Sovereignty and the vertical separation of powers in the EU

Hello, my name is Protesilaos Stavrou. In this seminar I will talk about the European Union’s vertical separation of powers. It is based on the legal principles of conferral, subsidiarity, and proportionality. These govern the distribution of competences in the EU. They do, in other words, regulate which level of state does what over any given area of policy covered by the European Treaties.

Drawing from the last three seminars on the interlocking aspects of sovereignty and statehood, I will critically assess the function of these principles in relation to the key questions of “who governs?” and “where is the locus of power?”.

Ultimately, I will propound the argument of considering the European Union as a de facto federation; a federal system whose constitutional arrangements provide for the vertical separation of powers and a distribution of effective sovereignty that is policy-dependent.

This will provide a different perspective on the concept of national sovereignty in the European context. It will also present intergovernmental decision-making institutions, such as the European Council, as yet another emanation of supranational authority, rather than what is prima facie understood as an aggregation of national sovereignties.

As such, this seminar will provide impetus for further work on the following problématiques:

Do European nations who are members of the EU enjoy national sovereignty in the traditional Westphalian sense of it being absolute?
In what way can the EU be considered sovereign?
Is sovereignty a fixed magnitude, where conferring powers to the supranational level necessarily diminishes the effective sovereignty of participating nation states? Or are there emergent forms of effective sovereignty, where the very presence of the EU is, in fact, the enabling factor of sovereign will formation?

Overview of the three constitutional principles

To proceed with the analysis, we will first review the three constitutional principles of conferral, subsidiarity, and proportionality. Then we will consider them in light of the analysis of effective sovereignty in the European Union.

Conferral governs the limits of Union competences, while subsidiarity and proportionality pertain to the use of said competences.

In further detail:

The principle of conferral

The principle of conferral renders concrete the raison d’être of the EU, which as stipulated in Article 1 of the Treaty on European Union, is that the Member States “establish among themselves the European Union on which they confer competences in order to attain objectives they have in common”.

This is the principle by which power over certain areas of policy is given to the European level by the nation states that have signed and ratified the European Treaties. The Member States agree to confer competences on the EU over an exhaustive list of policy areas. European institutions thus have a role to play in the formulation of policy within the area specified.

There are three degrees of conferred authority, namely, exclusive competence, shared competence, and supportive competence. These govern the relationship between the Union and the Member States, and define which administrative level has the power of initiative over the policy concerned.

Exclusive competence means that the EU institutions are the only ones that have the right to formulate policy in the areas specified, and that their decisions take precedence over those of Member States. Policies within this domain should be understood as being in the general interests of the EU at large, of the Union itself. Examples are competition policy for the single market, international trade and customs, and monetary affairs for the countries whose currency is the euro.
Shared competence means that EU institutions and Member States stand on an equal footing when it comes to making policy. Decisions falling within the scope of shared competence are best understood as largely national affairs that have a decisive European or cross-border dimension. Examples are the governance of the Economic and Monetary Union which covers national fiscal policy and macroeconomic coordination between the Member States, Common Agricultural Policy, police cooperation and related issues in the areas of freedom, security, and justice.
Supportive competence is meant to provide the EU institutions with ancillary functions that would support or else help the actions of Member States. Areas covered are administrative cooperation, culture, education, and tourism.

The principle of conferral functions in accordance with an exhaustive list stipulated in the Treaty on the Functioning of the European Union. For the purposes of this seminar, we will not dwell on the details of the list, but instead provide an annex to the transcript with the relevant information.

Suffice to say, the list specifies what kind of policy falls within the scope of each of the above three degrees of authority or involvement. And just as importantly, what is not conferred upon the EU remains with the Member States.

The principle of subsidiarity

To understand why conferral is designed in such a way, why, for instance, it grants exclusive competence to the EU on issues with a decisively EU-wide reach, we need to appreciate the principle of subsidiarity. We will then understand that the scopes of authority envisaged by the principle of conferral are not defined on a whim.

To elaborate: subsidiarity holds that power ought to be distributed in accordance with the scale of the matter at hand. It should be exercised as close to the citizen as possible. If a certain issue of common interest can be fully addressed at the local level, then only the local authorities should handle it. Similarly, matters with a nation-wide reach should be taken care of by the central government. Whereas phenomena that unfold beyond or across national borders require action at the supranational level. Put differently, subsidiarity formalises the idea that power should be commensurate with the specifics of the case.

With this in mind, we can clearly see how the rationale of subsidiarity carries over to the definition of the principle of conferral. Which is:

EU-wide affairs concern the interests of the Union at large and, therefore, should not be left to the discretion of national governments. The appropriate level of authority is the supranational level. This leads to the notion of exclusive competence.
When it comes to the intersection of national and supranational spheres, such as in cross-border cases, the most suitable policy-making arrangement is to have authorities from both levels co-decide. Hence the meaning of shared competence.
As for national matters that could, under certain circumstances, be of some interest to other Member States, the Treaties offer the option of supportive competence. National authorities hold the initiative and can involve the EU if necessary and only to the extent that is needed.

The principle of proportionality

Coming to the third and last principle that governs the distribution of competences in the EU, we have the principle of proportionality. It works in conjunction with the other two by framing their actualisation.

The distribution of authority should not only be as close to the citizen as possible, as well as bound by an exhaustive list of policy areas where it applies, but should also require that the power exercised by the authorities remained proportionate to the task.

Power should not be absolute, nor should it be exercised in a manner that disturbs the distribution of competences in the Union or undermines, among others, the values of democracy, rule of law, and fundamental rights (which, by the way, are enshrined in Article 2 of the Treaty on European Union, and are considered European values).

Effective sovereignty in the EU

To recapitulate: the principle of conferral delineates the limits of the EU’s involvement in policy-making. Whereas subsidiarity and proportionality underpin or else frame the implementation of those competences. This is what defines the vertical separation of powers in the European Union.

Coming to the questions of “who governs?” and “where is the locus of power?”, the European Treaties offer no straightforward answer. Instead they outline a series of policy-dependent arrangements for the allocation of effective sovereignty. And by “effective sovereignty”, I refer to what I have previously analysed as the actual power of initiative to formulate and implement a policy programme. This is distinct from what nations may enjoy by default, which is headline sovereignty or else their formal recognition as sovereign nation states without reference to their actual capacity to exercise their authority under the prevailing conditions.

On paper, the EU is not considered sovereign. It does not have any normative claims on headline sovereignty. The Treaties recognise that only nation states have such a capacity. And that is why powers are conferred upon the Union by the Member States in order to attain common objectives.

It is clear the EU is not a nation. What really matters though, is the actuality of affairs in the world of policy-making. Indeed, the EU is envisaged as an agent or assignee of sorts, as a vehicle for realising the collective will of its constituent nation states. And that is largely true on a number of occasions, due to the overlap between the interests of the Union and those of the Member States.

Nevertheless, the quotidian politics of Europe demonstrate that the supranational level is perfectly capable of exercising supreme political authority without reference to any normative claims on nationhood. Sometimes what is good for the Union as a whole is detrimental to the interests of a given country or group thereof. Whenever such instances arise, the latter can do little more than ultimately conform to the will of the supranational level. Nationhood and its much-touted monopoly over sovereignty becomes irrelevant.

Areas of policy that fall within the scope of exclusive or shared competence are clear cases where the Union has the first and final say in the matter. The agenda of any individual Member State cannot take precedence over that of the EU, normative claims on national sovereignty notwithstanding. To offer a few examples in outline:

Amid the systemic economic and financial crisis in the euro area, no one country could override the policies of the European Central Bank. Similarly, no state could deviate from the European rules concerning fiscal and macroeconomic policy. As such, there were instances, such as in Greece, where monetary policy was not accommodative enough, or where fiscal policy was pro-cyclical for the domestic economy. The national authorities could not act unilaterally, deviating from the European programmes. Instead they had to comply with the European rules, including the vertical separation of powers. The point is that the EU exercised effective sovereignty for what was considered the general, longer-term good of the Union, even though it was not in the immediate interests of one or more of its Member States.
Brexit is another example of how a nation state cannot just act unilaterally within the EU. There is a clear understanding that power is actually shared. The United Kingdom’s withdrawal from the EU can only be the end product of negotiations with the rest of the Union. Any conditions that the UK will have to conform with, any further obligations it may have to fulfil, will be instances of the exercise of effective sovereignty by the EU.
A third, and perhaps the most pertinent example, is the situation in Poland regarding the respect for the European values, as stipulated in Article 2 of the Treaty on European Union. The European Commission has long now been investigating the case and is of the opinion that there is a systemic risk to the rule of law in the country. Its latest action is to call upon the European Council to deliver its formal position on the matter, to agree, that is, with the Commission’s assessment, in order to initiate infringement procedures. While we may not yet know what the outcome will be, we can confidently claim that the EU is exercising effective sovereignty against what is perceived as the sovereign right of a nation to determine or refashion its own constitutional identity. The dispute shows that nations have to conform with the Treaties and that the Union can in turn act to protect its legal-institutional order.

The examples are plenty. All pointing to the fact that the EU is sovereign. However, and this is key, its sovereignty can only be understood in terms of its actual capacity to exercise supreme political authority. As effective sovereignty that is. Nations that are part of the EU do not forgo their headline sovereignty. They just agree to delegate competences to European institutions in pursuit of common ends.

This subtle distinction is crucial in understanding the reasoning behind Article 50 of the Treaty on European Union. It is the provision that allows a Member State to withdraw from the EU and thus reclaim the initiative over all areas of policy. Indeed the Brexit talks are predicated on Article 50 TEU.

This distinction is also essential in understanding the underlying thinking of the mechanism of enhanced cooperation, where a group of Member States can choose to deepen their ties and use EU institutions in the process. Basically it applies to the whole framework of differentiated integration, or else to the notion of a Europe of multiple speeds and orientations.

And so, the questions of “who governs?” and “where is the locus of power?” can only be tackled on a case-by-case basis. The default answer is necessarily aporetic: it all depends on the specifics. What can be claimed with certainty though, are the following:

Nations within the EU do not have absolute sovereignty in the Westphalian sense.
The distribution of effective sovereignty in the EU establishes a vertical separation of powers akin to that of formal federations. In other words, the state level retains considerable powers, but these must always be consistent with the legal-institutional order of the Union.
The EU is not a nation, and therefore has no normative claims on headline sovereignty. This does not prevent it from exercising effective sovereignty.
Headline sovereignty in the EU can be called upon by means of exception from the norm of European politics, such as by appealing to Article 50 TEU.
Seen from the perspective of a national government, the decisions of intergovernmental institutions or formations, such as the European Council or the Eurogroup, are instances of supranational authority. “Supranational” in the sense that (a) they are exogenous to the nation concerned, and (b) they flow from the European Treaties or EU legal framework in general.

Is the EU a proper federation?

These are observations on the EU’s actuality. Based on them, it can be claimed that the EU is a de facto federation. Multiple levels of administration. A vertical separation of powers with clear delineations between the national and supranational levels. All enshrined in the European Treaties, which are the Union’s primary law.

So if that is the case, if the EU is a federation of sorts, how come there are political forces who call for the creation of a European federation or others who define themselves in opposition to such an objective or state of affairs? What is the current EU architecture still missing from qualifying as a ‘proper’ federation?

At first, the EU has an image problem. It is not perceived as a political entity. Instead, it is often depicted as some detached bureaucracy, aloof from the fray, with no connection to the average person on the street. It is often understood as the infamous Brussels apparatus that only tries to meddle in the affairs of nation states.

The truth, however, is that the EU is just as political as any other polity. The Commission’s leadership is comprised of politicians. Indeed its president was elected in office following the spitzenkandidaten process. The European Parliament is political, as are the European Council and the Council of the EU. What the EU lacks is the ceremonial aspects of politics, at least to the degree necessary. The European Commission has executive powers but it is not called a “government”. Similarly, the Council of the EU has legislative authority but it is not referred to as the “Senate”.

Secondly, the EU does not yet have competences over policies that are considered cardinal expressions of statehood. Specifically, the EU does not levy taxes and does not have a standing army. These could render it in the eyes of some as a state manqué, one that is lacking is some fundamental ways.

Again though, that is more of a perception issue than a genuine design flaw of the EU edifice. It can be argued that precisely because the EU is a federal system it has arranged the distribution of competences in such a way as to suit its own historical-cultural peculiarities. No two federations are the same. Furthermore, it is not entirely clear that the EU has no role whatsoever in these policies. The latest breakthrough in European defence with the agreements on a Permanent Structured Cooperation, else PESCO, together with other initiatives on that front, point to a medium term future where the EU’s involvement in military affairs is comparable to the powers it has on economic governance. Taxation is not as clear cut either. Recently, the Commission demanded that Apple pay its due taxes to Ireland. It did so using its exclusive competence over competition policy, arguing that sweetheart tax deals are a form of state aid, which is illegal. Does that not set a precedent for indirectly pressuring Member States to harmonise their tax codes? Further nuance can be added to the argument, by considering the possibility of enhanced cooperation for introducing a European tax, say, for financial transactions. Whether that actually happens or not, is beyond the point. What matters is that the Treaties provide the means for realising such a programme.

The third and final reason why the EU is not typically considered a federation, is that the public debate still relies on notions and categories of yore. Indeed, I have done the same in this very seminar, where I refer to the various administrative levels as “national” and “supranational”. This is a binary that is not representative of the EU’s actuality. The distribution of competences in the Union is intricate, with multiple scopes of effective sovereignty. The allusion to a supranational authority, makes it sound as though there exists some superstate with an agenda that is entirely its own. When in fact, the policies that have a system-wide application, are implemented at the state level following extensive deliberation between EU institutions, as well as inter-governmental and inter-parliamentary coordination.

Understandably, political opinions and preferences will differ on the degree to which these need to be adjusted for the EU to be considered a ‘true’ federation. Seeing though as perception has not posed a hindrance to the European integration process, it is safe to posit that the EU has no problem at all with how it is classified. Call it what you want. A “sui generis” entity as some claim, which is an exaggeration or outright falsehood in my opinion.

In conclusion: there is ample evidence to support the argument that the EU has effective sovereignty in a manner that is isomorphic to that of federations. And this is the gist of this seminar, to understand that formalities do not necessarily determine the state of affairs, and that what really matters in our analysis of the EU is actual policy-making and how power is distributed and exercised in practice.

Thank you very much for your attention!

Acknowledgements

This seminar was produced using only free and open source software.

The audio was captured and edited with Audacity.
The presentation slides were prepared in LibreOffice and converted from a .pdf into .jpg using Imagemagick.
The video editing was done with OpenShot.
The transcript was written in Vim.
All working on a GNU/Linux machine, specifically Arch.

Annex

This section includes some further information about the principles of conferral, subsidiarity, and proportionality, with references to the Treaty text.

What is not conferred upon the EU remains with the Member States, with the understanding that both sides will work to support each other. As per Article 4 of the Treaty on European Union (TEU):

1 . In accordance with Article 5, competences not conferred upon the Union in the Treaties remain with the Member States.

3 . Pursuant to the principle of sincere cooperation, the Union and the Member States shall, in full mutual respect, assist each other in carrying out tasks which flow from the Treaties.

The distribution of competences in the EU is based on the principles of conferral, subsidiarity, and proportionality. While it is reiterated that what is not given to the EU remains with the Member States. As per Article 5 TEU:

1 . The limits of Union competences are governed by the principle of conferral. The use of Union competences is governed by the principles of subsidiarity and proportionality.

2 . Under the principle of conferral, the Union shall act only within the limits of the competences conferred upon it by the Member States in the Treaties to attain the objectives set out therein. Competences not conferred upon the Union in the Treaties remain with the Member States.

Conferral’s three-fold distribution of competences

The following are taken from the Treaty on the Functioning of the European Union (TFEU).

Exclusive competence covers (Article 3.1 TFEU):

(a) customs union; (b) the establishing of the competition rules necessary for the functioning of the internal market; (c) monetary policy for the Member States whose currency is the euro; (d) the conservation of marine biological resources under the common fisheries policy; (e) common commercial policy.

Shared competence concerns (Article 4.2 TFEU):

(a) internal market; (b) social policy, for the aspects defined in this Treaty; (c) economic, social and territorial cohesion; (d) agriculture and fisheries, excluding the conservation of marine biological resources; (e) environment; (f) consumer protection; (g) transport; (h) trans-European networks; (i) energy; (j) area of freedom, security and justice; (k) common safety concerns in public health matters, for the aspects defined in this Treaty.

Supportive competence includes (Article 6 TFEU):

The Union shall have competence to carry out actions to support, coordinate or supplement the actions of the Member States. The areas of such action shall, at European level, be: (a) protection and improvement of human health; (b) industry; (c) culture; (d) tourism; (e) education, vocational training, youth and sport; (f) civil protection; (g) administrative cooperation.