by national courts. During this period, the ECJ found that certain treaty provisions (Van Gend en Loos, ECJ 1963) and a class of secondary legislation called directives (Van Duyn, ECJ 1974a) were directly effective, and it strengthened the direct applicability of another class of secondary legis- lation, called regulations. Both doctrines have been controversial, since the Rome Treaty does not contain a supremacy clause and does not provide for the direct effect of directives or treaty provisions.
In the second wave of constitutionalization, the ECJ supplied national courts with enhanced means of guaranteeing the effectiveness of EU law. In the 1980s, the doctrine of indirect effect was established, according to which national judges must always interpret national rules as if they were in conformity with EU law (Von Colson, ECJ 1984). In Marleasing (ECJ 1990), the ECJ announced that, when a directive has either not been transposed or has been transposed incorrectly into national law, national judges are obliged to interpret this law in conformity with that directive. Put differently, the doctrine empowers national judges to rewrite national law in order to render EU law applicable, in the absence of implementing measures. Once national law has been properly (re)constructed, the EU law (in the guise of the national rule) can be applied in legal disputes between private legal persons (i.e., non- governmental entities). Thus, indirect effect substantially reduces the problem that the ECJ’s doctrine of direct effect covers disputes only between a private person and a governmental entity, but not between two private persons.
Finally, beginning with Francovich (ECJ 1991a), the ECJ has developed the doctrine of state liability. According to this doctrine, a national court can hold a member state liable for damages incurred by individuals due to a member state’s failure properly to transpose a directive. The national court may then require member states to compensate such individuals for their losses.
Once accepted by the national courts, these doctrines served to connect national and supranational legal systems; they established a decentralized enforcement mechanism for EU law; and they radically expanded the capacities of the supranational mode of governance and reduced the power of governments to control the integration process. The doctrine of direct effect empowers individuals and companies to sue member-state governments or other public authorities either for not conforming to obligations contained in the treaties or regulations, or for not properly transposing provisions of directives into national law. The doctrine of supremacy prohibits public authorities from relying on national law to justify their failure to comply with EU law, and obliges national judges to resolve conflicts between national and EU law in favour of the latter. In sum, in its constitutional jurisprudence the ECJ sought to enlist national judges in a partnership to make EU law more effective. If national judges chose not to refer cases, the legal system would have been stillborn, and the effectiveness of EU law could not have been secured – although it needs to be said that, for various reasons and at different
points in time, some national courts resisted the supremacy doctrine. I now turn to the impact of constitutionalization on integration and policy.
The dynamics of legal integration
The ECJ and negative integration
As defined above, negative integration refers to the process through which national barriers to transborder economic activity are removed. The ECJ, activated by art. 234 references, sustained this project during the post- Luxembourg Compromise period, systematically removing national rules and administrative practices that hindered labour mobility and trade, beginning in 1970s. One such line of decisions, on the free movement of goods, turned out to be crucial to the politics that culminated in the Single European Act of 1986 (SEA). As noted above, the SEA and the TEU repudiated the Luxembourg Compromise, reinstating and extending qualified majority voting as the dominant legislative process for regulating the common market and for other purposes.
From free movement of goods to the SEA
Ex-arts. 30-36 (now 28-31) of the Rome Treaty constitute the normative context for free movement. Ex-art. 30 (now 28) prohibited the member states, after 31 December 1969, from maintaining ‘quantitative restrictions [quotas]
on imports’ as well as ‘all measures having equivalent effect’; ex-art. 33 empowered the Commission to adopt, on its own, secondary legislation to clarify and enforce ex-art. 30; and ex-art. 36 (now 30) permitted exceptions to the ex-art. 30 prohibition: on the grounds of public morality, public policy, public security, health, and cultural heritage. These provisions can be interpreted variously. What exactly are ‘effects’ that are equivalent to quotas, and what types of national measures produce them? What national measures, otherwise prohibited by ex-art. 30, could not be justified with reference to an ex-art. 36 exception? For that matter, what exactly is a ‘public policy’
exception? Pursuant to ex-art. 33, the Commission sought to resolve questions such as these in a 1970 directive. The directive established a ‘discrimination test’: national rules that treat national goods differently from imported goods are considered to be measures prohibited under ex-art. 30. Almost immedi- ately, however, the ECJ’s jurisprudence rendered the Council’s directive obsolete.
The leading decision is Dassonville (ECJ 1974b). In 1970, Mr Dassonville imported some Johnnie Walker Scotch Whisky into Belgium, after having purchased it from a French supplier. When Dassonville put the whisky on the market, he was prosecuted by the Belgian authorities for having violated customs rules. The rules prohibited the importation from an EU country (France) of spirits that originated in a third country (UK), unless French
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customs rules were substantially similar to those in place in Belgium.
Dassonville was also sued by a Belgian importer who possessed, under Belgian law, an exclusive right to market Johnnie Walker in the country.
Dassonville argued that, under the treaty, goods that had entered France legally must be allowed to enter Belgium freely, and exclusive rights to import and market goods were not legally valid.
The case provided the ECJ with its first real opportunity to consider the meaning of free-movement provisions. Dismissing the objections of the UK and Belgium, both of which argued that such rules were not prohibited under ex-art. 30, it found for Dassonville, declaring the following:
All trading rules enacted by the Member States, which are capable of hindering, directly or indirectly, actually or potentially, intra-[EU]
trade are to be considered as measures having an effect equivalent to quantitative restrictions.
Thus the ECJ replaced the Commission’s discrimination test with a
‘hindrance of trade’ test. Any national measure that impacts negatively on trade, even indirectly or potentially, is prohibited. If put to a vote, this treaty interpretation – more expansively integrationist than any in circulation at the time – would not have been accepted by a majority, let alone all, of the member states.
The ruling posed a delicate policy problem for the ECJ. Ordering the wholesale removal of national regulations would strip away legal regimes serving otherwise legitimate public interests, such as the protection of public health, the environment and the consumer. The ECJ resolved the problem by declaring that member states could, within reason, continue to regulate the production and sale of goods in the public’s interest, pending harmonization by EU legislation. It stressed that: (1) the burden of proof rests with the member state to prove it has acted reasonably; (2) such regulations – as with national measures justified under ex-art. 36 grounds – could not ‘constitute a disguised restriction on trade between member states’; and (3) the ECJ and the national courts would review the legality of these exceptions to ex-art. 30 on a case-by-case basis.
The ‘Dassonville principles’ have animated the free-movement juris- prudence of the ECJ to this day.13 They enabled the EU legal system, activated by traders, to monitor member-state compliance with EU trade rules, but also to shape national law by progressively elaborating the permissible exceptions to ex-art. 30. More generally, virtually every important domain of negative integration is today governed by judicially constructed rules resembling, in their broad outline and logic, the Dassonville principles. That is, the ECJ works to remove barriers to the movement of persons, or to the provision of services, while requiring member states to justify such barriers on public interest grounds.
The purely judicial construction of a common market on a case-by-case