EUROPEAN UNION BUDGET

European Union Budget

European Union budget

Since the introduction of qualified majority voting, at least 58 labor regulations have been imposed by the European Community/Union. Three types of explanations are considered: i) the asymmetry of the EC budgetary process, ii) regulatory collusion and iii) the strategy of raising rivals' costs. Collusion and the strategy of raising rivals' costs are compared in a two-country game-theoretic model with international capital mobility. The empirical analysis shows that the transition to qualified majority voting was not preceded by a striking tendency of competitive national deregulation. In all cases in which a directive was contested, the UK was among the contestants. Various indices show that the UK has the least regulated labor market. More generally, the anti-regulation coalition also includes Ireland, the Scandinavian countries and the Netherlands. There are examples showing that if the coalition is too small to block the regulation, its members prefer not to record their dissent officially. In most investigated cases, the European labor regulation is more restrictive than most but not all prior national regulations. The empirical analysis demonstrates that the strategy of raising rivals' costs plays an important role in EU labor regulation.

THE EXPERIENCES of military defeat and the occupation of one's country confer depths of feelings whose complexity can be difficult to appreciate for those who have not been so affected. The Second World War was a determining force behind the establishment of the European Economic Community and its related bodies, the European Coal and Steel Community (ECSC) and Euratom. By binding their economies together, the EEC was intended to make future war between France and Germany impossible, so ending at least three centuries of conflict. The other founding members also had recent experience of occupation, but their inclusion was peripheral rather than central. The refusal of the United Kingdom to become a founding member likewise had its roots in the Second World War, reinforced by attitudes engendered by being an English-speaking island with an open-sea tradition.

The concept behind the binding of France and Germany through trade was the Ricardian one of comparative advantage, facilitated by the different structures of those countries' economies, notably in the balance between agriculture and industry. The Treaty of Rome that established the Community in 1957 was much concerned with the problems of adjustment arising from the integration of the continental economies, and established provisions to deal with them. Thus, agriculture was to be the subject to a policy of structured pricing to ease the unemployment problems that would otherwise arise as the sector adjusted to its new competitive position. This policy was to be achieved by means of intervention buying by the Community, financed by a budget drawn from value added tax levied by the member states. The Common Agricultural Policy still has this form, although the principle is slowly giving way under the triple pressures of cost, irrelevance and international trade. Again, all trade relations were to be conducted centrally by the European Community in reflection of the concept ...