Constitutional Law Group March 9, 2016 European Union, International law

Sam Fowles: In Defence of Europe

Professor Nicol’s critique of Another Europe is Possible and DiEM 2025 is undoubtedly engaging. But it confuses constitutional law with policy enacted through the law and can only be justified by adopting a rather one-sided reading of the EU treaties. Ultimately, in failing to offer a corresponding analysis of the international law position of the UK, he appears to embrace oligarchy or anarchy as preferable positions to a democracy that makes decisions with which he disagrees.

Fundamentally Professor Nicol’s analysis is mistaken in conflating law and power. Law is one expression of power but, in the 21^st Century, economic, political and cultural power often outbalances legal power. Constitutional law alone can only have limited effect when global and transnational power dynamics minimise the scope and impact of domestic law. The future of progressivism in the UK simply cannot be divorced from the future of progressivism on a global scale. In providing for cooperation and legislation beyond state level, the EU is essential for a more democratic world. The alternative to EU membership is to submit UK law to the whims of powerful and unaccountable forces which will make the UK’s democratic constitution effectively irrelevant.

Law or policy

While he adopts the language of constitutional law, Professor Nicol’s critique often appears to focus on policies enacted by the EU. He insists that the EU is a “neo-liberal” institution, yet only succeeds in demonstrating that the EU Commission pursues some “neo-liberal” policies. But the EU President and Commissioners are nominated by the Member State governments and must be approved by the European Parliament (which is directly elected by citizens of the Member States). The citizens of Europe get two voices in the selection of the Commission: once through their elected domestic government and again through the directly elected European Parliament. While undoubtedly flawed, the EU contains, in its elected institutions, the means for its own salvation.

If the EU is “neo-liberal” it is because successive electorates, domestic and European, have elected “neo-liberal” governments and MEPs. But this same organisation has also passed policies that are benefiting workers, the environment and minorities. Professor Nicol’s problem isn’t with the EU but with broken electoral systems across Europe. The solution is to reform our democracy, not withdraw from the only organisation capable of enacting democratic reforms on a continental scale.

EU Constitutional Law

Professor Nicol’s chief assertion is that the EU is constitutionally incapable of adopting progressive policies. But his analysis is based either on an excessively narrow construction of the relevant treaty provision or an understanding of progressivism shared by only those at the most extreme end of the political spectrum.

Professor Nicol suggests that Arts. 107-8 of the Treaty on the Functioning of the EU (TFEU) entrench “neo-liberalism” by allowing the Commission to vet the provision of state aid. Yet the subsequent provisions in Art. 107 specifically exempt state aid that has a social purpose. Art. 108 also provides for a review by the European Court of Justice (ECJ). It seems somewhat extreme to reject the suggestion that a state’s interference in the market should be subject to reasonable limits. Presumably Professor Nicol would not reject a law that, for example, acts to prevent governments rewarding their supporters by provision of state aid. Arts. 107-8 seek to strike a balance between unfair interference and necessary support.

The ECJ took an anti-union stance in Viking in limiting industrial action which unreasonably interferes with free movement. But it is not clear that this decision would be made the same way in the light of the EU’s accession to the European Convention on Human Rights (ECHR – provided for by Art. 59 of the Lisbon Treaty – hardly a “neo-liberal” provision). The ECJ will have to take into account the decisions of the ECHR in Demir and Enerji Yapi-yol Sen, which provide for a significantly expanded construction of worker’s rights.

The Ruffert judgement doesn’t (as Professor Nicol appears to suggest) concern industrial action, but whether a state may require public contractors to pay the minimum wage. While Professor Nicol and I may be united in our disagreement with this decision, the ECJ is not bound by its own precedent so, like many regressive decisions, Ruffert may be overturned by reference to new authority (such as the ECHR) or obviated with primary legislation.

Professor Nicol argues that “it is difficult to imagine how nationalisation of branches and subsidiaries of companies based in other Member States would constitute a lawful limitation on freedom of establishment.” Yet Art. 49 permits exceptions on grounds of public policy, health or security. While Professor Nicol does not refer to authority to support his contention, the municipalisation of energy in Germany provides an example of a transfer from private to public ownership that is acceptable according to Art. 49.

Would it be better if we leave?

Even if he is correct regarding all of the above points then Professor Nicol’s argument still fails on the question of what happens after Brexit. Withdrawing from the EU will mean exchanging a set of legal norms, with which we may disagree but which we can change through the democratic process, for a far more regressive set of norms, established with no accountability to the electorate.

If the UK leaves the EU, then it will need to negotiate new trade treaties with EU members and other treaty partners. The UK government has expressed a preference for investment protection measures enforced by Investor State Dispute Settlement tribunals (ISDS). Investment protection clauses effectively bind governments. Legislation is limited to that which does not infringe on the interests of profits of international investors. ISDS tribunals are not bound by precedent and are made up of ad hoc arbitrators (who are generally commercial lawyers who act for multinational corporations (MNCs) when not acting as arbitrators) rather than judges. ISDS tribunals are often not subject to appeal and are not obliged to publish their reasoning. Only international investors can access remedies in ISDS (so ordinary citizens are excluded) and, while ISDS tribunals may take the public interest value of regulation into account, they do not defer to it.

Compare this with the EU system. While EU law undoubtedly places limits on domestic legislation, EU law is subject to democratic accountability through the Parliament and enforced by a public court, accessible to all and staffed by full time judges who are appointed by elected governments. The ECJ also respects the right of Member States to regulate in the public interest by deferring to regulation that passes the proportionality test. It seems somewhat counterintuitive to replace a set of norms based on the democratic mandate and the rule of law with one in which accountability and judicial remedy are entirely the preserve of a small elite. It seems particularly absurd to do so in the name of progressive values.

Nor would leaving the EU exempt the UK from the Transatlantic Trade and Investment Partnership (TTIP) or the Comprehensive Economic and Trade Agreement (CETA). If either of these treaties are ratified before the UK leaves the EU (which will be at least two years after a referendum result) then they will bind the UK for a minimum of twenty years regardless of its membership in the EU.

But the most pressing constitutional argument pertains to the informal exercise of power. Globalisation enables MNCs to exert pressure on governments. They can establish themselves anywhere in the world and states must compete to attract their business. This gives MNCs power over states. But this imbalance of power only exists when states act as competitors. When states cooperate MNCs are no longer able to play them off against each other. Thus, as the largest economic block in the world, the EU is the best chance citizens have to exercise power equivalent to MNCs. An electorate in a state acting alone and in competition with its neighbours is never likely to have the power to demand a Tobin tax or measures to address tax avoidance. The demands of democratic accountability will always be outweighed by the need to attract investment. But when electorates act in solidarity, their voices are magnified by more than the sum of their parts.

Professor Nicol is correct to say that the requirement for unanimity makes reform of the EU difficult. But this is the nature of cooperation. While Professor Nicol and I would undoubtedly agree in our opposition to many of the policies of the EU, I disagree with the contention that the EU is constitutionally incapable of reform. The nature of democracy is that it cannot please everyone, but that is not sufficient reason to abandon attempts at regional democracy altogether. In a globalised century domestic constitutional law cannot be divorced from its international context, and progressive reforms can only be achieved by supporting greater democracy and the rule of law at an international level. Withdrawal from the EU risks not only irrelevance but a collective surrender of control over our own destiny.

Sam Fowles, Doctoral Candidate, Queen Mary University of London and Spokesperson for Another Europe is Possible

(Suggested citation: S. Fowles, ‘In Defence of Europe’ U.K. Const. L. Blog (9th Mar 2016) (available at https://ukconstitutionallaw.org))

11Comments

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1

Tom Austin on March 9, 2016 at 7:50 am
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Thank you very much Mr. Fowles. Professor Nicol’s piece did read to be rather doom-and-gloom from my own standpoint, I am happy too that an erudite response was possible without mention of ‘left-wing’ or socialism.
For myself, I’d far rather the UK remained within, and engaged with, the EU to progress the aims of Democracy, but as you point out this is a task for the UK’s domestic electorate, and electorates throughout the EU.
I shall be pointing-up these arguments wherever I can in the course of the Referendum ‘debate’.
2

Bernard Keenan on March 9, 2016 at 7:54 am
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Re. Neoliberalism: the EU is neoliberal in that it is based on ordoliberal ideas at a structural level. The constitutional point is that there is no democratic control over the economy at a macro-level, and that economic policies and market constraints are controlled primarily and ultimately by the Commission (presuming you accept the Commission is non-democratic in any meaningful sense of the word).

This is in line with neoliberalism as prescribed by Hayek and others: there is no possibility of popular governments attempting to steer the economy via legal interventions in the market at a macro-level. Putting this down to successive neoliberal governments winning power is a dubious claim – few elections are run on the basis of abstract theoretical points. Moreover elections are irrelevant to the constitutional point (indeed constitutions are supposed to be immune to election-steering), and the Commission is hardly responsive to elections: again, that’s the reason its members are not elected, to insulate them from prevailing political sentiment. In the EU’s constitutional arrangement the ideal of market stability is paramount. From the start this was seen as the best way of avoiding future wars in Europe. Democratic debate and decision-making was deliberately afforded a smaller role.

The most you will get in the direction of anything to the contrary are things like Art. 49 as mentioned here as though it were an example of democratic freedom – limited schemes of ‘exceptions’ permitted to national governments who might wish to do otherwise than apply the over-riding rules. All this was made obvious over the last seven years to the citizens of Greece, Ireland, Portugal, Italy, and so on.

I am not pro-Brexit, as it happens, nor an expert on the EU, but does it help the campaign to remain in the EU to try to claim it is something it isn’t?
3

Aileen McHarg on March 9, 2016 at 9:05 am
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It is true that free market laws in the EU allow space for the pursuit of non-market objectives, but it is also true that (a) they shape and limit the ways in which such objectives can be pursued and (b) they give normative priority to free competition by requiring states to show that “interventions” are in pursuit of legitimate aims and proportionate. Your argument that some kinds of interference with free markets are illegitimate (such as awarding state aid to government supporters), therefore there can be no objection to requiring states to demonstrate that their interventions are reasonable simply does not follow. It is perfectly possible to prohibit corruption (and other undesirable behaviours) without giving special legal status to free markets.

If you are interested, I have developed the argument about the way in which EU law shapes social regulation in relation to energy utilities in ‘The Social Obligations of Ownership and the Regulation of energy Utilities in the United Kingdom and the European Union’ in McHarg et al (eds) Property and the Law in Energy and Natural Resources (OUP, 2010).
4

Carol Harlow on March 10, 2016 at 11:49 am
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I think you have misunderstood Danny Nicol’s argument which is about the ‘constitutionalisation’ of an economic order, something which German ordo-liberals have been claiming for the Communities and its Court for many years. See notably: M Poiares Maduro, We the Court: The European Court of Justice and the European Economic Constitution (Oxford: Hart Publishing, 1997) andM. Streit and W. Müssler, ‘The Economic Constitution of the European Community: “From Rome to Maastricht”’ in F. Snyder (ed.) Constitutional Dimensions of European Economic Integration (Dordrecht: Kluwer) 1996.

What Nicol argues about Viking and Laval is that the EU ‘constitution’ rendered the outcome inevitable – whether one agrees with the substantive ruling or not. Only the Council – perhaps only the European Council – could change this state of affairs.

The example you give of the ‘after-death’ life of TTIP strengthens the point Nicol is making. The problems that the European Parliament had in actually accessing the TTIP negotiation documents, and the fact that the European Ombudsman had to hold an Own Initiative Inquiry into TTIP transparency, which was contested by the Council and Commission plus the problems encountered by writers and actors in contesting provisions seen as affecting cultural life, all underpin Nicol’s concern for democracy in non-statal, transnational governance systems, heavily reliant on courts. All that is standard stuff.

Whether we would be more democratic in or out is indeed a very moot point. We would be more symbolically democratic and possibly in a better position theoretically on accountability but the real political situation would, as we all know, differ.
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  Sam Fowles on March 10, 2016 at 7:06 pm
  Reply
  
  Hi Carol, thanks for your thoughtful comment.
  
  I would disagree that I have misunderstood Professor Nicol’s point. Rather, I have argued that he has not successfully made out his case. My argument was that, while Professor Nicol claimed that the EU represents the constitutionalisation of an economic order, he only succeeds in demonstrating that the EU has undertaken certain economic policies. This is not to misunderstand, merely to disagree.
  
  I’m sure this confusion is due to my own poor expression so let me try to draw out a few points. I do not disagree that there are economic assumptions built into the EU constitutional order. I do, however, disagree that these assumptions necessitate a “neoliberal” EU order, if by “neoliberal” one means an order in which power is concentrated in the hands of wealthy companies, at the expense of democratic institutions (although I’d call this a quasi-oligarchy. I think the term “neoliberal” probably obscures more than it elucidates). I would argue that the EU constitutional order presumes a liberal economy, i.e. an economic order in which there is a rebuttable presumption against state interference in the market. But this could describe any domestic constitutional order as well.
  
  In a liberal order, progressive policies may be pursued if sufficiently justified. My critique of Professor Nicol was that his analysis only succeeding in demonstrating that, if the EU had constitutionalised an economic order, it was only a liberal order. But that this is surely acceptable to all but those on the most extreme ends of the political spectrum. An order that lacks the presumption against interference in the market would be fundamentally undemocratic. (While I’m on the subject of neoliberalism, Brendan – I don’t think it’s necessary to vote purely based on political theory in order to elect a government that is “neoliberal”).
  
  My argument regarding the Viking case was that it could indeed be decided differently as EU law evolves. For example, to take into account the ECtHR or the proposed “social pillar”.
  
  While I would agree with you that the EU has lacked transparency in its conduct of the TTIP negotiations, this in no way distinguishes it from domestic constitutional orders. Trade negotiations are conducted in secret by the UK government. Indeed, the UK government has been far less transparent regarding TTIP than the Commission. I would agree that this lack of accountability is unacceptable but I don’t think it advances the debate particularly to set the bar for classification as “democratic” higher in the case of the EU than one would for a domestic government. The opacity of the TTIP negotiations is a critique of trade negotiations in general, not a critique of the EU in particular.
  
  As such, TTIP does not underpin Professor Nicol’s concern for democracy in transnational governance systems, it underpins a concern for democracy in general. My point was that it is better to have transnational institutions that are in some way democratically accountable, thus creating a pathway to greater transnational democracy at a regional and global level. To reject this would inevitably be to embrace a form of international relations in which the voice of democracy is entirely absent. This seems to me a strange way to advance the democratic cause.
  
  Hopefully this clears up some of my failures of clarity. This is an incredibly interesting (and important) debate and it’s important that we are able to engage with each others arguments directly, without misunderstanding each other. S
  - 6
    
    Steve Gwynne on March 22, 2016 at 4:16 pm
    
    Hi. You disagree that the Treaties and the Primary and Secondary legislation that arises from the Treaties do not Constitutionalise the economic order of neoliberalism but are instead a set of economic policies. First can you reference these policies if not Treaties or legislation and 2) can you explain the democratic accountability trail that enabled the Commission to put these neoliberal policies into effect.
7

Tristan Jones on March 11, 2016 at 10:24 am
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Sam can I just say that this is an excellent post, many thanks.
8

Guy Boland on March 13, 2016 at 9:39 am
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Maybe the claims that are made in the essay are directed to Professor Nicol’s article, and so it may be that there was no intention of putting forward specific or positive arguments for the desirability of Britain remaining in the EU. I would also have thought, but perhaps this is just a matter of preference, that “neoliberalism” didn’t have all that much to do with it one way or another. In a response to Professor Harlow it is happily put that it is a term that “obscures more than it elucidates”. But what follows is really an attempt to understand one or two statements made in the essay which I do not think provide sufficient ground on which to claim that Britain should remain in the EU.

It is said that “in a globalised century, domestic constitutional law cannot be divorced from its international context”. The statement is misleading. There is of course much in domestic law which is affected by international legal instruments. There are also perhaps certain things in domestic constitutional law which have been noticed and developed by the judges under the influence of international legal context. So much is not really controversial. But the question of whether Britain’s constitution can be considered apart from its international context and the question whether Britain should separate from the EU are two distinct questions. Since the passing of the European Communities Act 1972 there may have been a tendency to blur the two questions, since in certain circumstances law not made at Westminster can have effect in Britain, and what once was an “absolute” parliamentary sovereignty is now in a sense “qualified”. But nevertheless, what Parliament has made into law it can also unmake, and the principle that no law can bind subsequent legislatures is of constitutional character. It would no doubt be a rather extreme step for Britain to withdraw from the EU, but to say that there cannot be a withdrawal because the British constitution cannot be considered apart from its international context is not I think altogether helpful. It may of course be that what was intended was that there are good reasons why “in a globalised century, domestic constitutional law shouldn’t be divorced from its international context”, and probably even that statement would require qualification. It is not so much that domestic constitutional law shouldn’t be divorced from its international context, but that the British constitution should remain affected by Communities law. But the reasons which would be advanced as to why this should be the case have nothing to do with limitations on power. They would rather depend on the character of the “globalised century”, on the character of the EU, on the nature of the issues which the EU is required to deal with, and the desirability of a domestic legislature not attempting to distance itself from an institution which has provided citizens with a myriad set of rights.

It is also said that “progressive reforms can only be achieved by supporting greater democracy and the rule of law at an international level”. The related point made in the essay appears to be that British membership in the EU is desirable because it allows the EU to fulfil a democratic mandate. Too much is, I think, claimed in these statements. What appears to me most difficult about them is that they assume some special kind of power on the part of the EU to make “progressive” reforms. Of course it may be desirable for the EU to make law with respect to issues which have a quasi-global status, like climate policy, environmental law, and international taxation. But it doesn’t follow that the legislative power at Westminster is not plenary, and it doesn’t follow that the EU is specially or uniquely placed to set up plans to deal with those issues. And whether it was possible to support democracy or to support the rule of law from without, would not I think make a difference.

But there is another difficulty with these statements. It is not clear to me that the reason why Britain should remain in the EU is so that the EU might fulfil a democratic mandate. In the essay, a contrast is offered between the position at the EU level where the norms of the legal system are said to be informed by the “rule of law” and a “democratic mandate” with the position at the British level where “accountability” and “judicial remedy” are said to be “the preserve of a small elite”. From this, it is concluded that it would be “counterintuitive” for Britain to withdraw from the EU. I may have misunderstood this argument, but I don’t think it is very persuasive. Certainly it is unorthodox to say that the rule of law does not exist in Britain, and that parliamentarians cannot be held to account in Parliament, in the media, by the universities and to their electorates. Again, I don’t know that it can plausibly be argued that the common law is simply the preserve of a small minority class. And I might add that were the referendum to return a poll which indicated the people desired to withdraw from the EU, the British government would have a democratic mandate on which to act. But above all whether the EU does or does not have a “democratic mandate” is quite independent of whether Britain remains in the EU.

On the whole I don’t feel all that much trouble in thinking of reasons why Britain should remain in the EU, but I might be thinking of different reasons to those described in the essay. I hope I have gotten my points across alright and thanks very much for your very stimulating essay.
9

Steve Gwynne on March 22, 2016 at 5:01 pm
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I would generally disagree with Sam’s position and his interpretation of EU Treaty. The Treaties as a whole are designed to homogenise the social, political and economic order of Europe including environmental and labour regulations with the express point of creating a customs union. Therefore regulations are primarily designed to minimise competitive advantage between EU states, not to pursue social, economic and environmental justice. As such the Treaties are in effect the removal of tariffs and non barrier tariffs. The purpose is to create a capitalist free trade market with highly centralised governance structure to ensure that the EU remains as this beyond the democratic upheavals of national governments. In this respect the EU does constitutionalise the economic, social and political order of Europe beyond mere policy.

To sanctify the EU in relation to globally operating MNCs is simply to avoid pointing out that globalisation is essentially an eurocentric phenomenon and in this respect the EU as a trading bloc is simply a vehicle to ensure that globalisation remains eurocentric despite the presence of the UN, the WHO, the ILO. Thus the EU is responsible for the worldwide abuse and exploitation of both ecological and human resources.

Now that the EU has forbid the use of the veto we are left with majority rule. This is convenient for the overdeveloped EU states in relation to the underdeveloped EU states since now the economic power of the former can be used against the latter to ensure ever closer union continues this trend towards fiscal union by which economic governance is further centralised.

The matter of relevance within an internationalist realist paradigm that does not promote well-being but capital and the matter of relevance within an EU that is largely driven by corporate and financial interests (which the Treaties knowingly facilitate by virtue of lived experience) are both elitist projects and any hope of reforming the power base that these elites have forged for themselves is to miss the overiding agenda of the EU in my humble opinion. Therefore the question of remaining or leaving is whether one wishes to aid and abet this highly damaging agenda or not.
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  Tom Austin on March 31, 2016 at 10:54 am
  Reply
  
  Well, this is going to be a test of ‘competitiveness’, in one respect, for I do not doubt that my opinion is yet more humble than yours Mr. Gwynne…
  
  “Therefore the question of remaining or leaving is whether one wishes to aid and abet this highly damaging agenda or not.”
  
  I wish to ‘Remain’, and yet I desire to challenge rather than ‘aid & abet’ the agenda that you ably outline.
  How otherwise could I hope to do such a thing by leaving – and so abandoning many other Citizens with that same aim?
  Its not as if the UK establishment has the least will to act against the EU on the predominance of Corporate Globalization – ‘we’ are as one – nay, ‘we’ are the driver.
  e.g. We will hear much today about EU Nation States that have intervened to bolster their steel industries; Germany & Italy. I doubt though that we’ll hear of any such thing from our own Government.
  - 11
    
    Steve Gwynne on April 2, 2016 at 4:33 pm
    
    Thanks Tom. In response to your question of activism and responsibilty if we should leave is that the peoples of UK (and Europe) can campaign against and challenge the destructive effects of globalisation at the global level via both our own government who would immedietely have a seat at top table discussions at the global institutional level alongside the likes of Norway and Iceland. At present the EU only has a single seat/voice that represents the wide diversity of European perspectives at this level. Obviously UK govts change as does the hegemonic ideology driving UK govts. Also Citizen activism would become more globally inclusive if there was less emphasis and focus on the EU.
    
    For me global problems need global solutions and so the most important international arena to be able to express independant concerns and priorities is at the global level not the regional. Also we need to be able to create responsive policy at a national level and policy that is not constrained and limited in its scope as a result of treaties which predominantly serve to maintain a fair customs union. I think the ability to be able to respond to a wide set of unexpected circumstances without the constraint of needing the majority approval or even unanimous approval of another 27 states is important for UK resilience. I certainly see the benefit of managing supply across the EU zone but I think this would be more appropriate at the global level and decided by consensus on the basis of individual sovereignty as opposed to an EU collective sovereignty in which individual concerns and problems can easily be lost. In that respect I think unmediated/direct individual empowerment and expression is very important. All for One and One for All.
    
    We wont hear anything about the Tories not being able to provide state aid to our steel industry because to do so would weaken the remain campaign considering that EU rules forbid state aid to failing industries.
    
    Cheers.