P RODUCERS VS . C ONSUMERS

In the past years, regulatory issues have been redefined and are increasingly embracing the producer-consumer dimension (Young and Wallace 2000: 17). The Treaty of Amsterdam amended Article 153 (formerly 129A), granting the EU a vital role in promoting higher levels of consumer and environmental protection, to which the co-decision procedure is generally applied. However, national regulatory preferences remain highly varied and reflect different views on the notion of risk about product safety and contrasting perceptions as to how far the EU should intrude on agricultural and industrial production (Young and Wallace 2000: 17).

There is a wide spectrum of national standpoints on the significance and level of civic or consumer protection, with the north generally willing to actively champion such issues on the European level. With the EP as a strategic ally they have succeeded in anchoring consumer matters on the supranational agenda by generating a series of legislation on quality controls and product safety.

The diplomats and EU experts (DG Agriculture, Enlargement, IM) were requested to the elaborate on the expectations of the CEECs in terms of creating further consumer-oriented legislation. Thanks to the high correspondence of the collected results, the mean standard deviation was a mere 2.48. The scale indicates that the coalition of southern states will find support from the East:

Figure 7-5. The producer-consumer divide in the EU-25 (mean standard deviation 2.48)

SLO CY H SK M LV

PL EST LT FIN

E F GR I P CZ B IRL SQ L Com A D EP S DK GB NL

0 10 20 30 40 50 60 70 80 90 100

strongly on the side of production strongly on the side of consumers

0- against further consumer oriented regulation of the agrarian and industrial sectors 100- support extensive consumer-friendly regulation of agrarian and industrial sectors

EU 15 EU 25

Minimum – Maximum 0 100 0 100

Mean 45.9 28.2

Median 53 5.5

median weighted by Council votes 26 5.5

Standard Deviation from mean 37.4 36.2

Skewness -.01 .83

(see Appendix C for calculation technique)

Enlargement could thus fundamentally alter the legislative inertia between producer and civic interests in the EU by bringing 10 producer-friendly actors with nearly identical preference values onto the playing field. The reasons for this aversion to further consumer-friendly legislation are manifold. Contrary to widespread expectations, regulatory competition and market liberalization have not prompted a race to the bottom (see Young and Wallace 2000:

28). Instead, in the past years the Olsonian reasoning that production interests are privileged by producers’ superior capacity to organize has come under fire by a series of consumer-friendly legislation in the EU having cumulated in a recent trend towards tougher standards (see Hix 1999a: 239; Young and Wallace 2000: 8-13; Olson 1965).

Consequently, an array of consumer-friendly legislation has emerged (i.e. food, product and medicine safety and labeling, transport conditions) which is often higher than national standards. Despite significantly lower levels of socioeconomic and industrial development, the CEECs must adopt these strict laws as an accession prerequisite. This has prompted them to embark on a painstaking process of harmonizing existing or non-existent legislation of this caliber according to EU law (see Gorton et al. 1998; Strezynska 2000; The White Paper 1995). This puts the transformation states in a bind. They are required to demonstrate visible proof of their capacity to “digest” the single market acquis, even though this type of legislation is costly and detrimental to their economic transformation and industrial development. This burden is compounded by the fact that the CEECs will most likely not be entitled to the same amount of financial support as the southern states to overcome the disadvantages brought on by increased external competition and higher environmental protection. In other words, the CEECs are expected to endure immediate costs for potential integration benefits in the long run (Hughes, Sasse, Gordon 2002: 333).

On these grounds the CEECs lament the harsh strain put on agricultural and industrial production in adopting the acquis and assert that a transitional phase is inevitable before consumer interests will find support. Because the current modernization process continues to rely on low labor costs, all CEEC respondents clearly rejected any further such legislation. As the Washington Consensus has led to politics of capital account liberalization, macroeconomic stabilization and trade liberalization (see Nørgaard 2000a: 2; Bodenstein and Schneider 2001: 6), low production costs are a sina qua non for an investment-friendly environment. The research conducted revealed no evidence, though, that the CEEC preferences will be more extreme than those of the existing producer-friendly states (e.g. E, P,

GR). Finally, Olson’s logic of collective action indeed does apply to the domestic context of the CEECs, in which consumer interests are dispersed, poorly organized and politically inconsequential (partial exceptions: H and CZ) (see Strezynska 2000). As for the stability of the given preference profiles, that data indicate a harsh shift towards producer interests:

Figure 7-6. Kernel Density Estimates: Consumer interests EU-15 and EU-25

After a period of legislative progress on consumer affairs, the data point to the danger of legislative rollback, as the consumer-friendly voting block will suffer a significant loss of political leverage. This improves the position of the producer-oriented southern states, who have often posed an obstacle to the creation of any further legislation that burdens producers.³⁴ This has the logical implication that the current legislative core will expand considerably, as a majority of new and old members are resistant to any SQ-change .

Table 7-2. Producers and Consumers in the enlarged Union: Potential Coalitions

Status Quo

34 The Nice stipulations apply to an EU with 27 members. The exact threshold for a QMV and blocking minority with 25 members have yet to be determined. The highest possible QMV under any circumstances was fixed at 73.4, which will be used here as a benchmark.

In the past, though, the EU has been more successful in adopting so-called product standards (e.g. environmental legislation, product safety) in the midst of preference heterogeneity than process standards (labor protection measures; see section 7.3) (Hix 1999a: 234). Scharpf (1996) demonstrates this dilemma in game-theoretical terms. Here, the richer countries prefer an agreement on higher standards, while the poorer countries advocate lower, more flexible standards. The decisive point, though, is that both sides prefer any agreement on high or low standards to non-agreement, because non-agreement would cause unbearable negative externalities, e.g. internal market and competition distortions, cross-border pollution. Thanks to strategic agenda setting and QMV, the forerunners have been able to drag the laggards towards their ideal position (Hix 1999a: 233). However, as enlargement will reduce the relative power of the consumer-friendly block, the likelihood of such tactics without profound institutional modifications is limited.

7.2.1. Environment: The producer-consumer dilemma

The collected data imply that environmental protection is inextractably intertwined with the consumer-producer divide (see correlation matrix figure 8-1). Fearing that too strict regulations would hamper industrial production E, I, UK, P favor more relaxed common standards. In particular NL, D and the Nordic states have advocated stringent legislation which many southern European states have been unable to adopt (see Tsebelis 1994;

Holzinger 1995). GR, IRE, B, and F can generally be regarded as “fence-sitters”, sometimes supporting and other times rejecting such legislation. An even more severe gap exists between the western and eastern parts of the continent in terms of the level and quality of environmental protection. The goal of the interviews was thus to determine the degree of preference variation among the candidates and establish to what extent the environment has arrived on the domestic political agenda. Each policy maker was requested to transmit an ideal point into the following structure, with 0 symbolizing the total rejection of any further environmental standards and 100 representing the advocacy of strict, unitary EU standards.

Figure 7-7. Environmental protection: spanning the divide (agg. stan. dev. 6.49)

LV H ^GR

(sources for EU-15: Tsebelis 1994; Holzinger 1995; Young andWallace 2001; Bomberg and Peterson 1999)

EU 15 EU 25

Minimum – Maximum 16.7 100 0 100

mean 63.9 45.3

Median 50 33.3

Median by Council votes 50 41.7

Standard Deviation (From mean) 31.9 34.2

Skewness .13 .7

(see Appendix C for calculation technique)

The results – which delivered an aggregate standard deviation of 6.49 - indicate that enlargement will multiply the existing heterogeneity both in terms of standards, but also expectations. All data point to the reluctance on the part of the CEECs to tolerate further environmental measures on the EU or national level and a preference for the greater flexibility in product standards. However, a moderate degree of variation could be identified. The experts indicated that PL, SK and M will most vigorously reject further legislation. However, SLO and LT have suffered a lower degree of mass industrialization and environmental destruction and will not shy from further protection measures.

The data do not reflect an eternally hostile attitude of the CEECs to all environmental legislation, but should instead be interpreted as the impact of the burden inflicted upon the CEECs while quickly improving the environmental situation within the framework of the acquis, e.g. in area of carbon dioxide emissions.

Figure 7-8. Rapid progress in environmental protection

(source: Eurostat 2002)

Despite progress, it is assumed that the CEECs will promote policies which would give them greater flexibility in setting their own economic goals (selective alignment: see section 7.5).

However, as EU-15 producers strongly oppose lenient provisions on product and process standards for the new members, a high conflict potential exists. Their central argument against production flexibility is that it would create an uneven playing field and give eastern

P e r c a p ita e m is s io ns o f c a rb o n d io xid e in to n s

0 5 10 15

C Y C Z E S T H LV LT P L S K S LO

c o u n try

tons

1996 1999

producers a competitive advantage over those who truly adhere to more rigid standards (Sedelmeier 2002: 640). The data illustrated do not go to say that the coalitions mapped out are forever fixed. In their quest for a level playing field, it is highly plausible that environment- and consumer-conscious northern states will ultimately attract the support of the so-called “fence sitters” (B, GR, F) and southern members (as well as more environmentally conscious CEECs) to obtain the necessary majority amidst the broad resistance. This would deny the low-cost states any comparative production advantages. However, the Nice stipulations (see table 7-2) and their inherent status quo bias do little to enhance the Union’s ability to span this divide despite the QMV rule. In light of these realities, there is reason to expect a more gradual and cautious strategy on the part of the Commission and its allies in pushing the SQ towards further environmental conservation.