Regional Economic Exceptions Threaten Supranational Cohesion in the EU

By: Sean McClelland

Apparently, Swedes love their snus. Snus is an orally ingested form of tobacco consisting of wrapped packets of moist leaves, placed for extended periods under the lip of the consumer. Since the 19th Century, snus has been manufactured, distributed and consumed in Scandinavia, receiving widespread popularity in Norway and Sweden. Sometimes hailed as a substitute for smoking, it has become remarkably culturally relevant to Swedes in particular, who view the EU’s attempt to ban the manufacture and sale as a commercial and cultural assault on Sweden’s smokeless tobacco industry.

The snus battle is but one of many points of economic contention in a trans-national community that is becoming increasingly defined by a war over unique regional economic policies. Under the current sovereignty distribution scheme, the European Union is forced to make legal and regulatory compromises with joining states, often erecting barriers to the efficient functioning of the Eurozone as a whole.

At the same time, these exemptions often foment discontent among existing member countries. This holds particularly when economic calamity strikes periphery states like Greece, which has had instances of idiosyncratic pieces of legislation that discriminate against non-Greek Europeans. Ultimately, the clash of regional economic ideology in exemption-seeking member states gets to the very core of many issues plaguing the Eurozone as a whole. Similarly, the European attempt to form and maintain a union of disparate economic interests – let alone social, cultural and political interests – brings  to memory many of the struggles in the early years of the United States’ own sovereignty distribution scheme—federalism.

Without a doubt one of the most monumental news sagas in recent memory has been the Eurozone scramble to scrape together enough cash to save Greece from certain financial ruin. Interestingly, this long frenzy has come to be defined not by the largely expected Greek resistance to austerity measures, but instead by the intense hand wringing and inaction on the part of Northwest EU states. At its core, this precipitous time was spurred by deeper-seated economic differences between the core, rich European countries and the poorer periphery. Rich states like Germany, who originally outlined the powerful rhetorical language of EU charters prohibiting discrimination against nationalities (the clearest example can be found in Article 21 Section 2), became outraged at periphery countries and threatened to withhold funds vital to economic rescue.

Most threatening to the cohesion of the European Union, however, was a willingness years earlier to overlook the financial problems of entering member states. Greece was largely admitted to the Eurozone (and, importantly, reached the highest level of integration in the European Monetary Union—adopting the Euro as common currency) despite no visible progress towards cooperation with critical economic regulations outlined in EU charters. Among the charters, those concerned with deficit limitation (for example, Article 126 of the Treaty on the Functioning of the European Union, under which deficit limit was set at roughly 3% of GDP) were routinely ignored by Greek legislators and, indeed, not adequately enforced upon Greece by core EU countries.

In fact, as later became clear, the flaw in the EU’s structure lied in the relatively weak ability of the central EU authorities to force member states to adopt any sort of regulatory scheme; any sort of deficit-reduction matter would have to be pushed upon Greece under threat of default.

As a burgeoning political confederacy, the EU shares many traits with the United States under the Articles of Confederation and, indeed, American sovereignty distribution up until the Civil War. Even in the post-Civil War era of federal dominance, many powerful statutes at the national level are only able to influence the states by dangling fund incentives or threatening grant reductions. For example, Sections 1122 and 1124 of No Child Left Behind encourage states to “teach to the test” in order to earn federal grants. Using the proverbial stick, Section 158 of The United States Code on Highways outlines the manner in which the federal government can withhold highway funds from states that do not comply with minimum drinking-age laws. Acts like these manipulate portions of the American Constitution such as the 14th Amendment, The Commerce Clause (Article 1, Section 8, Clause 3) and the Supremacy Clause (Article 6, Clause 2) to get around the spheres of power held by the states under the 10th Amendment.

Looking at the trajectory of the United States—a transition from decentralized power reminiscent of the modern European Union to a system more or less dominated by a federal government intent on pushing its agenda upon the states—gives us a glimpse as to how the regional exceptions in the EU may pan out. Either the Swedish snus industry (or Greek’s high deficits) gets curtailed, the European Union earns stronger enforcement mechanisms and existing regional exceptions get systematically removed in favor of a stronger centralized European authority or the threats to social cohesion (whether social, political or economic exceptions) prevail. That is to say that the European Union must either become more federal or must devolve into something more akin to a free trade area. Europe’s current regulatory regime that is predicated on the interaction of uniquely individualized countries interacting within a weak regulatory community is inherently at odds with the current paragon of European achievement: the Euro.

Either the EU becomes more cohesive, specifically abolishing regional exceptions, or suffers the fate of the Articles of Confederation, which aptly described their doomed framework as a “firm league of friendship."

Sean McClelland is a second year Law, Letters, and Society major in the College.