European Union Federations Research Articles

‘Obligations of good faith’: on the difficulties of building US-style EU federalism

The sovereign debt crisis has exposed the weaknesses of the regulative and institutional arrangements of the European Monetary Union. A number of American scholars have highlighted that there are lessons on federalism for Europe to learn from the USA. But to what extent can the US model of fiscal federalism be transferred to the European context? Our general assumption is that besides the differences of the historically developed institutions, structures and economic concepts, it is the different logic that has and is driving the two integration processes that would impede such a transfer. Basing the argument on Oates’ theory of two generations of fiscal federalism, we see that the USA – building on a firm constitutional framework – provided for a crucial role of central government in macro-economic stabilization, whereas the European Union (EU) style of fiscal federalism remains contractual. Although transfers are inevitable, the EU shuns the logic of financial solidarity as economic divergencies cannot be harmoniously accommodated by a commitment to a common constitutional framework. As crisis management largely relies on an intergovernmental decision-making process, it enhances the power of creditor states vis-à-vis the debtor states and follows the logic of ‘surveillance and punishment’. The European emphasis is on controlling the moral hazard and the most likely outcome of the crisis will be differentiated integration.

EU Federalism and the Governance of Financial Reporting

The European Union (EU) is built on the federalist principle of subsidiarity, which we consider in the policy field of financial reporting. We attempt to answer the question, whether the current accounting regulation in Europe is sensibly balanced between centralized and decentralized decision making. Drawing on comparative accounting research to identify criteria for “local preferences,” we conclude that local solutions currently remain preferable for small and medium-sized companies. For them, a centralized solution would result in additional costs for at least some member states and their residents. Large international firms, in contrast, face an increasingly integrated capital market and rather need a central solution as currently implemented by the EU. However, recent developments in corporate finance may align local preferences on accountancy in the future.

European and international framework agreements: new tools of transnational industrial relations

In recent years transnational framework agreements (TFAs) at global and European level have emerged as a new tool of regulation within transnational companies. Based on an outline of the origins of TFAs, a quantitative overview of TFAs and an analysis of the strategies pursued by global and European union federations in concluding TFAs, this article discusses whether and how these new tools advance the internationalisation of industrial relations. The article concludes that a whole range of sector- and company-specific conditions must exist for a TFA to be signed. Where they exist, TFAs give global and European union federations as well as European Works Councils a recognised place in the area of global social regulation, and there are cases in which they have successfully been used to solve local conflicts. Research carried out by the authors suggests that TFAs, if used strategically, have the potential to contribute to the development of international industrial relations at company level and even, in the long term, to facilitate the trade unions’ organising activities. However, because of the small number of TFAs, currently fewer than 150, their contribution to the internationalisation of industrial relations has so far remained limited.

EU Federalism and the Governance of Financial Reporting: Cost and Benefits of Centralized Standard Setting

The European Union (EU) is constructed under the federalist principle of subsidiarity, which this paper con-siders in the policy field of financial reporting. We attempt to answer the question whether the current governance level of accounting regulation in Europe is balanced between centralised and decentralised decision making. In order to identify needs, which are crucial for being able to decide upon the importance of decentralised coordination, our analysis applies insights from comparative accounting research. Following the extant literature we focus on three criteria: a) the member states' legal systems, b) the micro and macro-structure of European capital markets, and c) taxation. Using the federalist framework, we conclude that local solutions in accounting currently remain preferable for small and medium sized companies, while big listed firms rather need a central solution as currently implemented by the EU. Large groups are mostly international themselves and face an increasingly integrated capital market (both globally and across the Union); small and medium sized companies operate still in locally different business environments with strong national peculiarities and preferences. For them, a centralised solution would result in additional costs for at least some member states and their residents. Recent changes in corporate finance may change this situation, however, by aligning local preferences on accountancy.

The Structure And Dynamics Of Eu Federalism

This article analyzes European Union (EU) politics through the lens of comparative federalism. The article assesses the contributions that rationalist and constructivist approaches can make to the analysis of EU federalism, focusing on two broad questions. First, what explains shifts in authority from the state (i.e., member states) to the federal (i.e., EU) level? Second, what explains the degree to which the federal government constrains state discretion? This article develops testable hypotheses based on the rationalist and constructivist perspectives and presents a set of initial plausibility probes. The article shows that there is considerable room for dialogue between rationalist and constructivist perspectives and together they can provide a more comprehensive explanation for the dynamics of EU federalism.