Towards an effective european single market implementing the various forms of european policy instruments across member states

Michael KaedingTowards an Effective European Single Market Implementing the Various Forms of European Policy Instruments across Member States... A recent Commission score-board illust

Towards an Effective

European Single Market

Michael Kaeding

Towards an Effective

European Single Market

Implementing the Various Forms

of European Policy Instruments across Member States

ISBN 978-3-531-19683-1 ISBN 978-3-531-19684-8 (eBook)DOI 10.1007/978-3-531-19684-8

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Michael Kaeding

(Ph.D., Leiden University),

Brussels, Belgium

3

5

Acknowledgements

The idea for this book started life initially in 2006 when I drafted the conclusions

of my Ph.D thesis ‘Better regulation in the European Union: Lost in Translation

or Full Steam Ahead? The transposition of EU transport directives across Member States’ (Leiden University Press) Until then, regulations and directives

had been the dominant policy instrument in the European Union The use of new modes of governance at the European level had already increased in salience and attracted some scholarly attention, but a systematic comparison of implementa-tion patterns in hard and soft law traditions had been lacking ever since The year

2012 marks the 20th anniversary of the Single Market In order to guarantee its effective functioning, which will also be strategically important for the success

of the EU 2020 strategy, we need, however, to understand and unleash the potential of the existing EU regulatory framework, including the complete toolbox of European policy instruments This volume will help to overcome many of the impediments to using alternative policy instruments at the European level as effective responses to pressing European and global policy issues

This research would have been impossible without discussions and collaboration

with colleagues from the NWO financed research group ‘Analyzing EU Policies:

The Transposition of Directives’ program at the Department of Public

Admini-stration (including B Steunenberg, K van Kersbergen, F van Waarden, A Dimitrova, M Haverland, M Rhinard, S Berglund, I Gange and M Romeijn) and the GAK financed project ‘Hervorming Sociale Zekerheid’ at the Depart-

ment of Tax Law and Economics (including K.P Goudswaard, C.L.J nada, G.J.J.H van Voss, M Versantvoort, O van Vliet, B ter Haar, H Nijboer

Cami-and A Eleveld) of the University of Leiden Some of the thoughts that turned into chapters were also presented at seminars and conferences, where I received valuable feedback (Robert Schuman Centre for Advanced Studies (EUI): Bring-ing Civil Society in: The European Union and the rise of representative democ-racy, Florence in 2009; ECPR Joint Sessions 2009 in Lisbon and 2010 in Mün-ster) Lukas Obholzer and Leonard Geyer provided research support for which I

am very grateful I would also like to thank European Union Politics and the

Journal of European Integration for giving me permission to use parts of

previ-ously published material

In addition, I am indebted to the European Institute of Public Administration (EIPA) for granting me study leave for three months at the University of Wis-consin-Madison (USA), during which I finalized the manuscript, and generously financed by the Fulbright Foreign Scholarship Board Warmest thanks go to the (extended) family and close friends who have always supported me in every way possible I dedicate this book to my parents

The views expressed in this book are that of its author and do not commit nor reflect that of his institution of employment, nor its staff I am solely responsible for any mistake or inaccuracy

Dr Michael Kaeding

Brussels and Madison,

March 2011

Table of Contents

INTRODUCTION

1 Implementing the Various Forms of European Policy

PART I: TAKING LEGISLATIVE ACTION

3 Implementing Flexible Directives across Member States 53

PART II: TAKING NO LEGISLATIVE ACTION

6 Implementing Open Methods of Coordination across

Logit Table 4 Lamfalussy Background and Institutional Architecture

Table 7 Duration of enactment before and after (in months)

Table 8 Comparing the pace of legislative activity

Table 12 Degree of correctness of implementation of the 2002

Autonomous Agreement on Telework Table 13 Timeliness of national implementation of the 2002

Autonomous Agreement on Telework

Table 15 Political priority

Table 16 Nature of administrative coordination

Table 18 Nature of national legal instrument

Table 19 Evaluation of Member States’ implementation of

Commission recommendation Table 20 Transposition deficit (in percentage)

Table 21 Total social expenditure as percentage of GDP

Table 22 Total expenditures as for 1% of population aged 65+ and

percentage of GDP controlled for unemployment rate

List of Figures

Figure 3 Countries with decreasing, constant or increasing

total social expenditures pattern

Abbreviations and Acronyms

providing Public services

Occupational Pensions Supervisors

Committee

HR High Representative for Foreign Affairs and

Development

Union

ernance in the Economic and Monetary Union

13

1

Implementing the Various Forms of European Policy Instruments across Member States

1.1 The various forms of European policy instruments - neglected?

Rules are essential for economic growth, social and environmental protection and overall well being Unfortunately, they are often introduced as a knee-jerk reaction to a particular problem reflecting the so-called ‘regulate first’ culture in both the European Union and its Member States Although legally-binding instruments often seem to be the most appropriate choices to achieve policy objectives, this volume argues that they might sometimes only be ‘second best’ imposing unnecessary costs on citizens and businesses and dampening innova-tion with significant implications for competition and economic performance Instead an alternative policy instruments may be available and more effective Furthermore, legally-binding acts do not entail any guarantee for full compli-ance In 20 years the European Single Market has not been completed; in fact non-compliance with EU law represents a serious and alarming threat to the EU project as a whole If we are to compete successfully in an increasingly aggres-

M Kaeding, Towards an Effective European Single Market,

DOI 10.1007/978-3-531-19684-8_1,

sive global market, whilst many other economies continue to get stronger, all parts of the EU, Member States and the EU institutions, must put the Single Market ‘back on stage’ And we need to regulate smarter

The answer therefore is not to give up on rules, but rather to develop and implement good-quality regulations Presenting both timely and relevant cases for the many forms of European policy instruments this volume provides useful data regarding what policy instruments work and under what circum-stances to overcome many of the impediments to using alternatives as appropri-ate responses to European policy challenges Drawing from recent examples covering different policy areas (transport, financial services, work conditions, public administration and social protection) data show that alternative policy instruments come along with many advantages, but are not a panacea for full compliance Breaking with a long-standing mantra, this volume suggests that only correctly implemented alternative policy instruments are potentially quicker, cheaper, more flexible, innovative, transparent and effective

1.1.1 Why to regulate in the first place?

States do regulate to achieve outcomes which might otherwise not be put into effect, induce or get around outcomes in different locations to what might otherwise happen, or induce or frustrate outcomes over different time units than would otherwise occur In fact, there history of government regulation is rich Common examples of regulation include controls on market entries, institutional reforms, standards of production for certain goods, freedom to provide services, employment for certain people in certain industries or pollution effects

Classic regulations are justified using a variety of reasons In economics the existence of a market failure, i.e the inefficient allocation of goods and services by free market (Bator 1958), is often used as a justification for govern-ment Market failures are associated with inadequate information, non-competitive markets (risk of monopoly), unseen externalities (Arrow 1969), and collective action problems (Samuelson 1954; Buchanan 1965) Other schools of thought stress aspects of endogenous preferences, collective desires, diverse experiences, irreversibility or interest group transfers.1

More generally, regulation is a direct mechanism for changing iour based on the assumption that those subject to the regulation are required to comply with its provisions Policy instruments are ‘means of controlling and coordinating both public and private actors’ (Bähr 2010) If not they face finan-cial or custodial penalties Policy instruments that one way or another ‘involve the utilization of state authority or its conscious limitation’ (Howlett 2005) There is a reassuringly direct link between the regulation and the expected outcome for the policy maker, government and citizen alike, assuming that governments are able to enforce effective compliance thereof In summary, rules are crucial for economic growth, social welfare, environmental protection and over-all well being

1 Developing in parallel with the growth of capitalism, Weber understands the body of coherent and calculable law in terms of a ‘rational-legal authority’, which forms a precondition for modern political developments and the modern bureaucratic state Central to the development of modern law

is the formal rationalisation of law on the basis of general procedures that are applied equally and fairly to all Durkheim (1893) argues that as society becomes more complex, the body of civil law concerned primarily with restitution and compensation grows at the expense of criminal laws and penal sanctions Over time, law has undergone a transformation from repressive law to being an indicator of the mode of integration of a society

1.1.2 Pitfalls of the classic regulatory approach in the European Union

In practice, however, things look different Too often the first response by governments to a perceived policy issue is a traditional knee jerk ‘command and control’ regulation In addition, effective compliance is an illusion In the Euro-pean Union (EU), for example, things do not look promising The European Single Market, which describes the European project to create free movement of people, goods, services and capital within the EU and to mould Europe into a single economy, is yet incomplete – after 20 years A recent Commission score-board illustrates that 74 Single Market directives had not yet produced their full effects due to lack of national transposition measures in one or more Member States (Commission 2010: 13) In addition, Member States grant themselves too often an extra 6-9 months after the deadline has expired to adopt the implement-ing legislation (Commission 2010) Next to delayed transposition (Mastenbroek 2003; Kaeding 2006; Toshkov 2008), European Single Market directives are too often applied incorrectly (Versluis 2004; Falker, Treib, Hartlapp and Leiber 2005), which leaves us with a highly fragmented Single Market, i.e a ‘regulatory patchwork’, deterring citizens and businesses from exercising their rights

More generally, the knee-jerk ‘regulate first’ approach may often be only the ‘second best’ policy instrument More effective and efficient alternative policy instruments may have been simply overlooked despite the considerable range of modes of regulation available and the fact that scholars have been studying policy instruments for centuries (Hood 2007) This however could be fatal They lie in particular at the heart of the policy process (Dahl and Lindblom 1953: 16-18) The use of ‘second best’ policy instruments may often impose unnecessary costs on citizens and businesses and dampen and restrict competi-tive pressure and innovation with significant implications for competition and

economic performance In the long run, delayed and incorrect enforcement of

EU legislation are highly problematic since they potentially jeopardize the credibility and reputation of the Single Market

1.1.3 Ensuring effective regulation and reinforcing implementation

Doubtlessly delayed and incorrect compliance2 with EU legislation is a serious and alarming threat to the EU project as a whole With the Single Market we intended to design an EU which creates economies of scale, allows the estab-lishment of Europe-wide commerce and enables faster growth If we are to compete successfully in an increasingly aggressive global market, whilst many other economies continue to get stronger, all parts of the EU, Member States and the EU institutions, need to regulate smarter in order to guarantee the functioning

of the Single Market The answer is not to give up on rules, but rather to develop good quality regulatory framework with a variety of policy instruments.3 A good-quality regulatory framework based on a handful of alternative policy instruments will result in more effective and efficient answers to policy prob-

2 Implementation concerns 'incorporation into national law in all Member States Three aspects are important: Are the EU standards actually transposed in good time, on an appropriate scale, and in a correct manner?' (Falkner et al 2005: p 4)

3 Equity, fairness, simplicity and coherence considerations have a being on the choice of policy response too, because the distribution of benefits and costs can differ between groups in society and/or geographic areas The perceived fairness of different instruments can influence the public’s acceptance of the instrument, and hence the level of compliance In turn, this has implications for the effectiveness and efficiency of the instrument The degree of political accountability also has an important influence on perceptions of fairness Those taking decision should be subject to some oversight to ensure that they implement regulations as intended Transparency can be an important mechanism for ensuring accountability of regulators, next to existing avenues of appeal Those subject to the regulation should feel that there is an opportunity for review by an independent body if they disagree with decisions or actions of the regulator Therefore, equity and fairness considerations are best embodied in policy instruments which are transparent in their operation and impacts; and contain appropriate appeals mechanisms (Bovens, Curtin and ‘t Hart 2010)

lems Effective in the sense that they resolve the problem they were introduced

to address; efficient in the sense that they minimise both the direct compliance costs borne by those subject to the regulation, and other, often more indirect,

costs which may be imposed on the public

This argument is not new Both the OECD and the EU preach the

‘command of alternatives’ since the mid-90s Consideration of alternative policy instruments is a key element in the 1995 OECD checklist for regulatory deci-sion-making and greater guidance to policy makers can help ensure that alterna-tives are more fully considered (OECD 1995; 2004) Since the 2000 European Council in Lisbon the EU better regulation agenda foresees the consideration of alternative policy instruments A recent OECD report confirms that the explicit examination of regulatory alternatives is increasing at a substantial pace How-ever the extent of their use remains still low (OECD 2008: p 6) In 2005, only

18 countries had a systematic requirement that the use of alternatives to tion be considered in all cases, while 8 countries required it in only some cases (OECD 2008: p 6) Four countries reported no requirement for the consideration

regula-of alternatives at all In sum, only half regula-of the OECD countries had developed guidance material to assist in the evaluation of suitable alternative approaches

By now, the impact assessment guidelines set out strict requirements on how new policy instruments should be designed

1.1.4 Regulation can take many forms

Regulations can take many forms The range of options varies according to the hierarchy of policy instruments from prescriptive regulations and traditional

directives to flexible directives; self-regulatory instruments; recommendations; and the open-method of coordination.4

- Prescriptive (classic) regulations, directives and decisions

There are three forms of traditional EU law (Art 288 TFEU) Regulations are the most direct form They are different from directives, which are binding as to the goal to be achieved, but leaving national authorities the choice of form and methods of complying instruments Decisions apply in specific cases only, involving particular authorities or companies

- Flexible directives (framework directives)

Since traditional directives can be sometimes over-prescriptive and inflexible, creating complex requirements that are difficult to comply with Framework directives, on the other hand, can be more flexible by creating an overall frame-work that clearly sets out the objectives, then leaving open the means of achiev-ing them So-called flexible directives give Member States and economic opera-tors the flexibility to implement provisions in ways suited to their markets and avoiding the rigidity of a ‘one size fits all’ approach Flexible directives, ideally, draft the essential framework aspects of legislation, i.e ‘( ) as far as possible, be general in nature and cover the objectives, periods of validity and essential

4 This list is not exhaustive (Offe 1975; Scharpf 1976; Hood 1983; König and Dose 1993) based instruments (fiscal measures such as taxes or subsidies), for example, work by using market signals (prices) to provide an incentive to businesses and citizens to act in a way which will achieve the government’s policy objective Maintaining the status quo is another important scenario ‘Taking

Market-no action’ should be part of the range of delivery options for consideration, except where the Treaties require EU action which is enshrined in the legal provisions of the Treaties by the principles of subsidiarity and proportionality Subsidiarity is the principle whereby the EU does not take action, except in those areas which fall within its exclusive competence, unless such action is more effective than action taken at the national, regional or local level According to the principle of proportionality any action should be as simple as possible to minimise the financial and administrative burdens on governments, economic operators and citizens (see also Best 2008)

aspects of legislation, while technicalities and details should be a matter of executive measures or be left to Member States.’ (Commission 2005c)

- Self-regulation

The Inter-Institutional Agreement on Better Law-Making (2003: p 3) defines self-regulation as ‘the possibility for economic operators, the social partners, non-governmental organizations or associations to adopt amongst themselves and for themselves common guidelines at European level (particularly codes of practice or sectoral agreements).’ Consequently, self-regulation requires markets

to regulate their own activities, without the requirement or agreements being underpinned by legislation The group is responsible for developing self-regulatory instruments, monitoring compliance and ensuring enforcement EU involvement is usually limited to encouraging or facilitating the process; perhaps with the threat of legislation should it not be successful.5

- Recommendation

Recommendations are adopted by the Commission or Council suggesting courses of action They are not binding for Member States (Art 288 TFEU) Though without legal force, they are negotiated and voted on according to the appropriate procedure and therefore do have a political weight A recommenda-tion is an instrument of indirect action aiming at preparation of legislation in Member States, differing from the directive only by the absence of obligatory power Issuing a recommendation can signal that the EU thinks action should be

5 There is often some cross over between self-regulation co-regulation (Best 2008), as the sion is sometimes quite closely involved in self-regulation For clarity, co-regulation involves some sort of legal underpinning and can therefore be described as self-regulation with a legislative back- stop

Commis-taken in an area and is often a warning to industry that it needs to act or face the likelihood of future legislation

- Open method of coordination

The open method of coordination (OMC) takes place in areas which fall within the competence of the Member States, such as employment and social policies (Art 5 TFEU), protection and improvement of human health, industry, culture, tourism, education, youth, sport, civil protection and administrative cooperation

(Art 6 TFEU) It provides a framework for cooperation between the Member

States, whose national policies can be directed towards certain common tives It is based principally on jointly identifying and defining objectives to be achieved (adopted by the Council); jointly established measuring instruments (statistics, indicators, guidelines); and benchmarking, i.e comparison of the Member States’ performance and exchange of best practices (monitored by the Commission) Member States are evaluated by one another (peer pressure), with the Commission's role being limited to surveillance Depending on the areas concerned, the OMC involves so-called ‘soft law’ measures which are binding

objec-on the Member States in varying degrees but which never take the form of directives, regulations or decisions

1.2 Scope of the volume

Alternative policy instruments are not per definition a panacea for more effective policies If the EU wants to re-launch the Single Market successfully we have to make every endeavour to address simultaneously the issue of what modes of regulation are the most appropriate, and to take enforcement very seriously (Monti 2010: p 96) Breaking with a long-standing mantra this study argues that also alternative policy instruments risk being not fully implemented But timely and correctly implemented alternative policy instruments are potentially quicker, more flexible, cheaper and in the end more effective

There seems to be considerable experimentation with the use of tives in EU countries However, policy makers remain reluctant to seriously consider the use of them or do they pay insufficient attention to the implementa-tion of the instrument The impediments to the wider use of alternatives are in part due to a lack of knowledge of what alternatives exist in the policy instru-ment toolbox, and the circumstances under which they are successfully imple-mented

alterna-This volume will therefore make useful information available in order

to increase acceptance of alternative instruments as effective responses to policy issues6 This volume offers the first systematic comparative analysis of how new and older policy instruments are implemented to determine the extent of compli-ance and determine reasons for non-implementation Obviously, the aim is not necessarily for 100% compliance The trade-off between high level of compli-ance and increased monitoring and enforcement costs may be such that less than full compliance is optimal Central to being able to assess the effectiveness of a

6 See also Kohler-Koch (1998); Knill and Lenschow (2004); Scharpf (2006); Börzel (2009); Bähr (2010)

policy response will be the time aspect A timely implementation of the EU instrument is a principle condition for correct implementation and enforcement and more than ever pivotal in a fast developing global world economy Conse-quently, this volume extends the earlier works of the OECD and the EU on alternatives to traditional regulation by assessing the implementation of various forms of regulations Drawing from examples of different policy areas (transport, financial services, work conditions, public administration and social protection) which are of particular importance for the EU’s economic, social and environ-mental competitiveness and well-being, this volume will ensure that the analysis

is both timely and relevant to national and European policy makers

The study is organised as follows Chapter 2 suggests that Member States have been struggling to cope with the volume and complexity of tradi-tional regulation they are required to implement according to the EU Treaties

The quantitative analysis, which covers the EU transport acquis, unearths that

the EU has a serious

Departing from these findings, chapter 3 assesses the so-called lussy governance structure, which was set up to develop the financial service industry regulations across EU Member States While the financial market’s importance for Europe’s global competitiveness is unquestionable, experts have argued that the particular four-level Lamfalussy governance structure seem more transparent, with better involvement of external stakeholders and enhanced political cooperation between all the institutions, implying a general boost in the quality of legislation on financial services and an acceleration of the legislative process due to its higher degree of flexibility This study will challenge these mantras Over the last ten year, the length of the decision-making processes could not be significantly reduced, and the EU seems to face very similar im-plementation problem in financial services as other regulatory policy sectors

Lamfa-Entering the section of non-legislative action chapter 4 offers an sis of the effectiveness of so-called self-regulatory autonomous agreements between European social partners Underlining the lack of power of European

analy-social partners vis-à-vis their national member organisations and anticipating a

‘regulatory patch-work’ at national level due to very diverse traditions of trial relations, scholars have been sceptical about the prospects for implementa-tion of self-regulatory European autonomous agreements Empirical evidence from the implementation of the 2002 Telework Autonomous Agreement sug-gests, however, that European autonomous agreements and their implementation across Member States are taken seriously by all actors involved European social dialogue made a qualitative leap forward by galvanising national social actors

indus-Chapter 5 evaluates the effectiveness of recommendations In light of the functioning of the Single Market, the chapter’s general concern is to explore how Member States have converged around the Commission’s administrative best practices for the transposition of EU legislation The study finds evidence for converging tendencies since 2004 towards the recommended administrative model in the Member States

Chapter 6 scrutinizes the effectiveness of the open method of tion (OMC) – which has renewed the notion of policy convergence/divergence across EU Member States This chapter examines the role of European integra-tion in shaping and changing social welfare systems Based on 2007 OECD social expenditure data and controlled for cyclical and demographic effects, this analysis finds that social expenditures of EU Member States have converged and increased on average since 1991 On the other hand, non-EU Member States have diverged, suggesting a tangible effect of European integration on Member States’ social policy regimes

coordina-The concluding chapter 7 draws together the results from the five case studies based on which a number of recommendations are developed Imple-menting these recommendations could make a real difference to the EU regula-tory landscape

The epilogue in chapter 8 adds some afterthoughts to the ongoing bates surrounding the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union, the Europe 2020 strategy and national Solvit centres

de-27

2

Implementing Classic Directives across

Mem-ber States

2.1 The implementation of transport directives in the EU – lost in translation? 7

This chapter is posed to unravel the EU implementation puzzle what factors determine delays when implementing EU directives across Member States while focusing on the time aspect of national transposition processes, which represents

a particularly salient form of non-compliance (Mastenbroek 2003; Berglund, Gange and van Waarden 2006) In the following, this chapter refers to the national transposition outcome as a game between bureaucratic and political transposition actors who must agree, within an allotted time frame, on a new national policy complying with EU law Who ends the game and when depends

on the players’ expected payoff The expected flows of payoffs to an actor equal the difference between benefits and costs Moreover, the costs of the new poli-cies are not equally distributed among the actors, who may then engage in a war

of attrition as they attempt to redistribute or simply delay the realization of these

7 This chapter draws from Kaeding, M (2008b) ‘Lost in translation or full steam ahead? The

transposition of EU transport directives across EU Member States’, European Union Politics 9(1):

pp 115-144

M Kaeding, Towards an Effective European Single Market,

DOI 10.1007/978-3-531-19684-8_2,

costs (Alesina and Drazen 1991) Eventually, three sets of explanatory factors for the timeliness of national transposition processes that influence the cost/benefit structure of the actors can be identified combining legal, administra-tive as well as political factors: EU directive-specific, domestic level-related and crises-related multipliers While the European level indicators relate to the policy-design (directive’s level of discretion and the transposition deadline), national factors stem from the process of implementation (national transposition package and number of veto players) Crises-related factors (timing of general elections and policy (sub-) sector related accidents) stand on their own

The chapter is structured as follows: after providing the theoretical background, it presents a data set of basic variables that facilitates the systematic empirical analysis of the EU transposition performance of Member States Note here that the focus lies with EU directives which are not immediately applicable

at the national level, but have to be incorporated into national law first quently, the independent variables are operationalised and the research method presented Comparing three groups of transposition outcomes, the analysis shows that EU directive specific features explain short delays, whereas national level explanatory variables explain long delays The statistical results also support the central argument that European level, national level, and crises-

Subse-related factors together account for transposition delays In the end, the findings

are synthesized and discussed

2.1.1 The puzzle

EU Member States frequently breach EU law At the same time scholars have started to investigate the matter thoroughly But it is the dissatisfactory state of the EU implementation literature more generally that leaves the interested scholar puzzled

The empirical puzzle: ‘Cannot see the forest for the numbers’

Despite concerns on the quality of Commission’s scoreboards (Börzel 2001; Mbaye 2001; Mastenbroek 2005; Treib 2008), data reveal an EU implementation deficit The so-called ‘fragmentation factor’ has found its way to the implemen-tation debate which exemplifies the percentage of the overall outstanding direc-tives that have not been implemented in at least one Member State In 2010, the fragmentation level is six percent (Commission 2010: p 15) which corresponds with six percent of the internal market directives not having achieved their full effect In absolute terms, this means that 85 internal market directives were not implemented in at least one Member State The presence of an EU implementa-tion problem, which is supported by a considerable number of scholars in the field, seems apparent (Sverdrup 2004; Falkner et al 2007; Steunenberg and Toshkov 2009; Luetgert and Dannwolf 2009; König and Luetgert 2010; Börzel, Hofmann, Panke and Sprungk 2010; Haverland Steunenberg and van Waarden 2011) But puzzling too since non-compliance could eventually become very costly for a Member State.8 In addition, non-transposition creates uncertainty and

8 So far the Court of Justice of the EU has imposed fines on Greece, Spain, and France In 2000, Greece became the first Member State to be adjudged with a daily fine of 20,000 EUR It took Greece six months to comply and it ended up paying a total of 4.7 million EUR In November 2003, Spain became the first Member State to be fined twice for the same infringement Its penalty was modest, only 625,000 EUR per year (Nicolaides and Oberg 2006) In July 2005, France harvested the largest penalty in EU history, which was both a lump-sum of 20 million EUR and an additional

undermines the legitimacy of EU legislation It forestalls further European integration involving the free movement of goods, persons, services and capital Furthermore, it jeopardizes market competitiveness, national growth, and em-ployment performances in Europe and beyond In other words, it has been harming the successful functioning of the Single Market over the last 20 years

2.1.2 What makes national implementation processes timely?

The implementation of a directive requires ‘the adoption of general measures of

a legislative nature’ (Prechal 1995: p 5), which normally induces policy change

at the Member State level through national transposition actors, who must come

to an agreement of how to implement policy in a manner complying with EU

legislation These transposition actors are administrators and politicians

Whereas ministers sign the ministerial orders and political appointees control the interpretation as regards the content of the directive, it is the ministry’s admini-stration that provides the technical and juridical know-how in the legal transposi-

tion stage Examining the timeliness of national transposition processes across

Member States, the following six hypotheses can be derived

Number of administrative and political actors

Bargaining outcomes are dependent on the number of actors involved in setting a new policy Increasing the number of players increases the coordination problem (Shepsle and Boncheck 1997) due to problems common to group interaction A bargaining deal between two players is less complex than a deal with four

biannual sum of 57.7 million EUR if it continued to ignore EU legislation relating to fishing - amounting to a daily fine of 321,000 EUR

because the number of possible combinations is much greater Complexity can delay the process considerably So, countries with more political fragmentation

adopt policy change later (Haverland 2000; Giuliani 2003; Linos 2007) The

fewer actors are involved in the making of a legal instrument, ceteris paribus, the less likely is a delayed transposition process)

Margin of discretion

Actors, who are engaged in the national transposition process, cannot modify the policy in ways that are substantially different from the draft adopted by the Council of Ministers Otherwise, their action can be subject to infringement procedures (Art 258-260 TFEU) and a Court’s judgment of failure to comply with treaty obligations including a lump sum and/or penalty payment Next to non-notification incidents, however, the Commission only challenges adopted national implementing measures that exceed the margins of discretion, assigned

to Member States by the directive Hence, if already existing national ments lie within the margins of discretion, then no new national transposing instrument has to be agreed upon (Steunenberg 2007) While most transposition processes require new national implementing measures, the new European policy determines each Member State’s ability to interpret a directive’s provisions

instru-But transposition often deals with more than two issues and hence points on which actors may disagree If we consider, for example, Directive 2001/14/EC on the allocation of railway infrastructure capacity and the levying

of charges for the use of railway infrastructure and safety certification, six issues with considerable leeway for interpretation can be identified If we apply a dichotomous interpretation alone, they already stand for 6! (240) different policy combinations that have to be addressed one by one which is very time-consuming and rent-seeking cost-intense Consequently, there is a positive

relation between Member States’ discretion and the timeliness of national

trans-position processes The higher the amount of discretion is, ceteris paribus, the

more difficult it is to settle an agreement on time

Transposition deadline in the European directive

After being adopted at the European level, national actors must transpose EU directives within a specific allotted timeframe set in the texts This fixed dead-line (Ponsati 1995) yields a discontinuity in the payoffs that actors can enjoy over time by leaving the assumed cost-constant, but allowing costs to shoot up with the expiry of the deadline After the deadline has expired, the status quo can prove very costly for the government Lawsuits at the national or European level become a real threat – representing additional costs to the already existing rent seeking costs of the players (Koutalakis 2004) So with the expiry of the transpo-sition deadline the pattern changes: additional costs of noncooperation occur reflecting the potential threat of a likely infringement procedure which is cum-bersome, time-consuming, image damaging, distracting and possibly linked to a costly outcome Introducing a deadline allows the rent-seeking costs to rise exponentially Consequently, the length of the transposition bargaining period defined by the EU directive has an impact on the date of agreement (Masten-broek 2003; Haverland and Romeijn 2007; Kaeding 2008c; Steunenberg and

Kaeding 2009) The more time a Member State has to transpose a directive,

ceteris paribus, the swifter is the national transposition process)

Effects of national transposition packages

As a matter of fact, national transposition actors often use one national legal

instrument to transpose a handful of EU directives This is known as the national

transposition package approach These national transposition packages can

include two or more EU directives whose full transposition is, quite often, not due in the same year (for Italy see Giuliani and Piattoni 2006: p 85- 106; more generally see Kaeding 2007a) They are applied to reduce the costs of coordina-tion within the ministries since they allow transposing a couple of directives with only one national legal instrument

Due to its endogenous character a national transposition package should only positively affect the transposition speed assuming that Member States always try to meet the deadlines Depending on the position of the EU directive within the national transposition package, the costs may remain for a longer

period below the costs for policy change However, a break-even point will

occur when costs of maintaining the status quo surpass the rent-seeking costs of implementing the new policy Hence, the usual time margins of transposition are set by the deadlines in the first and last directives in the package Depending on those and following the earlier mentioned logic of an additional ‘infringement threat’ cost component, the accumulated costs may increase considerably for the first EU directives after the deadlines, but remain relatively low for the last

directive whose allotted timeframe is longer A national package approach

increases the probability of a delayed settlement of the first European directive

in the package, whereas, in turn, it accelerates a settlement of the last European directive

Effects of general elections

National elections are the usual mechanism by which modern democracies fill offices in the legislature They are set and postponed by presidents and head of states, and they vary in frequency and time needed for execution Because general elections attract a lot of attention by voters and office seekers, they have

an impact on the national policy-making procedures and are often characterized

as destabilizing and disequilibrating factors in a country’s policy-making system

A general election unbalances the regular heartbeat of day-to-day politics and directly affects the size of actors’ rent-seeking costs

For analytical reasons, this study distinguishes between general tions falling at two points during a national transposition bargaining process:

elec-either at the beginning, or at the end Depending on when a general election

occurs in the point in time of the transposition process (timing), a general tion can have either a retarding or accelerating affect - for varying reasons: electoral campaigning and its result

elec-Although elections reduce rent-seeking costs in general, elections that

fall at the end of a national transposition bargaining process increase the cost of

waiting dramatically, for both politicians and administrators First, national general elections reduce rent seeking efforts of government officials by channel-ling all their attention away from day-to-day policy-making toward the electoral campaign National implementation procedures that have not been finalized by the end of the parliamentary term often expire and must be re-tabled in the new

legislative term If they are not adopted before the end of the legislative term,

however, they automatically extend the duration of a national transposition process considerably Then, the public administration faces the potential threat of infringement costs, which coincide with the ‘legislative deadline’ Future payoffs

‘shadow’, so to speak, on the national transposition process

On the contrary, general elections that coincide with the beginning of a

national transposition bargaining process do not encounter infringement costs in

the short run Politicians still have all the legislative term ahead and, first, bly prioritise election pledges On the other hand, administrators have less incentive to maximize their influence at the beginning of a legislative term compared to the end of the same (Kaeding 2008b) Generally speaking, they

proba-attach low priority to EU law, not in the least because they associate it with a lot

of additional workload from Brussels Whereas a general election falling at the

beginning of the transposition procedure decreases the probability of a free settlement, a general election at the end of a transposition process acceler- ates the adoption of a new national legislation

problem-Effects of external shocks

Exogenous shocks may increase the cost of not adopting reforms, or make them outdated/irrelevant, but eventually prompt a solution to a bargaining problem (Drazen and Grilli 1993) Regardless of the kind of crisis, considerable influence

is enacted on the timeliness of the transposition process by such upsets In the context of transposition, a crisis adds additional expenses to the constant rent-seeking costs A crisis that immediately shoots up overall costs, increases the cost of non-transposition more general and lowers the equilibrium level, and thereby increases the probability of a fast settlement So, the external shock costs

reduce the benefits, and settle bargaining issues A crisis increases the

probabil-ity of a timely transposition process

Summary of predictions

Table 1 summarizes three groups of factors that affect the timeliness of national transposition bargaining processes across Member States For the European level factors it shows that the directive’s level of discretion may have a retarding effect on transposition timeliness On the contrary, the more transposition time is provided for in the directive, the more swift and problem-free the national transposition process is expected to be At the national level, national forms and methods of transposition play an important role as well as the timing of general

elections When more veto players are involved, the transposition process is slower The national transposition package approach also affects the pace of policy change by affecting the distribution of adjustment costs of a new Euro-pean policy General elections may have either a retarding or an accelerating effect on transposition, depending on the time of their occurrence in the transpo-sition process Last but not least, external shocks increase the cost component in the cost/benefit equation considerably Crises may push for fast implementation

of the content of the new EU directive

Table 1 Effects on the timeliness of national transposition processes

Effect on transposition speed Retarding Accelerating

Level of tion guaranteed

discre-by the directive

The more discretion

in the text, the more difficult timely

The more tion time set in directive, the more problem-free transposition

transposi-Number of veto players

The more veto players involved, the more delayed the transposition process

Occurrence of national transpo-

sition package

First European Directive in the national transposi-tion package

Last European Directive in the national transposi- tion package

elec-General elections scheduled at the

beginning of

transposition process

General elections scheduled at the end

of the transposition process

2.1.3 Research design

To test the six hypotheses, this study presents data covering almost two-thirds of

the full population of the EU transport acquis (1995 -2004) Before testing the

hypotheses, this study explains the selection of the policy field, the Member States, and of the time period of investigation, presents the various sources of information and assesses the quality of the data set

Policy field selection

While the research focuses on the reasons and mechanisms behind Member States’ transposition delays, it would be difficult to analyze all European policy

fields in which directives are issued Selecting the transport sector for this

chapter was guided by four considerations: Since the study’s focus is on the timeliness of national transposition processes, I will not consider areas in which the EU primarily issues regulations Second, I will focus on a core policy area of the Union established by the Treaty of Rome (Franchino 2005b) In order to facilitate the generalization of my findings at a later point, the third consideration

is whether the policy area in question fits well into the dominant EU regulatory category (Majone 1996) representing technical, regulatory, as well as harmoniz-ing directives I will also control indirectly for different subsections (Kaeding 2007a): maritime, rail, road, air and inland waterway, which makes the transport case adequate to test the hypotheses And fourth, to be able to produce empirical regularities for research on transposition of EU directives, I present areas with a sufficiently large number of cases and sufficient variety on the dependent vari-able between the cases (for a concise overview of EU legislative output, see Alesina, Angeloni and Schuknecht 2005)

Selection of Member States

For analytical reasons this study opted for nine Member States: France, many, Greece, Italy, Ireland, Spain, Sweden, the Netherlands and the UK First, this group of Member States covers so-called implementation ‘leaders’ as well as

Ger-‘laggards’ Whereas Greece and Italy are notoriously taking one of the latest ranks in the Commission’s scoreboards, Germany, France, Ireland and the Netherlands attain medium scores, and Spain, the UK and Sweden perform rather well In addition, these states were selected to cover most of the important dimensions of variation on the national level independent variables: centralized (France and Greece) versus decentralized states (Germany, Spain and Italy), old and new Member States, variation in legal traditions and practices (typical regulatory patterns) (France versus UK), and variation in the number of players across Member States and transport sub-sectors Here, institutional aspects of the Member States’ political system play a role, since they are part of the explana-tory factors Whereas some governments tend to be more stable than others (Germany versus Italy), I also include Member States with clear preferences for

a limited number of transport sub-sectors, such as the Netherlands for inland waterways; Ireland for air transport and Greece for maritime issues In contrast, Germany, Italy, the UK and France consider all five modes of transport equally important Eventually, with Greece, Sweden and Ireland, a group of states on which little EU implementation research work has been done to date is also included

Time period: 1995-2004

Mainly for availability reasons, this study opted to focus on only recent cases of

EU national implementation instruments in the area of transport covering almost ten years (1995-2004)

Sources of information

Information on the EU transport directives is taken from the official legal

data-base of the European Union – Celex (Communitatis Europeae Lex) which covers

all Community legislation, preparatory acts, case-law of the Court of Justice of the European Union and parliamentary questions.Celex also provides publica-tion references regarding Member States’ national provisions to enact Commu-nity directives Almost 70% of all national implementing measures for the selected Member States were reported in Celex and other Commission sources However, the official legal databases of the European Union are not the only accessible source to report national implementing measures (for an overview, see Hudson 2005)

To compare and control for the quality of Celex, I also contacted each

Transport Ministry of the nine Member States to receive a full list from the national transposition databases dating back to the very first directive of the

transport acquis. Interestingly, 80% of the data – that is often referred to as

‘unreliable’ (Börzel 2001; Mbaye 2001; Mastenbroek 2003; Luetgert and wolf 2009) – matched the national data In only 20% of the cases I added further information on the national implementing instrument derived from the national databases There was no biased lack of information across the nine Member States or transport sub-sectors worth mentioning Incomplete data on the EU directives or the national implementing measures seems unrelated to Member States or transport sub-sectors Since these missing values are ‘random noise’ they are not expected to affect the findings in a systematic manner

Dann-In terms of completeness, Member States sometimes translate EU legislation by using more than one national transposing instrument For the purpose of this study, three primary considerations denote the first national legal instrument as the prudent choice (see also Berglund et al 2006): Representing

normally a key legislative measure in the national transposition process, it is with the first instrument that the ‘clock starts ticking’ As a matter of fact the first measure might not indicate whether the national transposition process is complete However, by using the first measure we can confidently ascertain whether there has been a delay while diminishing the possibility of exaggeration

of delays From a practical point of view, too, recording the first national ment makes sense because the Commission considers the first legal instrument notified as sufficient

instru-Data set

All in all, the EU transport transposition data set covers the period from 1995 to

2004 and includes information on the first 367 national implementing measures

in nine Member States covering 67 EU transport directives and representing 63%

of the total transposition acquis that Member States had to transpose before the

last enlargement round in 2004 To increase the quality of the Celex data (and thereby satisfy the recent efforts in the field), this study controlled for and added national data sources and tidied up the data set for analytical purposes

Operationalization: EU directive specific features

Transposition deadline set in directive: The lengths of granted transposition

time, i.e the time set in the EU directive fixing the period for notification of the national implementing measure to the Commission, are calculated by subtracting the deadline, set in the directive, from the date of publication of the EU directive

in the Council of Ministers Celex provides the full texts of the directives where the last but one article always includes the reference to the deadline, phrased as follows: ‘Member States shall bring into force the laws, regulations and adminis-trative provisions necessary to comply with this Directive by … ‘ The timeliness

for transposition deadlines set in the directives varies between 0 and 3.5 years

of discretion The discretion ratio varies in principle on a scale from 0 (no discretion) to 1 (full discretion) The rate for all 67 directives including all articles but the first (purpose) and the last (addresses) ranges between 0 and 0.7 accordingly

Operationalization: National level specific features

Number of veto players: The number of national actors bargaining the new

policy is contingent on the chosen type of transposing instrument, which differs across Member States Questions about how many ministries are involved, and how many national legal instruments are needed may depend on strategic calcu-lations or may be preconditioned by national trajectories Predicated mostly on administrative and ministerial traditions, one legal instrument is preferred over another Scholarly work (Steunenberg and Voermans 2005) shows that the number of transposition actors varies considerably and often goes beyond two Information on the national legal instruments for all Member States is drawn