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The primary impetus to European Union after World War II was political -to reconstruct a Europe which would remain at peace, under democratic control, and free from any re-emergence of dictatorships. The chosen means of economic integration and union has been a long road in which the interests of many parties and the clash of opposing national interests have been (and still are being) gradually fought out. One might say in the language of the contractarian theory of public choice, already discussed, that economic union was intended to limit public choices through the voting rules and the creation of the Community governmental institutions of the Treaty of Rome so that the worst of all "political failures" of the 20th century could not happen again.

Interest in the differences over the fundamentals of policy in the EU has tended to focus at least since the Treaty of Accession in 1973 on the United Kingdom's relations with the rest of the Union. It has begun to be forgotten that in the early stages of the formation of Community policy, and in the formation of the CAP in particular, it was the clash between France and West Germany, the two largest member states of the original Six, which occupied the centre of attention. As an agricultural-importing country, the creation of an internal free market in agricultural produce put greatest pressure on Germany and her farmers as prices, particularly for cereals, in Germany were the highest. Other member states were looking to the creation of a common market in agricultural produce to replace German imports from third countries with their own exports. In the battles over the establishment of common prices, the only route to the establishment of common threshold and support prices in all main markets in which regimes were established was to fix them at the level in the highest member states, which in most cases was the German level. A similar problem occurred in 1969 after the boom in the Germany economy created pressure for a revaluation in the Deutschmark which threatened to lower Community agricultural support prices (calculated in Deutschmarks) in Germany. To support the interests of German farmers in this case, the Community invented the device known as "monetary compensatory amounts (mcas)", which effectively formed a tax on imports into Germany equal to the amount of the revaluation and a similar subsidy on German produce being exported. (After the move to flexible exchange rates in 1971 mcas began to be fixed weekly to match any moves in currency markets.) German protectionist policies and the struggle for self-sufficiency in agriculture are deeply rooted, and control over these policies was sacrificed with reluctance for the industrial economic advantage of the common market (see Hendriks [1991] for an extended historical account).

In many ways the UK situation as an agricultural-importing nation was similar to that of Germany except that the UK had other obligations to the Commonwealth as a supplier of agricultural products. Politically the UK also saw itself (in the early post-war years especially) as a major power having a "special relationship" with the United States. By the late 1950s such notions had changed and the US keenness for UK membership of the European Community began to be heeded. The British proposal for a gigantic industrial free trade area that omitted agriculture was a failure. The limited Free Trade Area Agreement that followed the breakdown of negotiations for British entry to the Community in 1963 was a stop-gap measure and an irrelevance that delayed the eventual negotiations for entry in 1973.

These brief remarks on a few of the events of history serve to demonstrate the clash of interests there is in Community economic policy making even when statements of aims and objectives may not give rise to much difficulty given the skill of diplomatists and civil servants in drafting them. The neat division in the European Union between the "constitutional contract" and individual policy acts (discussed earlier) might be said to be affected by the fact that the Treaty arrangements since the founding Treaty of Rome (1957) have been under frequent review as the Community has been enlarged and its internal institutions and arrangements have developed. Moreover, when the intention has been to create a framework for a managed market, single policy acts require constant adjustment: only thus can such acts cope with problems of enlargement, and changes in the market situation arising from changes in consumer demand, as well as rapid technological and structural change in all aspects of production and marketing. The sheer necessity to respond to change creates opportunities for agents in the system to try to influence policy decisions in ways that are favourable to their interests.

The decision-making process of the European Union when it is laid out in detail is very complex because of the numerous links that exist in the system. Indeed, it might be said that it is the very existence of some of the international links in the system that gives rise to political tension in the domestic policies of member states. Such links may tend to break the sovereignty of the parliaments of member states. Parliaments have found a weakening of their control over Ministers when decisions are taken in the Council of Ministers. The legislation of national parliaments can be overthrown by citizens' right of access to the European Court thereby reducing control of citizens by governments. Issues arising in these ways often cut across traditions of party politics in member states and even render them irrelevant, which leads to a sense of frustration and dissatisfaction. These remarks might be read in the press of most countries at some time or other as they relate to many issues in the everyday life of ordinary citizens throughout the Union.

An attempt has been made in Chart 1 to portray the system and the links in it. Many books set out diagrams of the system similar to Chart 1 - none is completely satisfactory. The following paragraphs are a brief sketch of the operation of the system¹.

(¹I have used "European Union Selected instruments taken from the treaties" Book 1, Volume 1 published by the Office for Official Publications of the European Communities 1995 for quotation.)

The key institution of policy making for the European Union is the Council of Ministers which consists of the Ministers of member states for whatever matters are being discussed, e.g., agriculture, transport. The Council legislates by means of Regulations and Directives, both of which are binding in member states. Regulations specify the means and often involve the Commission in administration, while Directives leave the methods of achieving the policy prescription to member states themselves. The Council can also issue Decisions, which likewise have binding force on governments, large enterprises and organisations. The Council acts by qualified majority (Treaty of Rome, Article 148) except in cases where there is a vital national interest or in other cases where unanimity is required. The Council also has a Committee of Permanent Representatives of Member States (COREPER) whose responsibility is to prepare for the work of the Council and to carry out tasks assigned to it by the Council. These tasks are frequently to find solutions to problems on which the Council have been unable to agree.

An extension of the Council of Ministers is the European Council which effectively is a Council meeting involving the heads of governments accompanied by Foreign Ministers and other Ministers as required. It is in these meetings (usually held three times a year) that large issues such as the need for changes in the Treaty arrangements, changes to the Commission's "own resources" and issues that cannot be resolved in ordinary Council meetings are dealt with. Some decisions affecting the dairy industry have had to be taken at this level, e.g. the introduction of the quota policy, the Italian quota issue, the decisions relating to BSE and the ban on British beef exports. Changes in Treaty arrangements requiring unanimity and ratification by the parliaments of member states have to be dealt with at Inter-Governmental Conferences (IGCs).

The Council of Ministers acts only on the basis of proposals made to it by the Commission. The Commission's primary tasks are to ensure that the Treaty and measures taken by institutions pursuant to it are applied, and to formulate policy proposals to the Council (Article 155). The Commissioners themselves (there are 12 at the present time) are nominated by the governments of member states, and the Head of the Commission is chosen and agreed upon by the European Council after consultation with the European Parliament. The Head of the Commission allocates portfolios to the Commissioners nominated by members states' governments, which are then subject to a vote of approval by the European Parliament. These are delicate matters in many areas but not least in agriculture. The Agricultural Commissioner's job has frequently been given to a Commissioner from one of the smaller states: the Netherlands, Denmark, Ireland and, at the present time, Austria. Commissioners nominated by member states are not representatives and are required to give "a solemn undertaking" to serve the general interests of the Community and be completely independent when taking up their duties (Article 157 (2)).

The Commission can make proposals only after it has consulted the European Parliament and the Economic and Social Committee. The European Parliament is a directly elected body. Its chief function is advisory, but it has the power to question Commissioners, and receive reports from them as well as an annual report from the Head of the Commission. Its proceedings are public and published. It has the power to pass a motion of censure on the Commission which, if carried by a two-thirds majority, requires the Commission to resign as a body (Article 144). The Single European Act (1992) and the Maastricht Treaty gave the European Parliament limited power of amendment of Council legislation in certain areas relating particularly to transport, environment and consumer protection (but not agriculture). The last word in cases of dispute is left with the Council after reference to a conciliation committee, but the Council is then required to act under the unanimity rule and not by qualified majority voting; without unanimity the Council is required to accept Parliament's amendment.

Under Article 113 of the Treaty of Rome the Community took responsibility for negotiating common commercial policies with the rest of the world, a logical extension of the establishment of the common external tariffs. This area of activity, which has devolved on the Commission, has become very important as the task of conducting increasingly complex negotiations for Community enlargement, the Uruguay Round of GATT, co-ordination of sanctions policies, the disposal of large surplus stocks, and aid policies to the developing world extend well beyond tariff or commercial policies. To deal with such matters Article 113 has been revised and extended in Article 228 by the Maastricht Treaty to give the Commission, the Council and its committee the necessary legal power. Whilst this work has enhanced the Commission's status, it still acts after the submission of proposals on such matters to the Council (Article 113 (2)) and in consultation with a special committee appointed by the Council (Article 113 (3)) to assist it. The work of the Commission in this area, it should be said, has been of considerable importance over the years to agriculture, including the dairy sector which has been affected by enlargement, sanctions, deals on surplus stocks, food aid, terms of entry of foods from third parties, and the 1992 GATT Agreement.

The Economic and Social Committee, with many sub-committees covering the various specialised sections of its work, is an advisory Committee appointed by the Council from lists of names provided by member states. The names submitted, twice as many as the available seats, are from all walks of life but are supposed to "consist of representatives of the various categories of economic and social activity" (Article 193).

Around the central process of Community decision-making through its principal institutions there is considerable opportunity, particularly in agriculture and the dairy sector, for the activities of pressure groups and "industry experts" (usually the representatives and employees of powerful organisations in the industry). Farmers' unions are represented in Brussels through the activities of COPA (Committee of Agricultural Producers' organisations in the EC) and co-operative marketing organisations are represented through COGECA (the General Committee for Agricultural Co-operatives in the EC). The dairy trade also has a European organisation, (EDA-formerly ASSILEC) the European Dairy Association, with representatives in Brussels. Each of these bodies is able to obtain representation on the Commission's Milk Advisory Committee, and through this channel farmers and industry marketing organisations can exercise influence on proposals to be made to the Council as well as on the implementation of policy by the Commission. Arguably links with these bodies are part of the Commission's antennae of information in understanding the way its proposals are expected to work on the ground. Even when there is industry opposition, these direct links between the Commission and industry are important for the Commission in preparing and arguing its case.

A final point should be observed in relation to the decision-making process, particularly as it relates to agriculture. Every year the Commission is required to make proposals for the review of farm prices and support arrangements. These proposals are invariably controversial and often very hard fought, both within the Council and outside in the other advisory institutions, and also through wider public debate. The result is that the review proposals are usually presented as a package of measures as the only means of achieving reasonable consensus. Essentially this means give and take, or a kind of market trading in political decisions. There has to be something favourable to everyone even though many pills have to be swallowed. Clearly there is much scope for skilled negotiation and guile by politicians and bureaucrats, but the reality of this process has to be understood every bit as much as the formal decision-making rules and the democratic process they seek to establish in the system.

Chart 1: Machinery of EU Decision Making

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