The Economic Constitution of the European Union

4 Colum. J. Eur. L. 27 (1998)

Wolf Sauter. Center for European Law and Politics (ZERP), Bremen, and Faculty of Law, University of Groningen.

Striking a balance between state and market is problematic for the European Union. This is not surprising, as the EU is a divided power system, where public intervention automatically raises the delicate question of which level of government is competent. The economic orientation of the EU is the subject of a long obscure legal debate, which has, however, increased in relevance with the Single European Act (SEA) and the more recent moves toward economic and monetary union (EMU). This legal debate has focused on two related issues. The first is whether the Treaty’ imposes a specific economic paradigm on the Member States and strictly circumscribes the role of national economic policy, or whether Community law allows for a variety of economic systems. The second issue is whether the EU itself is free regarding the economic orientation of its policies, or whether it must always give priority to market principles and competition.

This academic debate on the limits to public intervention first spilled over into the political arena in 1992-1993, as the ever wider ratification debate on the Treaty on European Union (TEU) revealed a strong undercurrent of resistance to its version of an “ever closer union among the peoples of Europe.” At its most articulate, dissent focused on the horizontal and vertical division of power in the Community system-on how far European integration should proceed-and was motivated by concern over the democratic legitimacy of the decisionmaking process.

The TEU fell victim to the success of the Single European Act, the unanticipated consequences of which had raised awareness of the potential impact of Treaty amendment. Possibly, fumbling handlers left the new Treaty exposed to becoming a lightning rod for more diffuse dissatisfaction with national as well as European policies. Nevertheless, the TEU inaugurated important qualitative changes in the integration process which merit critical scrutiny. First, the TEU finally elaborated the principles and procedures for the coordination of the economic and monetary policies of the Member States and set a strict timetable for EMU. In line with the EMU objective the TEU also introduced various new competencies for the Community as flanking policies to market liberalization. Second, the new Union received responsibilities for a common foreign and security policy (CFSP) and cooperation on justice and home affairs. Although this suggested progress toward new levels of political integration, the Member States reserved these areas for strict intergovernmental control. Third, the TEU not only complicated the institutional framework with its “three pillar” structure, but also reinforced controls on the expansion of Community competence throughout the EC Treaty. Hence, the TEU combined fundamental shifts in the scope of the Treaty with attempts to control the future distribution of competencies.

This paper will examine the implications of these developments for the understanding of the economic orientation of the Treaty and the margins of national economic policy. For this purpose, we will use two current theoretical perspectives which interpret the Treaty either as a full-fledged (“political”) constitution, or as a limited “economic” constitution of the EU.

The view that the Treaty forms the constitution of the EU may now be almost axiomatic in Community law circles.2 However, although Community legal circles interlock with the legal establishments in the Member States, their opinions do not always correspond. Recently, the constitutional perspective has come under attack from national constitutional courts, while the European Court of Justice appears to have consolidated its characterization of the Treaty as a constitutional charter. On both sides of this argument, however, the Treaty is widely considered unsatisfactory as a political constitution, both as concerns its logic and coherence, and in terms of its legitimacy. Below, an attempt will be made to sketch the basic characteristics of the Treaty as constitution, and its flaws.