European Business Framework

HA i Europæisk Business
1. Semester 2021
Noter
Indholdsfortegnelse
1. INTRODUCTION (W. 36)......................................................................................................................2
1.1 OVERVIEW.................................................................................................................................................2
1.2 PART 1.....................................................................................................................................................3
1.2.1 Roots of European integration........................................................................................................3
1.2.2 Early steps towards integration......................................................................................................4
1.3 PART 2.....................................................................................................................................................5
1.3.1 Summary of key concepts:..............................................................................................................5
2. EEC TO SEM (W. 37)............................................................................................................................5
2.1 OVERVIEW.................................................................................................................................................5
2.2 1960S......................................................................................................................................................5
2.2.1 Background.....................................................................................................................................5
2.2.2 The 1963 (small) crisis....................................................................................................................6
2.2.3 The 1965 (big!) crisis.......................................................................................................................6
2.3 1970S......................................................................................................................................................6
2.3.1 Background.....................................................................................................................................6
2.3.2 The Hague summit in 1969.............................................................................................................6
2.3.3 Other important developments......................................................................................................7
2.4 1980S......................................................................................................................................................7
2.4.1 Background.....................................................................................................................................7
2.4.2 The idea of SEM..............................................................................................................................8
2.4.3 The decision-making process concerning the SEM..........................................................................8
3. MAASTRICHT TO LISBON TREATY (W. 38)...........................................................................................8
3.1 OVERVIEW.................................................................................................................................................8
3.2 THE 1990S: FROM MAASTRICHT TO AMSTERDAM............................................................................................9
3.3 THE 2000S: FROM AMSTERDAM TO LISBON..................................................................................................11
3.4 THE 2010S: IN THE SHADOW OF THE CRISES..................................................................................................12
4. THEORIES OF EUROPEAN INTEGRATION (W. 39)...............................................................................12
4.1 OVERVIEW...............................................................................................................................................12
4.2 PART 1: PURPOSES OF REGIONAL INTEGRATION THEORIES + FEDERALISM............................................................13
4.3 PART 2: FOUR OTHER THEORIES + CRITIQUE OF THOSE THEORIES.......................................................................14

1. Introduction (w. 36)

1.1 Overview
History of European integration from WW2 to the Treaty of Rome. Concepts of
intergovernmentalism and supranationalism, a common market and customs union etc.
 Intergovernmentalism vs. supranationalism
 Negative vs. positive integration
  A common market
 A customs union vs. free trade area

Part 1:
 The roots of European integration
 Early steps towards European integration

Part 2:
 A summary of key concepts
 A few facts about the EU

1.2 Part 1
1.2.1 Roots of European integration
 Federal ideas and attempts to integrate Europe are not new
o but the post WW2 drive towards integration was rooted in efforts to maintain
peace in Europe
o  federalist aspirations - to avoid the nationalism of the “old order” - Jean Monnet
 The Council of Europe was formed (1949)
o European Convention on Human Rights (ECHR) (1949); Covers basic rights and
liberties e.g. Habeas Corpus (frihedsberøvelse)
o European Court of Human Rights
(Not formally connected to the EU)

 European integration was, in particular, a means of managing the Franco-German

relationship
o France wanted to keep Germany divided: French, British and German zones
 French anxiety about the re-emergence of German industrial might - and how to solve the
“German question”
 German aspiration to reintegrate in the international community - and to trade

 The European project was also rooted in the politics of the Cold War & the Marshall Plan

 The Organization for European Economic Cooperation (OEEC) formed 1948  OECD

 Marshall aid was tied to the removal of barriers to trade and commerce between member
states

- Marshall plan/aid larged sums of money used from USA to revive European economies and
produce attraction of communism.
- OEEC - European recovery program
- OECD - forum for discussing common problems among European countries and seeking
solutions
- Marshall aid, loan from USA, aimed at breaking down barriers.
1.2.2 Early steps towards integration
 Schuman declaration (1950)  Treaty of Paris established the European Coal and Steel
Community (ECSC) (1951) - six member states; Belgium, France, Germany, Italy,
Luxembourg and the Netherlands
o Transfer to a supranational level, sovereignty over two crucial “war industries”:
steel and coal. To rationalize and manage the development of two key industries.
o Create forms of cooperation which will male war impossible and, by means of spill-
over effects, develop more cooperation and interrelations
 The ECSC had a “High Authority” and a “Council of Ministers”

- The industries were in need of help and losing money

- There was a need to manage the production and trade of coal and steel
- Supposed to make war impossible

 The Treaty of Rome (1957) created two new communities:

o European Atomic Community (Euratom)
o European Economic Community (EEC), 6 original member states

Commitment to an “ever closer union”, to economic and social progress “by a common action to
eliminate the barriers which divide Europe” and to “the constant improvement of the living and
working conditions of their people.” (Preamble).

 The EEC saw the formation of the European Commission and the Council of ministers
o There was thereby a balance between intergovernmentalism and supranational
governance
 Focus on the economic rather than political aspects of European integration
 The EEC was a common market
 The EEC was (and the EU still is) a customs union!

- Supranational governance: states have given up/pooled sovereignty to European

institutions
- Intergovernmentalism: each state has individual sovereignty and can veto
- They (EEC) have a common trade policy against the world

 The EEC involved the liberalization of trade and commerce between member states
 Yet it introduced a Common Agricultural Policy = a system of trade protection and price
support for farmers
 The conflict of ideas between a free market approach and “dirigisme” was to be a key
battleground
 Another key conflict was between supranational authority and national sovereignty

 European Free Trade Association (EFTA) formed separately among non-EEC members
(1960)
 - EFTA - alternative to European economic community
- It was a free trade agreement, each member had its own trade policy with non-member
country
- Intergovernmental cooperation

1.3 Part 2
1.3.1 Summary of key concepts:
 European Coal and Steel Community (ECSC)
 European Economic Community (EEC)
 A Common market
 A free trade area vs a customs union
 Supranationalism: Policy where sovereignty has been ceded or pooled by member states
in (EEC/EU) institutions
Vs
 Intergovernmentalism: Cooperation between sovereign states in which the national veto
is maintained
 Progress towards further European integration can take form of deepening or widening

- Widening: enlargement, taking EU members late

- Deepening: new policies, monetary union, adopting the Europe, new institutions and new
powers to existing institutions.

2. EEC to SEM (w. 37)

2.1 Overview
History of European integration - the early years of the EEC to the formation of the Single
European Market (SEM). The goals and means of the SEM, harmonization, mutual recognition,
removal of non-tariff barriers. Policy instruments - regulations, directives etc.
 Deepening vs widening
 Direct effect and supremacy of EC/EU laws
 A Single European Market
 Harmonization vs mutual recognition

2.2 1960s
2.2.1 Background
 Period of economic growth
 New youth culture which is questioning authorities is born
 In 1960 the competing trade block EFTA is launched
 In 1961 the customs union is in place
 The CAP is launched during 1962 leading to stable food supply but also overproduction
 During 1968 custom duties among the EEC members were dismantled
2.2.2 The 1963 (small) crisis
 In 1961 President de Gaulle proposed an intergovernmental political cooperation
 Negotiations on the “Fouchet Plan” were ongoing when Britain first applied for EEC
membership in 1961
 De Gaulle opposed British membership
 However, he allowed negotiation on membership while trying to make the terms
unacceptable for the UK
 When the Fouchet negotiations came to halt, and the entry negotiations did not, de Gaulle
unilaterally vetoed British entry in 1963 (and again in 1967)
o EEC received setback
 So basically, the French president unilaterally declined the British application for
membership to the EEC without negotiating with the Six. The British membership would
have provided an alternative leadership which would've been a threat to de Gaulle’s plan.

- De Gaulle saw UK as a predator to France - wanted to prevent UK from joining the

community
- In order for UK to join they should live up to some unfavourable conditions for the UK,
which made them change their mind - de Gaulle’s way of blocking UK
- In 1967 Denmark applied along with UK, but since UK’s application was vetoed again,
Denmark withdrew its application due to business with the UK
2.2.3 The 1965 (big!) crisis
 In 1965 the commission proposed a system that would give the EEC its own financial
resources under scrutiny of the EPA
 De Gaulle opposed this which he saw as a move in a supranational direction
 When an agreement could not be reached, he withdrew French participation in Council
meeting i.e. the “empty chair crisis”
 In 1966 France return to the meetings due to the “Luxembourg compromise” which
allowed member states to veto decisions under QMV due to vital national interests
 This lead to a collapse of moral in the commission

2.3 1970s
2.3.1 Background
 Period of economic and political turbulence in the world
 The Luxembourg compromise made integration more difficult
 The economic problems in Europe made the countries more inward looking
 The entry of UK and Denmark caused problems, because they had a more
intergovernmental outlook.

2.3.2 The Hague summit in 1969

 Aim: to relaunch integration
 Changes of leadership in France (Pompidou) and Germany (Brandt) in 1969 pawed the way
for further European integration:
o Completion was achieved through allowing the EEC to have its own resources for
the first time while given the EPA some budgetary powers
 o Widening was achieved through the entry of Britain, Denmark and Ireland into the
EEC in 1973
o Deepening of co-operation on foreign policy through EPC had some success; less so
cooperation on monetary union

Completion:
 The EEC got its own resources coming from levies in agricultural products and customs
tariffs on imports of products from outside the EC
 The European Parliament got a budgetary role, where it could propose amendments to
those part of the budget that was not compulsory expenditures

Widening:
 Negotiations with the UK, Ireland, Denmark and Norway opened in June 1970
 Completed successfully by January 1972
 Referendums on membership were held in Ireland, Denmark and Norway. Whereas clear
majorities in Ireland and Denmark voted in favor, a majority of the Norwegian people
rejected the membership
 On January 1973, the UK, Denmark and Ireland entered the EC
 A referendum was held in the UK on June 1975 by the new Labour government after entry
which showed a two-to-one support for membership

Deepening:
 Following The Hague Summit in 1969, a committee chaired by Pierre Werner drafted a
proposal for an Economic and Monetary Union
 Based on the proposal, the snake-in-tunnel was launched in 1972 which, however, did not
do well due to the economic crisis following the collapse of the Bretton Woods system
 The European-Political Co-operation based on the Davigion-report proved more success in
terms of creating a coordinated Foreign-Policy

2.3.3 Other important developments

 Following a call from Jenkins to renew attempts at monetary union, the European Council
passed a proposal by Schmidt and Giscard d’Estaing for an economic and monetary system
in 1978
 The new EMS would be more flexible than its predecessor, but Britain declined to put
sterling in the exchange rate mechanism and play a full role
 The accession of Greece to the community was agreed in 1979, Portugal and Spain, who
applied later, were eventually accepted into the EEC in 1985. The widening was seen as an
important steep to consolidate democracy in the three countries

2.4 1980s
2.4.1 Background
 Sluggish (slow) growth in many member states
 The Cold War including fear of a nuclear war
  (Neo)liberal ideas on the rise because of change in leadership in many countries and
economic steering problems

2.4.2 The idea of SEM

 the Genscher-Colombo Plan proposed institutional and market reforms but received a cool
reaction from the Council. However, the ideas for freeing the internal market began to gain
attraction
 The resolution of the British budgetary question at Fontainebleau allowed for progress on
both the internal market and institutional reform
 The single market programme proposed by Delors was the “Big Idea” that could relaunch
European integration

2.4.3 The decision-making process concerning the SEM

 The idea received strong support from the European Round Table of Industrialists
 Eventually governments were persuaded of the need for the SEA by the desire to compete
with Japan and the US.
 In June 1985, the Council agreed on the 1992 timetable for completion of the single
market
 An IGC on institutional reform drew up what became the SEA
 With a few exceptions, the SEA inktroduced QMV into the Council for measures related to
the freeing of the internal market

3. Maastricht to Lisbon Treaty (w. 38)

3.1 Overview
The Maastricht Treaty, EMU (introduce the basis of EMU), central and eastern European
enlargements, the Lisbon Treaty. Introduction and overview of EU institutions.
 Economic and social cohesion
 Subsidiarity
 Exclusive competence and shared competence
 Acquis communautaire & differentiated integration

What can we learn from the 1960s about EU today?

 Theres a tension in the EU between actors representing an intergovernmental approach vs.
a supranational approach
 Theres a tension between Fance and the UK

What can we learn from the 19670s about EU today?

 Political leaders matter
 Although initiatives are not immediately successful, they may gain traction latter

What can we learn from the 1980s about EU today?

  European integration may gain momentum due to external pressure
 QMV is important to speed up European integration

3.2 The 1990s: From Maastricht to Amsterdam

3.2.1 Background:
 Collapse of communism and the reunification of Germany
 The Single Market is getting in place with the “four freedoms”: movement of goods,
services, people and money
 New political issues on the agenda such as the environment
 The concept of “space” changes due to free movement and new forms of communication
i.e. the mobile phones and the internet.

3.2.2 Towards Maastricht:

 Despite British opposition the European Council agreed in June 1989 to Delors’ three-stage
plan for a monetary union by 1999
 The collapse of communism and the prospect of a reunified Germany focused attention on
the political aspects of European integration
 In 1991 two IGCs were held on both the monetary union and political union. The proposals
of these IGCs were incorporated into the TEU, agreed at Maastricht in December 1991
 The Treaty created a three-pillar structure known as the European Union consisting of the
EC pillar and the intergovernmental pillars of the CFSP and JHA.

3.2.3 After Maastricht:

 The decision to move to a single currency caused concern within member states, not least
Germany, which had a strong attachment to the Deutschmark
 The TEU was rejected by a majority (50.7%) of the Danish people in a referendum in 1993
and was only accepted in 1993 following four opt-outs in the Edinburgh compromise
(56.7%)
 A referendum in France (1992) was only narrowly in favour (50.3%)
 By the time Austria, Finland and Sweden became members in 1995, the EU was not the
confident one they had applied to join
3.2.4 The Monetary Union
 In 1995, details of the monetary union with a strong German fingerprint emerged. The
ECB would be located in Frankfurt and the single currency would be called the “Euro”
 In 1999 the Euro came into operation in eleven member states, although national
currencies continued in circulation until 2002

3.2.5 Enlargement:
 All member states paid lip-service to the principle of enlargement of the EU to the east
 Germanys commitment to enlargement was based largely on security considerations
 British motives reflected a combination of security, economic, and political considerations
 France feared the impact on
o The EU balance of power
o Divert of attention away from the Mediterranean
o The impact on the CAP and structural funds
 Copenhagen Criteria are the rules that define whether a country is eligible to join the
European Union

3.2.6 The 1996 IGC and Amsterdam:

 The 1996 IGC focused on the institutional changes necessary to prepare for further
enlargement: QMV and presidency (Council); number of Commissioners and decision
making in the EP
 This IGC was also marked by conflict over the British “beef” crisis, which resulted in the
Major government blocking agreement on a range of issues
 Resulting from the 1996 IGC, this Treaty was relatively modest in scope
 It did not contain the decision-making reforms necessary for incorporating many new
member states
3.3 The 2000s: From Amsterdam to Lisbon
Background:
 The Euro is now the currency in many member states and more are adopting it
 11 September 2001 starts the “War on Terror”
 Europe is united with the enlargement
 Financial and economic crisis unfolds at the end of the decade

The Nice Treaty from 2001:

 Nice became the longest European Council in the history of European integration as
leaders negotiated over institutional changes in preparation for enlargement
 There was particular tension between large and small states over voting weights under
QMV, and about the extension of QMV
 Reform of voting weights led to a complex “triple majority” system
 QMV was extended into around thirty new areas, but the veto remained in others
 In a parallel initiative, also confirmed at Nice in December 2000, the Charter of
Fundamental Rights of the European Union

The Lisbon Strategy:

 In March 2000, a special European Council in Lisbon agreed to pursue a new strategy to
“make Europe the most competitive and the most dynamic knowledge-based economy in
the world by 2010”
 The strategy was pursued through the Open Method of Coordination
 In November 2004, the Kok report described progress as disappointing

European Security and Defense Policy:

 Progress on the ESDP was stalled by the 2001 terrorist attacks on the Unites States
 The initial response from the EU was to declare solidarity with the United Sates, and
support the subsequent US campaign in Afghanistan
 Splits emerging between key member states including applicant member states on how to
respond to the subsequent US decision to take military action against Iraq

The Constitutional Treaty

 The Constitutional Convention prepared the ground for the European Constitution. It was
unique in its composition and purpose
 The Convention’s proposals were presented in June 2001 and the Treaty establishing a
Constitution for Europe was signed in October 2004 based on some amendments
 In May 2005 the French referendum returned a 55 per cent vote against and shortly after
the Dutch 62 per cent
 The vote prompted one of the biggest crisis in the EU’s history
Enlargement, The European Parliament and Commission
 In 2004 ten states, mainly from central and eastern Europe, became members of the EU
 Turn-out at EP elections fell to a record low in 2004, and national issues remained
prominent in the elections
 Barroso’s appointment was a compromise between federalists and Atlanticists + smaller
member states
 The proposed Commission hit problems over a number of nominees, and the changes that
were made were seen as victory for the EP

The Lisbon Treaty:

 After a period of reflection, some of the more controversial aspects of the Treaty were
removed
 The revised “Lisbon Treaty” was signed in the Portuguese capital in December 2007
 For some, the Lisbon Treaty was a serious dilution; for others the changes were seen as
mainly cosmetic
 In Ireland, the only state to hold a referendum, 53.4 per cent of the public voted against in
June 2008
 Following assurances in relation to areas of concern, a second Irish referendum in October
2009 produced a vote of 67.13 per cent in favor

3.4 The 2010s: In the shadow of the crises

 The consequences of the economic crisis of 2008 lead to tighter Economic governance in
the EU, but also sharp divides between southern and northern Europe as well as the rise
of non-mainstream parties
 Terrorist attacks and the refugee crisis of 2015 created closer police cooperation but also
division between core and peripheral member states in the EU
 Britain’s exit from the EU beginning with the referendum in 2016 threatened to split the
union but had a unifying effect
 The EU received much criticism for underestimating the Covid-19 crisis and for the slow
vaccine rollout. But the EU has also been successful in adopting the Next Generation EU
Fund and in slowly overtaking other countries in terms of vaccine rollout, while exporting
many vaccines

4. Theories of European integration (W. 39)

4.1 Overview
 Federalism
 Realism
 Neo-functionalism
 Liberal intergovernmentalism
 Multi-level governance
4.2 Part 1: Purposes of regional integration theories + Federalism
 Theory enables a better understanding of institutions, policy-making, events and
developments
 Theory may throw light upon normative issues such as democracy
 Theory can also influence the questions you ask, and where to look to find answers

“Theory is always for someone and for some purpose” Robert Cox (1981) (Bulmer et al p66)

 Therefore, theories do not offer absolute or universal truths, but versions of the truth

Federalism:
 European federalism attracted strong support among resistance groups during WW2
Europe
 The leading intellectual figure was Altiero Spinelli
 The federalists advocated a “constitutional break” to replace sovereign states with a
federation
 By the time their Congress took place in 1948, national political elites were re-established
in Europe
 While the (Hague) Congress did produce the Council of Europe, this was an
intergovernmental body, falling short of federalist aspirations
 The European Union of Federalists (EUF) formed in December 1946
 Federalism proposed superseding nationalism
4.3 Part 2: Four other theories + critique of those theories

Realism:
 The state is the most important actor in international politics - the state is a unitary actor
 The statesman’s task is to ensure the survival of the state
o The key to survival is in the anarchic international system is self-help - to have more
power than other states
 Cyclic view of history - even though there are periods with peace, there will arise conflicts
and war again
 Realistic point of view: to recognize the fact that different cultures and countries have
different values
 Thomas Hobbes: Humans are greedy for power, and war is a basic condition for humans
lives if there isn’t a state power
 Rousseau: in the absence of a government, humans will act on their own with the purpose
of satisfying their own short term needs instead of cooperating with the purpose of
satisfying their common long-term needs.
 Anarchy leads to states competing over power and security - Zero sum game (nulsumsspil)

Neo-functionalism:
  First attempt to understand European Integration
 Seek to provide closer integration without forcing countries to integrate too far or too
quickly
 in achieving integration in one sector of common policy amongst sovereign states, this
would eventually lead to a ‘spillover’ into other policy areas.  This would then lead to
integration in these policy areas and in turn, more ‘spillover’.
 Neo-functionalism is the perspective that all integration is a result of past integration
 According to neo-functionalism, the importance of nationalism and national state will
decline in the light of a central supranational state
 Driving force of integration process: spillover
o Functional spillover: modern industrial economies were made up of interconnected
parts
 If one sector integrated, it would lead to a spill-over into other sectors
o Political spillover: involved the build-up of political pressures in favor of further
integration within the states involved
 Criticized realism, led to intergovernmentalism

Liberal intergovernmentalism:
 Emphasized domestic rather than national interests
 On the domestic level, various interest groups would compete in order to influence
national preference formation in integration


 Finally, if governments feared the resultant agreement was not going to be lived up to by
the other parties, they would favor the transfer of sovereignty to supranational
institutions better placed to force compliance
 A two-level game
 Stanley Hoffman: Governments had much more autonomy in the process of European
integration than in the neo-functionalist view
 Integration process remained intergovernmental
 o It would only go as far as the governments were prepared to allow it to go
 Like realists, Hoffman stressed the external limitations on autonomy
o States were seen as independent actors, but their governments were constrained
by the position of the state in the world system

Multi-level governance
 Term used to describe the way power is spread vertically between many levels of
government and horizontally across multiple quasi-government and non-governmental
organizations and actors
 A system of continuous negotiation among nested governments at several territorial tiers
o Supranational, national, regional, local
 Offers important concepts for understanding EU practice
 Argues that national governments have lost some control over policy to the
supranational level, and is particularly useful for understanding territorially organized
policies such as cohesion policy

Critique of theories:
 Realism and neo-realism: Consider states as the only meaningful actors in international
relations, have a simplistic view of how national interests are formed, and have not taken
on board the impact of globalization and regionalization on the role of the national state
 Neo-functionalism: Has trouble explaining periods of stagnation in European integration
e.g. following the “empty chair“ crisis
o Spillover between e.g. policy areas not inevitable
o Little consideration of different national demands
o The role of the state has endured, while that of supranational institutions - e.g. the
EC - has varied over time and according to policy area
 Liberal intergovernmentalism: Appears to overestimate the degree of control retained by
states, to ignore transnational processes, not to take on board the supranational nature of
much integration, and to underestimate the significance of bodies such as the EC
 Multi-level governance:
o some say its not a theory and explains little
o overestimates the significance of especially sub-national actors
o there are too few cases, where it applies

4.4 Part 3: multi-level gov, Europeanization, democracy and legitimacy

Multi-Level Governance elaborated