Democratic Deficit in Commission Decision-making - is lobbyism to blame?

Transcription

1 MSc in EU Business & Law Thesis Authors: Louise Rønne Tine V. Gundersen Academic Advisor: Gert T. Svendsen Democratic Deficit in Commission Decision-making - is lobbyism to blame? An analysis of the impact of interest groups lobbying activities towards the Commission, the democratic consequences and the reasons that make it possible Aarhus School of Business Department of Management August 2006

2 Abstract Do interest groups lobbying activities towards the Commission contribute to the creation of a democratic deficit in policy making? This is a question that becomes increasingly relevant as the Commission includes the opinions of interest groups in more and more policy creations. The Commission itself has recently published a green paper that suggests certain guiding principles for lobbyists to follow. If lobbying activities, in fact, contribute the creation of a democratic deficit, it is pivotal to understand the underlying reasons for this, in order to improve the situation. This thesis will therefore undertake an investigation of the issue, specifically in regards to trade policy and the case of import restrictions towards textiles from China that was a hot topic in the media last year. The problem statement of the thesis is thus; do interest group lobbying activities towards the Commission contribute to the creation of a democratic deficit in trade policy decisions and if so, can the explanation be found within the decision making of the Commission? To answer this question, we start by defining and analysing the term democracy in order to determine which requirements are needed for a political system to be considered democratic. Democracy is a complex system of governance, and legitimacy is one of the core elements of it, as specified by Lipset. There is not one central precondition to democracy and all the elements of democracy, as specified in the theoretic presentation, must therefore be present in order to avoid a democratic deficit. The thesis focuses on one element of democracy; political legitimacy. Based on the theories of Beetham and Lord, Scharpf and Shimmelfennig, a framework for analysing political legitimacy is developed, which shows the various elements needed for this factor to be fulfilled. Political legitimacy consists of two main elements; input legitimacy and output legitimacy. Based on this framework, a model is created which lays the grounds for the analysis in order to answer the problem statement. This shows how a democratic deficit can be determined, thus, how to determine whether there is output legitimacy in a given case and if so, by analysing the elements of input legitimacy to clarify, where this lack derives from. The case, concerning the imposition of quotas on certain product categories of Chinese textiles is used in the analysis, to determine, whether there is output legitimacy

3 in Commission Regulation 1084/2005 and whether there are signs of interest groups influence on the Regulation. In this case, there are indications of interest group influence, mainly from one group, while the other organisations have not been as successful in their actions. The explanation appears to be that the actions of the successful actor strategically were planned better and more high-key than the actions of the other actors. The analysis shows that the requirement of output legitimacy has not been fulfilled. Therefore, we continue our analysis by examining if this may derive from a lack of input legitimacy. Based on this analysis, it is clear that there are serious deficiencies in input, both regarding the authorisation of the Commission, its representation and accountability. This is most likely the explanation for why the lack of output legitimacy is so extensive. As deficiencies in both input and output legitimacy have been determined, it is relevant to evaluate if some of the Commission s initiatives regarding transparency will help to remedy the situation. Hereunder, if the proposed Green Paper on the European Transparency Initiative (ETI) will address some of the present problems. The Green Paper concerns amongst other, the behaviour of interest groups, however, it can be questioned whether the main problem for legitimacy in the Commission is the behaviour of these groups, or whether it is caused by the way, the Commission applies and evaluates the information they supply. Our analysis suggests the latter. We conclude that there most likely has been interest group influence on the Regulation that has lead to a democratic deficit and that the problems in fact are caused by deficiencies in the decision making of the Commission.

4 Table of contents 1. Introduction Problem statement Methodology Delimitations and Assumptions Structure Democracy and the EU Defining Democracy Political Legitimacy Input Legitimacy Output Legitimacy Input vs. Output Legitimacy The EU between Intergovernmental Organisation and Nation State Input Framework The Commission The Roles and Functions of the Commission The EU s Common Commercial Policy The Lisbon Agenda Lobbyism Theory Defining Lobbyism Collective Action The Strategic Choice of Lobbying How to Lobby Output Framework Trade Theory Trade Restriction The Terms of Trade Effect Strategic Trade Policy World Trade Organisation Model The Context of the EU-China Textile Case The Trading Relationship between China and the EU The Textile and Clothing Markets The Value Chain... 55

5 6.2.2 Structure of the International Textile and Clothing Markets The EU Textile and Clothing Sectors Textile Protection The Guidelines The EU-China Textile Case Actions of the Interest Groups Euratex Strategic Review of Euratex EuroCommerce Strategic Review of EuroCommerce BEUC Strategic Review of the BEUC Commission Regulation 1084/ Signs of Interest Group Influence on the Regulation Analysis of Output Legitimacy Effectiveness Efficiency Analysis of Input Legitimacy Authorisation Representation Accountability Effect of the EU Transparency Initiative Conclusion Suggestions for Further Research Bibliography List of Appendixes

6 List of Figures, Models and Tables Figures Figure 1: Figure 2: Constitutional elements of legitimacy Elements necessary for a decision to be considered politically legitimate Models Model 1: Model 2: Model 3 Model 4: Structure of the Thesis The effect of import quotas under perfect competition The effects of a quota imposition for a big country The analysis of political legitimacy in a policy decision Tables Table 1: Best practices for arena management Table 2: Game showing interdependency of two producers in a free trade situation Table 3: Game showing interdependency of two producers after a trade restriction is imposed Table 4: Government-Government interaction and retaliation game Table 5: Percentage increases at which a safeguard investigation will be initiated Table 6: Levels at which a safeguard investigation, in principle, will not be initiated Table 7: Evolution in quantities from 1st quarter 2004 to 1st quarter 2005, as presented in the safeguard investigation. Table 8: 2004 import levels, alert levels and evidence of trade distortion based on Regulation 1084/2005 for the protected product categories Table 9: Import levels 2005 and agreed growth levels for the protected product categories. Table 10: Comparison of import quantity before and after the introduction of the quota Table 11: Characteristics of the product categories which may explain the agreed growth rates Table 12: Agreed growth rate compared with the percentage of total import 2004 and the source of the request for the safeguard investigation

7 List of abbreviations ACP ATC BEUC CCP CEEC DG DSB DSU EC ECSC ECT ETI ETUF:TCL EU GATS GATT MFA MFN OJ QMV R&D SME TEU TSSC WTO African Caribbean Pacific countries Agreement on Textile and Clothing Bureau Européen des Unions de Consummateurs Common Commercial Policy Central and Eastern European Countries Directorate General Dispute Settlement Body Dispute Settlement Understanding European Communities European Coal and Steal Community Treaty establishing the European Community European Transparency Initiative European Trade Union Federation: Textiles, Clothing, Leather European Union General Agreement on Trade in Services General Agreement on Tariffs and Trade Multi-Fibre Agreement Most Favoured Nation Official Journal of the EU Quality Majority Voting Research and Development Small and Medium sized Enterprises Treaty of the European Union Textile Specific Safeguard Clause World Trade Organisation

8 1. Introduction One of the recurring discussions in the European Union in recent years has been on the so-called democratic deficit. This has traditionally been seen as a result of amongst other factors the institutional structure, the legislation processes, the dominance of delegated expert knowledge and the lack of public support, accountability and a political community within the Union. The discussion has mostly been dominated by the European Parliament and as a result, the Parliament has experienced a broadened scope of its powers. However, in the implementation of the policies in the fields of competition and trade policy, the Parliament is not involved in the decision making process. In these areas, the Commission has the power to make decisions autonomously with the exception of the need to take committee recommendations into account. The fact that these policies are outside the reach of the Parliament increases the challenges of keeping the process democratic. In order to solve the problems created by these challenges, it is important to create some standards for the functioning of democracy. One of the issues that contribute to the importance of this discussion is the increasing efforts of interest groups attempting to influence the outcome of the decision making in the Union. This does not necessarily constitute a problem as interest groups can provide necessary information to the institutions. However, as interest groups often represent the interest of a single group in society, they will always be biased towards the interests of their own group. Therefore, they will attempt to influence decision makers to make decisions in line with their own goals, and these are not necessarily in line with the goals of the Community. In January 2005, The Commission launched the Strategic Objectives , in which the importance of expanding the opportunities for stakeholders to participate actively in the policy making of the EU was emphasised. This accentuates the need for awareness of this bias, and the necessity of including diverging interests and to evaluate them on an equal basis. The Commission has emphasised that with better involvement comes greater responsibility (White Paper on European Governance, p.15). In relation to this, the Commission has produced a Green Paper on the European Transparency Initiative in which it has made proposals for the improved responsibilities of the interest groups. This initiative emphasises the role and obligations of the interest groups. But 1

9 does the lobbying activity of interest groups in fact create a democratic problem for the Union or does the problem lie in the way the Commission responds to it? Although the subject of the democratic deficit and the lack of legitimacy of the EU have been discussed by many, there has, to our knowledge, not been created a specific framework on how to evaluate if EU decision making is democratic. This is important to do as it is not possible to improve the democratic situation until the issues that contribute to the deficiencies have been identified. In this thesis, we will attempt to analyse if the activities of interest groups contribute to make the decisions of the Commission biased towards the goals of the interest groups and thus contribute to a democratic deficit? If this is the case, how is this possible and what can be done to remedy the situation? In order to analyse this, we will undertake a case study of the decision making process leading up to the imposition of quantitative restrictions on certain product categories of Chinese textiles by Commission Regulation 1084/ Problem statement Do interest groups lobbying activities towards the Commission contribute to the creation of a democratic deficit in trade policy decisions, and if so, can the explanation be found within the decision making of the Commission? The answer to this will be found through an analysis of the use of the Textile Specific Safeguard Clause in Regulation 1084/2005. In order to answer the problem statement, there are several issues that must be investigated. We have divided these into six specific questions that will be the basis for the assessment of the case. 1. How did the interest groups attempt to obtain influence on the Regulation? There are several reasons for examining how the interest groups attempted to obtain influence on the Regulation. First, it is needed in order to be able to recognise the signs of influence on the Regulation and thus on the legitimacy of the decision. Second, it is necessary to asses why some interest groups are more successful than others in influencing policy makers. Third, it is relevant to know how interest groups attempt to influence, when determining how the Commission should relate to the information provided. 2

10 2. What is the content of the Regulation? Knowledge of the content of the Regulation is necessary to be able to evaluate it. Has the Commission provided sufficiently substantiated evidence in the basis for its decision and is there sufficient justification for the provisions of the Regulation? 3. Are there signs of interest group influence in the Regulation? If there are signs of influence from interest groups in the Regulation, this indicates that there might be a democratic deficit. This is due to the fact that visible signs of interest influence may indicate that the Commission has been biased towards the goals of the interest group instead of the goals of the Community. 4. Is there output legitimacy in the Regulation? In order to evaluate whether the Regulation has output legitimacy, it must be analysed whether it is effective thus, if it contributes to reach the goals of the Union, and if is efficient, thus if the effects of the Regulation could have been achieved in a more cost efficient way. 5. If not, is the lack of output legitimacy caused by a deficiency in input legitimacy? Output legitimacy may be reduced if there are deficiencies in the decision making process. Therefore, it is important to analyse the input legitimacy in order to be able to clarify, where the potential deficiencies may derive from. In order for input legitimacy to be present, the decision makers must be properly authorized by the people governed, they must represent the people and they must be accountable to the people. 6. Will the proposed Transparency Initiative help remedy the potential lack of legitimacy? As mentioned above, the Commission has recently increased focus on the actions of the interest groups on the decision making process of the Union. The question is thus; will the initiative contribute to reduce the legitimacy deficiencies? This is important in order to determine whether additional initiatives are necessary to alleviate the problems. 3

11 1.2 Methodology The problem statement will be solved by making a deductive analysis, where we use a theoretic base for developing a model, which will create the cadre for the analysis of the case. We have chosen this form of analysis, as it gives us a normative perception of how democracy should function and what factors are needed for the requirements of democracy to be fulfilled. This gives us a basis for measuring the effect of lobbyism on the policy making in the EU. The requirements for democracy are based on the works of Lipset, Beetham and Lord, Scharpf and Schimmelfennig. On the basis of these scholars, we will deduce a framework for political legitimacy based on input and output legitimacy which will be used to create the structure for the rest of the thesis. To make the basis for the input framework, a descriptive analysis of the Commission will be conducted. This will be followed by a normative analysis of lobbyism based on the works of van Schendelen complemented by descriptive data based on Burson-Marsteller. The output framework will be based on a descriptive analysis of trade theory, which can be used to assess the impact of the trade policy measures. This will be based on the work of amongst others Smith, Ricardo and Brander and Spencer. The theoretic presentation will be used to deduce a model that will create the basis for the empirical analysis of the case where the six questions will be answered in the given order. The analysis will carried out subjectively as we attempt to give our own assessment of the information presented. This will be related to theory when relevant. The methodology for the analysis of the actions of the interest groups needs further clarification. Lobbyism is a diffuse subject to examine, as it covers interest groups formal and informal, direct and indirect actions to influence policy makers. We have chosen to examine the actions of three interest groups that represent three different stakeholders in the textile case the industry, the retailers and the consumers. The analysis will be based on the material published on their respective websites as this ensures that the communications are chosen on an equal basis. 1.3 Delimitations and Assumptions In our definition of democracy we do not describe or distinguish between the different concepts of democracy such as liberal, pluralist, social or deliberative democracy. However, the scholars operate under the assumptions of liberal democracy. 4

12 In the creation of the framework for political legitimacy, we have chosen not to include the identity factor as this factor cannot be influenced directly by legal measures. It evolves within the people over time. As we assume that the reader has a basic level of knowledge of the EU we focus mainly on the roles and functions of the Commission and only in relation to trade policy and the decision making processes relevant to our problem statement. The other EU institutions will only be referred to when relevant. We have delimited the goals of the EU to include the objectives denoted in the EC Treaty and the Lisbon Agenda as these provide sufficient basis for our further analysis. We do, however, acknowledge that the EU has launched other strategies, e.g. the Strategic Objectives that builds on the Lisbon Agenda. EU has in the recent years mainly referred to interest groups instead of lobbyists due to the negative connotations of the word lobby (Commission, 1995, p. 17 (Williamson)). We use the terms interchangeably and do not distinguish between interest groups representatives and lobbyists. Furthermore, we do not include lobbying activities undertaken nationally in our analysis and limit the focus to attempts to influence the Commission. Moreover, in order to be able to compare the actions of the three interest groups on an equal basis, we have chosen to limit the analysis to the information published on their websites. We, thus, only focus on the formal lobbying efforts. Without conducting interviews with the interest groups and Commission representatives it is not possible to get knowledge on other possible lobbying efforts. However, we assume that the arguments presented are representative of the arguments in other lobbing activities that might have been conducted. In regards to trade theory, we have chosen to limit the number of scholars included, to those who are most important for the development of economic trade theory and that are relevant to answering our problem statement. We operate under the assumptions listed by these scholars when applying their theoretic framework although we do not undertake a thorough presentation of these assumptions. Furthermore, we limit our discussion to a partial equilibrium analysis. Moreover, considering trade theories that cater for a potential positive effect of a trade restriction we only consider the terms of trade effect and strategic trade policy. In both the analysis of the Regulation and of the Commission s preparatory work, we assess only the information provided by the Commission on the website of DG Trade. Moreover, we only asses the Regulation in light of the goals expressed by 5

13 the EU and do not consider whether these are fair or not. This is also the case for the output analysis. When considering the EU import share of textiles on the world market, we disregard intra EU trade. Furthermore, in the output analysis, we will not undertake a thorough economic analysis of the different policy measures due to lack of resources and information. All values denoted in ECU have been nominated in Euros as the value is the same. In order to have a varied language, we have chosen to refer to the European Union, both as the EU, the Union and the Community interchangeably. The textile and clothing industries are, furthermore, referred to as the industry unless otherwise is specifically stated. When referring to the textile industry this also includes the clothing industry unless specified. Finally, when referring to policy makers, these constitute both policy and decision makers. 1.4 Structure The thesis will be divided into the four main parts that will create the basis for answering the problem statement. Model 1: Structure of the Thesis Theoretic framework Model Do interest groups lobbying activities towards the Commission contribute to the creation of a democratic deficit in trade policy decisions, and if so, can the explanation be found within the decision making of the Commission? Conclusion Analysis Source: Own Creation 6

14 The theoretic framework consists of three main parts; Democracy and the EU is presented in section 2, section 3 is the input framework and section 4 is the output framework. In section 2 the framework for the rest of the thesis is created. Here, the concept of democracy is analysed and the requirements for obtaining democracy is determined, hereunder the concepts of input and output legitimacy. The input framework consists of the decision making authority the Commission and of lobbyism the interest groups attempts to influence the decision makers. The output framework consists of a presentation of trade theory in order to analyse the effects of certain trade policy measures. The model, presented in section 5, is created on the basis of the theoretic framework and serves as grounds for the further analysis of our case study of Regulation 1084/2005 and the published deliberations of the Commission leading up to the Regulation. The model specifies the connection between input and output and how these influence the democratic deficit. The analysis is composed by the sections Section 6 contains an introduction to the Context of the EU-China Textile Case and in section 7 follows a description of the case history. In section 8, we present and analyse the arguments of the interest groups. This analysis is the basis for answering question 1 in the problem statement. The Regulation is analysed in section 9 and provides an answer to question 2. In section 10 we analyse the signs of interest group influence on the Regulation by comparing the analysis of the arguments to the Regulation. This contributes to answer question 3 of our problem statement. The output legitimacy of the Regulation is analysed in section 11 and thus provides the answer to question 4 and question 5 is answered in section 12 through an analysis of input legitimacy. The European Transparency Initiative proposed by the Commission is analysed in section 13 to examine whether the initiative will remedy the potential lack of legitimacy as posed by question 6. Section 14 is the conclusion which provides the answer to our problem statement. Suggestions for further research will be presented in section 15. 7

15 2. Democracy and the EU In order to be able to determine the existence of a democratic deficit in the EU, it is necessary to determine a set of requirements for democracy. To achieve this, we start by introducing the concept of democracy and defining it according to S. M. Lipset supplemented by Beetham and Lord in section 2.1. Based on this, we discuss the importance of legitimacy and the different elements hereof. Political legitimacy is one of these elements, and it will be further discussed in section 2.2 based on the framework of Beetham and Lord, the input/output dichotomy of Scharpf supplemented by Schimmelfennig. The role of the nation state as the constitutional basis for democracy is stressed in several definitions of democracy. We relate this to the structure of the EU, as a legislative entity and its challenge to fit into the definition of democracy in section 2.3. Is it reasonable to expect the EU to fulfil the requirements of legitimacy when this traditionally has been linked to the nation state? This question is necessary to pose, in order to put the issue of legitimacy in the EU into perspective and to obtain an understanding of the complexity of the EU as an entity. 2.1 Defining Democracy The French philosopher Jean Jacques Rousseau posed the question what principles of political right make government legitimate, men being as they are and laws being as they might? (Reimer et al., 2006, p. 136). Rousseau represents the classical view of democracy that concentrates around the concepts of common good, popular sovereignty and the importance of a unanimous agreement to associate under the general will (Rejai, 1967, p. 202, and Reimer et al., 2006, p. 136). This view has been criticized for its lack of precision and empirical evidence to back up the definitions. In more recent research, during the last century, scholars, such as Schumpeter, Dahl and Lipset, have to a larger extent been focusing on empirical evidence and focused on competition, accountability, pluralism and responsiveness (Rejai, 1967, p. 203). Sociology professor S. M. Lipset underlines that a democratic system: supplies regular constitutional opportunities for changing the governing officials and a social mechanism that permits the largest possible part of the population to influence major decisions by choosing among the contenders for political office Lipset, 1960, Political man p. 45 8

16 This definition contains requirements of democracy which is seen in various definitions by different scholars. It is therefore a valid point of departure for the following discussion. The regular constitutional opportunities for changing governing officials are traditionally seen as taking place within the framework of a nation state, as the nation state is still the only political entity based on a constitution. Lipset does, however, not specify what he means by regular constitutional opportunities in this early work (1960). Nation states have been the cadre for democratic practice and visions in modern history (Østerud, 1994, p. 68). This explains the general perception that democracy operates within national borders. This is also commented on more recently, by Lipset and Lakin (2004, p. 19), who state that democracy is a system for delegating political rights that specifies how leadership should be designated at the highest national level in a polity. In 1991, Habermas, professor of philosophy, argued that democracy has hitherto only functioned within national borders (quoted Laffan et al., 2000 p. 17). The question is thus; can democracy work outside the framework of the traditional nation state? This will be discussed in section 2.3. The need for an opportunity for changing governing officials indicates that a representative system is necessary for democracy to function. According to Andersen and Eliassen (1998, p. 3) the core of any representative system is its parliamentary institutions. This leads us to the perception that one prerequisite for democracy is the presence of a parliamentary system. Lipset determines three factors that characterise a democratic system. First a group of leaders in office, second, an opposition outside office and third, a political formula legitimizing the system as a whole. The first two factors cover elements of competition and pluralism in the sense that diversified actors compete to be elected into office and the losing parts represent the opposition outside office. The third factor, the need for legitimacy, is a more complex issue. Finding the variables for this formula is one of the main tasks in this thesis in order to answer the problem statement. Lipset defines legitimacy as the capacity of the system to engender and maintain the belief that the existing political system is the most appropriate for society (Lipset, 1960, p. 77). This implies that the system, hereunder its institutions and norms, must be considered to be in its right by the majority of the population subjected to it and that the rules made by it are accepted. 9

17 Professor of politics, David Beetham (1991, p. 9) criticizes the Lipset definition of legitimacy for focussing disproportionably on the perception that people have of political leadership rather than the actual characteristics of it. A system is not legitimate because people believe it to be so. Beetham emphasises the importance of assessing the congruence between the system of power and people s believes, values and expectations and not only assessing these three separately. Beetham and Lord (1998, p. 3) accentuate three specific factors needed for a democratic political authority to be legitimate. 1. It is acquired and exercised according to established rules (legality) 2. The rules are justifiable according to socially accepted believes about i) the rightful source of authority and ii) the proper ends and standards of government (normative justifiability) 3. Positions of authority are confirmed by the express consent or affirmation of appropriate subordinates and by the recognition from other legitimate authorities. (legitimation) The first factor points to the importance of a democratic political order to stem from rule legitimacy legality in contrast to systems obtaining legitimacy through e.g. inheritance or custom. It refers to the constitutional rule of law, an expression associated with the nation state, which also Lipset includes in his definition. This implies that a written constitution enforced by independent courts delimits the power of the political authorities, i.a. its scope and mode of appointment and dismissal (Beetham and Lord, 1998, p. 5). This factor is also called judicial legitimacy. The second factor, normative justifiability, depends on the given norms which vary from society to society. It leads to the questions of how political authorities gain their power and what means they use, in conducting politics. This is what Beetham and Lord (1998, p. 6) refer to as the identity, the democracy and the performance criteria. There is hence, a direct two way link between democracy and legitimacy one is necessary to achieve the other. Legitimacy is a precondition for democracy to function in the same way as democracy is a precondition for the legitimacy of political authority. The two former criteria for normative justification, identity and democracy, imply that authority must derive from a rightful source and in accordance with the 10

18 popular sovereignty argument; the only rightful source of power is the people. The identity criterion poses the question: who actually constitutes the people? How should the delimitation of who is a part of the people and who is not, be made? Is it a question of territoriality, citizenship or a third and different element such as colour and gender? The democracy factor raises the questions of how political authority is elected and whether they represent the people they are elected to represent. How should a political authority that does not fulfil its obligations be sanctioned? Based on the characteristics of the identity and the democracy factors, these can be considered inputs to the system. In the remaining part of this thesis, we will therefore, refer to this element as input legitimacy, which will be clarified further below in section The last criterion for normative justification; the performance criterion, contains the output of policy making in line with the output definition of Scharpf as will be further discussed in section Normative justification hence consists of the inputs to and outputs from the political authority and will therefore be referred to as political legitimacy. The third factor of the Beetham and Lord definition of legitimacy; legitimation refers to the express consent and affirmation of subordinates and the recognition of the political authority from third parties such as international organisations and other nation states (Beetham and Lord, 1998, p. 9). This social acceptance is a unique source of the obligation of the people to obey the political authorities (Beetham and Lord, 1998, p. 7). This need for political authority to obtain general acceptance of society, nationally as well as internationally, can be referred to as social legitimacy. This must, however, not be confused with the concept of social legitimacy, as used by Schimmelfennig 1, which contain similarities to the element of identity, presented by Beetham and Lord. The importance of identity in order to obtain legitimacy will be touched upon at a later point. The elements of democratic legitimacy, as presented above, are shown in figure 1: 1 Schimmelfennig puts emphasis on the importance of legitimation through the homogeneity of the society, the collective identity of individuals and the strength of civil society (Schimmelfennig, 1996, p. 14). 11

19 Figure 1: Constitutional elements of legitimacy Legitimacy Judicial legitimacy Political legitimacy Social legitimacy Input legitimacy Output legitimacy Source: Just, 2005, p. 49 In the remaining part of this thesis, we will mainly focus on political legitimacy in relation to our problem statement. It must be emphasised however, that for a governing system to be considered democratic, all forms of legitimacy must be present. As Touraine accentuates; democracy has no central precondition (quoted in Lord, 1998, p. 13). Democratic politics do not consist of one component but of a certain approach to managing the complex correlation between them (Lord, 1998, p. 13). Hence, if one of the preconditions is absent there is, by definition, a democratic deficit. 2.2 Political Legitimacy As mentioned above, political legitimacy can be divided into two core elements: input and output legitimacy. In the following sections, the requirements for obtaining input and output legitimacy will be analysed in order to create the framework for the further analysis of the case Input Legitimacy Input legitimacy covers the dimensions of identity and democracy according to Beetham and Lord. According to Scharpf, input legitimacy is government by the people and derives from the free will of the people. It is seen as a result of the preferences of the constituency. (Scharpf, 1999, pp. 6-10) This is in line with the identity and democracy variables of Beetham and Lord as presented above. The focus is on the participation of citizens either directly or indirectly. The citizens of society must have the opportunity, and will, to participate directly in the decision making processes or their elected representatives must make decisions on their behalf. 12

20 Beetham and Lord (1998, p. 26) identifies three factors that constitute the democratic variables of input legitimacy: Authorization Representation Accountability First, authorisation is fulfilled when access to power is time-limited and granted by the constituency on the basis of free and equal election processes (Meyer, 1999, p. 619). The requirements for the proper authorization of power in a democracy are twofold (Beetham and Lord, 1998, p. 16). The first requires the consent of the overall power structures by the people governed, hereunder, how election processes in general are conducted. The second form of authorization needed, concerns the origin of specific power relations. How is the particular governing leadership elected? Second, representation covers the importance of making public policies that are aligned with the peoples preferences. Meyer refers to this as responsiveness in the exercise of power. This means that the public should be involved in the decision makers deliberations and that the conflicting interests of the constituency should be taken into account (Meyer, 1999, p. 619). This does not mean that politicians should change policies and their political opinions according to how the public opinion constantly changes. Policies should not be based on an aggregation of personal interests, but rather be constituted in a system where people entrust the political authority to act in their power whilst having the final controlling powers through elections. According to J. S. Mill, political authority should be able to compel a full exposition and justification of all acts which any person consider questionable and those whose opinion is overruled feel satisfied that it is heard and set aside not by a mere act of will, but for what is thought to be superior reasons (Lord, 1998, pp ). Furthermore, representation embodies the idea that the power holders reflect the society which they govern, both geographically and in regards to political opinion. It should thus represent a microcosm of the country (Beetham, 1998, p. 3) Third, accountability requires that power holders need to publicly justify their actions and that they must step down in the case of misuse of power or misconduct (Meyer, 1999, p. 619). According to Lord (1998, p. 81) accountability can be considered a precondition for the factors of democracy to be able function properly. If decision makers are not considered accountable for the decisions made, there is no 13

21 ground for competition for re-election that is a necessity for democracy e.g. in the Lipset definition. Political accountability is vital in order to ensure that power is authorised and supervised sufficiently. By giving the masses the opportunity to elect the actors they see best fit they are able to punish politicians who do not fulfil their mandate and reward those who do. To achieve effective democratic accountability the following four types of accountability must be present: administrative parliamentary electoral judicial Administrative accountability signifies the accountability of the bureaucracy and the assurance that rules are interpreted similarly and fairly, throughout their area of influence. Bureaucracies consist of public servants who are not elected, and they must, therefore, be held accountable to the ideals of public service. This is often attempted by constructing hierarchical structures where bureaucrats are accountable to their superiors and where the hierarchical structure is headed by the responsible elected politician (Lord, 1998, p. 81). Parliamentary accountability is present when the executive power is transparent. The elected representatives must have the power to investigate executive decisions and be able to control decision makers without taking reins of power (Lord, 1998, pp ). Electoral accountability signifies that the people s representatives are submitted to control by voters through periodical elections (Lord, 1998, p. 91). Finally, judicial accountability is important to secure that decision makers cannot abuse their powers or act outside the legal framework that they operate under. Therefore, an independent judicial authority is necessary and it must be based on equality and be accessible to any citizen (Lord, 1998, p. 96) Output Legitimacy Output legitimacy concerns the results stemming from the decisions made i.e. the performance of the policy makers. Scharpf refers to output legitimacy as being government for the people stressing that it is achieved when political decisions, the output, effectively promote the interests of the constituency (1999, p. 6). Output 14

22 legitimacy is, according to Scharpf, derived from governments ability to solve problems requiring collective solutions problems that cannot be solved by individual action (1999, p. 11). A sufficiently broad perception of common interests is needed, in order to justify the institutional arrangements and instruments used. This means that output legitimacy may be obtained in societies that do not have a strong common identity and that the polity does not need to have the primary or exclusive loyalty of their constituents in order to secure output legitimacy. Schimmelfennig is in line with Scharpf s perception of output legitimacy and argues that [t]he legitimacy of a political system depends on its capacity to achieve the citizens' goals and solve their problems effectively and efficiently. He thus divides the concept of output legitimacy into two distinct elements; effectiveness and efficiency (Schimmelfennig, 1996, p. 13). The effectiveness of a system refers to the requirement that decisions achieve the goals of society, such as security and social welfare. These goals must be endorsed by the majority of the citizens and achieved through a process that can be accepted. It thus, represents the ability of decision makers, to solve the political problems by increasing the common welfare of its constituents. It must be able to respond fully to the collective preferences of its citizens (Dahl and Tufte, 1973, p. 20). Efficiency refers to the requirement that the solution chosen is cost efficient. The achievement of the goals must thus be reached at the least possible cost for society. According to Schimmelfennig, the higher the capacity of effectiveness and efficiency is, the more legitimate the political system is (Schimmelfennig, 1996, p. 13) Input vs. Output Legitimacy Frequently, there is a trade-off between input and output legitimacy. One example is if there are a great number of actors taking part in the decision making process. This may impede the effectiveness and the efficiency of the output, as decisions may not be made at the required time, which can result in an increase of the cost of the policy. There is thus a risk that representation undermines effectiveness and efficiency. As the cost of achieving unanimity, and thereby a higher representation, may be high, political systems often use qualified majority voting (QMV) as a means to secure effectiveness and efficiency. Output legitimacy is, hence, increased at the expense of input legitimacy as demands for speed, may undermine authorisation, representation 15

23 and accountability. Therefore, too much democracy may threaten democracy (Huntington, 1975, quoted in Andersen and Eliassen, 1998, p. 10). The challenge of obtaining a functioning democracy is thus, finding the right combination of input and output legitimacy as both input and output legitimacy must be present in order to obtain political legitimacy. This is shown in the model below: Figure 2: Elements necessary for a decision to be considered politically legitimate Political legitimacy Input legitimacy Output legitimacy Authorized Accountable Representative Effective Efficient No Yes Legitimacy Legitimacy Democracy Democracy Source: Own creation based on Beetham and Lord, Scharpf and Schimmelfennig According to Scharpf, input and output oriented legitimacy co-exist and the one complement, reinforce and supplement the other within the nation state (Scharpf, 1999, p. 12). However, the positive effects of co-existence may not be as evident in a suprastate or intergovernmental system of governance, as it lacks the familiarity and traditions of national systems. 16

24 2.3 The EU between Intergovernmental Organisation and Nation State Governance beyond the nation state is a well known fact in the international order. Since the Second World War, international organisations such as the World Bank, the United Nations, and the World Trade Organisation (WTO) have been perceived as important for solving issues that are outside the control of single nation states. None of these have, however, come close to introducing democratic practices. In comparison to the other organisations formed in the aftermaths of the war, the EU has by far integrated the deepest. But can democracy be expected to function beyond the nation state? The traditional link between democracy and the nation state, pointed out by i.a. Lipset and Lakin and Habermas, emphasises the democratic challenge the EU faces. What kind of legislative entity is the European Union? The EU does not qualify under the Westphalian state system of sovereignty as being rooted in a bounded territory and legitimized by a collective identity that binds the territory together (Laffan et. al., 2000, p. 29). The degree to which the EU is a bounded territory can be questioned as the discussions of where, the borders of the EU should be, is continuous. The territory has been enlarged on several occasions and will probably be enlarged again already on the 1 st of January Furthermore, there is a lack of sense of common identity between the peoples of Europe, which is a vital part of the concept of a nation state. There is no European etnos, no common ethnical background binding the people of the Union together. There is neither a feeling of unity binding the peoples together, creating a demos, which is considered a vital characteristic of a nation. (Østerud, 1994, p. 27) Benedict Anderson has defined a nation as an imagined limited and sovereign political community (Anderson, 1991 p. 6). Imagined, as its members will not meet, but still they have a sense of solidarity making it possible for them to imagine being part of the same society i.e. a common identity that binds them together. In the EU, the sense of having a European identity is, in general, weak and if existent, it is just one of many identities held by European citizens. According to the Eurobarometer (54.1, 2001) 42,4% of Europeans describe their identity as exclusively national and only 9,2% classify their European identity over their national (Hooghe and Nugent, 2005, p. 22). Conversely, the EU neither has a purely intergovernmental system; i.e. the rule of one country one vote cannot be considered the most resident, as the votes are 17

25 weighted in an overwhelming part of decisions. Furthermore, there are fields where the Union has exclusive decision making power, i.a. trade policy. Moreover, the EU is based on treaties that establish its institutions, its cadre of powers and its laws. However, the treaties are increasingly getting a more constitutional character contributing to the development of supra-state like traits of the Union. The institutions created by the treaties are, moreover, given a certain degree of independence. The institutions have a permanent character and a degree of autonomy, even beyond those of the signatories of the treaties, who authorized this power (Lord, 1998, p. 21). One example is the supremacy of EC law granted by the European Court of Justice (ECJ) which will be returned to below. In addition to this, the fact that the institutions now distribute powers and responsibilities across different levels of governance also contributes to giving the treaties a constitutional character. Furthermore, the EU institutions can grant rights and obligations directly applicable to individual citizens, without the need for further implementation into the national legislation. Another state like feature is the fact that the treaties, since TEU, refer to the concept of a European citizenship (TEU, part two). These are factors that may be considered contributing to the creation of a common European identity and to the strengthening of the constitutional character of the treaties (Lord, 1998, p. 21). The structure of the EU can be seen as a product of what is called the Monnet Method implying integration starting with a focus on non controversial but still vital resources such as coal and steal, issues of tariff and quota reductions and incrementally in small steps, broadening and deepening the cooperation (Bomberg and Stubb, 2003, p. 157 (Dobson and Weale)). This continuous change and evolution of the EU as an entity, has contributed to increase the difficulties of a democratic evaluation of the Union and of identifying the true nature of it (Andersen and Eliassen, 1998, p. 3). The structure encompasses some very specific features. First, the institutional complexity of the European Union is built on multi level governance rather than a purely intergovernmental or purely supra-state system. The two views have been competing in explaining European integration either through a bottom up or top down approach. However, as explained above, the EU has both intergovernmental and suprastate characteristics, which can be seen as a result of the diverging interests and convictions of the member states, which contribute to its institutional complexity. Second, there is no stringent hierarchical structure ranking the different institutions even though their operations may be formalised and institutions are 18

26 potentially powerful. The national hierarchical structure of power and responsibility is absent. Decisions are made and executed at various levels, a range of actors are involved in the process and there is not a specific person, who answers for the decisions made. (Christiansen and Pattioni, 2003, p. 8 (Christiansen et. al)) This is seen in the balance of power between the Commission, the Council and the Parliament; all must cooperate and negotiate to reach a decision in most policy areas. The distribution of power, however, varies according to the policy areas. (Christiansen and Pattioni, 2003, p. 8 (Christiansen et. al)) We will not go further into the various modes of decision making, except for where it is necessary for achieving the overall objective of this thesis. In section 3.1 the decision making procedure for trade policy decisions will be presented. Third, the formalized structure of decision making is one thing, another is the informal structures influencing decision making. An important feature of this has been the Commission s ability to relate to interest groups and its need for the information supplied by the interest groups. Lobbyism will be discussed further in section 3.2. Finally, the member states have two sets of legislation to relate to; the national legislation as well as the EC legislation, which, as mentioned above, was given supremacy by the ECJ in the Van Gend en Loos case in This covers decisions and policies affecting every day life of European citizens. This discussion opens up for the question of what kind of body the EU actually is. Is it reasonable to expect the EU to function as a democracy when it cannot be considered a state like polity? Is it in reality more of a diplomatic system of governance that should be considered a domaine reservé, under the norms of diplomacy? Should it follow the norms of a technocracy a system focusing on common good being achieved better, without having the political authority submitted to the restrictions, biases and distortions of democratic politics, hereunder elective pressures and incentives (Beetham and Lord, 1998, pp ). Or, should it be based on the same demands as national political authorities, given the extensive supra-national policy formation, taking place within the EU framework? The EU has a profound system of policy making in a broad range of areas affecting the citizens of Europe directly, but as Laffan expresses it, it has shallow political roots. There has been Europeanization of policies not politics (Laffan, 2000, p. 92). Politics are still widely conducted on a national basis and the decision making 19