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«Paper to be presented at the ECPR Joint Sessions, Workshop 17: European domestic societies in the face of European integration and globalisation. ...»

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Europeanisation and domestic policy-making in small open

economies: A comparison of five policy cases in Belgium and


Paper to be presented at the ECPR Joint Sessions, Workshop 17:

European domestic societies in the face of European integration and


Marie-Christine Fontana

Institut d’études politiques et internationales, Université de Lausanne

Contact: marie-christine.fontana@unil.ch

First draft, comments are welcome.


European integration challenges domestic societies and affects their politics.

However, how and through which causal mechanisms domestic policy-making is affected has hitherto not been the object of much scholarly interest. Several, often contradictory, theoretical assumptions contrast with little empirical research. In this paper, we analyse these contradicting hypotheses of how European integration is expected to affect domestic policy-making in small open economies, particularly exposed to external pressure. The results from ten case studies show that European integration does not foster concertation, as internationalisation did in the past. On the contrary, it tends to weaken concertation by empowering the executives.

However, this effect should not be overestimated. In addition, European integration has no effect on the parliament and the executive-legislative relationship. An interesting and somewhat surprising result is that indirect Europeanisation has not a weaker impact on domestic policy-making than direct Europeanisation - policy-making in Switzerland is equally affected than policy-making in Belgium. Overall, the impact of European integration remains limited, and its interaction with other, mainly domestic factors must be accounted for in order to understand the extend of this impact.

Intro du ction 1 Already in the 1970s, the “second image reversed" literature argued that developments in the international realm might affect domestic politics, in particular regime types and coalition patterns (Gourevitch 1978). And Katzenstein (1985) showed in his seminal work on Small states in world markets that economic openness and exposure to international competition strengthened corporatist policy-making arrangements in small European states such as the Scandinavian countries, Netherlands, Belgium, Austria, and Switzerland. Because of the vulnerable stand of these countries in the international realm, domestic conflicts had to be avoided and a need for consensus emerged.

Over the last thirty years, economic globalisation and political internationalisation have increased and have become even more important for domestic societies.

The most important development for European states has been the process of European integration, which led to the emergence of an impressive body of literature on Europeanisation (e.g. Börzel and Risse 2006; Cowles et al. 2001;

Featherstone and Radaelli 2003; Graziano and Vink 2007; Héritier et al. 2001;

Radaelli 2003). While the largest part of this literature studies the impact of European regulation2 on domestic policies, fewer studies analyse the impact on policy-making (Falkner et al. 2005; Héritier et al. 2001; Moravcsik 1994; Schmidt 2006; Thatcher 2004). Moreover, the effects of European regulation on domestic policy-making remain disputed. Therefore, in this paper, we analyse how and through what kind of mechanisms European integration affects domestic policy-making patterns, and how this interacts with more global and with domestic factors.

We focus on small European states with open economies, which are less influential in the international realm and which are at the same time more exposed to external pressure than big states (Katzenstein 1985). These states have a tradition of corporatist policy-making, and its interaction with external European impact is object of contradicting expectations and so far little studied.

Some argue that European integration strengthens concertation and agreements among domestic actors, while others argue that it leads to a redistribution of resources and thus to unequal or differential empowerment. A further aspect of This paper draws upon research conducted in the framework of the research project "The impact of internationalization on Swiss policy processes in comparative perspective", (dir: Prof. Ioannis Papadopoulos) funded by the Swiss National Fund for Scientific Research (National Centre of Competence in Research "Democracy in the 21st Century"). We gratefully acknowledge financial and organisational support. We also thank Alexandre Afonso, Stéphanie Andrey and Florian Roby for their case study analyses and Ioannis Papadopoulos for his useful comments.

Regulation understood in a large sense as European policies, not in the narrow sense of a European regulation (a specific instrument of the EU which, unlike directives, is directly valid in the member states, without transposition).

domestic policy-making analysed in this paper is the executive-legislative relationship. Here too, contradicting expectations as to how it is affected by European regulation can be found in the literature: Parliaments are generally considered as “losers” in the Europeanisation process, but perhaps they are just “latecomers” and have reacted to their loss of influence by developing counterstrategies (Maurer and Wessels 2001). In short, in this paper, we scrutinise which one among the circuit of policy-making, concertation among social partners, the government, or the parliament is able to take a leadership role in policy-making, and what allows it to be domestically successful under conditions of external impact.

More precisely, we compare policy cases in Belgium and Switzerland. While both countries have a long tradition of corporatist policy-making or concertation (Katzenstein 1985; Lijphart 1999),3 they differ in their EU membership. Within the two countries, we compare cases with a European regulation with cases without a European impact. These "control cases" (Haverland 2006) allow to better asess whether European integration affects domestic policy-making. A difficulty in analysing the impact of European regulation on domestic policymaking is its interaction with more global developments. While this is probably less the case for positive integration such as environmental or social policy,4 the major part of European regulation (and the policy cases analysed in this paper) concerns negative integration or market-making measures (Scharpf 1999), which are part of a more global trend of marketisation (Djelic 2006). Hence, European regulation is often influenced by global policies - it is then an intervening factor between global trends and domestic reforms. While the question whether policy reforms are more due to globalisation or to European integration (Levi-Faur 2004; Verdier and Breen 2001) is beyond the scope of this paper, and a separation of the two factors will empirically often be difficult, in this study, we will take into account whether and how European impacts interact with more global factors.

Drawing upon detailed case studies, our paper shows that European integration affects domestic concertation, but has no effect on the executive-legislative relationship. However, this effect is limited and interacts with more global and domestic factors. In addition, we observe more general transformation of domestic policy-making in the small European states Belgium and Switzerland, questioning their categorisation as states with corporatist policy-making (for Switzerland Kriesi 1998; Neidhart 1970; Papadopoulos 1997), (for Belgium Deschouwer 2002;

Fitzmaurice 1996; Jones 2002) Often object of Europeanisation studies, notably environmental policy.


The rest of the paper is structured as follows: first, we discuss the theoretical expectations regarding the impact of European integration on domestic policymaking, and we present rival hypotheses discussed in the literature. Second, we present the logic of comparison and our methodological approach. In the empirical part, we first briefly present the policy-making processes and the causal mechanisms involved in the ten cases. We then test the hypotheses on this basis. We conclude with a synthesis of our findings and some general remarks on policy-making in the two countries under scrutiny.

Eu ro peansatio n & do mesti c polic y- m akin g : cont radi cting hy poth eses

Europeanisation is generally understood as the impact of European integration on domestic policies, politics and polities - "the domestic impact of Europe" (Börzel and Risse 2006). In this paper, we further differentiate between direct and indirect Europeanisation (Sciarini et al. 2004), which is related to the comparison of the EU member state Belgium with the non-member Switzerland. European policies not only affect member states, which are obliged to adopt them, but also non-members such as Switzerland, which often adapt to European policies. This is particularly true for negative integration or market-making, because here, adaptation is necessary in order to participate in the European market. Indirect Europeanisation therefore refers to the possibility of voluntary adaptation, in Switzerland also called 'autonomous adaptation'. Direct Europeanisation occurs when a European regulation must be adopted by a (member) state, e.g. in the case of a European directive. However, direct Europeanisation also exists in Switzerland, because of bilateral agreements with the EU, for example the free movement of workers.5 Hence, we analyse how European integration affects domestic policy-making within and across the borders of the EU. In small European states with an open economy, two elements of policy-making are supposed to be particularly affected: concertation among social partners and the government on the one hand, and the executive-legislative relationship on the other hand. Regarding both elements, contradicting expectations of European impact are presented in the literature.

Also within the European Union, indirect Europeanisation is possible, for example with the Open Method of Coordination. See also the differentiation between vertical and horizontal integration, e.g. Radaelli (2003: 40f.), Vink and Graziano (2007: 12f.), and the terms of ‘hard’ vs. ‘soft’ Europeanisation.

Eu ro pean int eg ration an d con c ert ation in do m estic polic y- m aking

Concertation, or corporatist policy-making, means that major interest groups such as the social partners and the state negotiate a common solution in policymaking: it is a "joint process of decision-making, with privileged position of social partners compared with other interest groups (ex: tripartite committees)."

(Falkner et al. 2005: 236). According to Katzenstein (1985), this type of policymaking was reinforced through the exposure of small European states to the international economy in the 1970s and 1980. Some years ago, he argued that European integration still has the same effect on concertation than internationalisation had thirty years ago, i.e., that European integration reinforces internal cooperation and compromise-seeking (Katzenstein 2003). Also the existence of a “semi-pluralist” system of interest intermediation at the EU level could foster concertation at the domestic level through mimetism (Schmidt 2006). Consequently, we will expect that concertation is stronger in cases with a European regulation than in domestic policy cases without external impact. The

first hypothesis then is:

H1a: Concertation is stronger in cases with a European regulation than in noneuropeanised cases.

This impact on domestic policy-making is questioned by the argument that European integration empowers domestic actors unequally, leading to "winners and losers" (Thatcher 2004). The consequence is that the “winners” will be less willing to cooperate with the “losers” in concertation, and to make concessions which are necessary in order to find a compromise. This leads us to a second,

contradictory hypothesis:

H1b: Concertation is weaker in cases with a European regulation than in noneuropeanised cases.

However, there is disagreement in the literature about which actor(s) will be the winners of Europeanisation. Moravcsik (1994) has argued that executives will be reinforced because they can play a two-level game: thanks to their participation in European policy-making, they can introduce new domestic policies arguing that the EU forces them to do so. While this hypothesis is based on an intergovernmentalist approach, an international economy perspective expects capital and business interests to be reinforced. Globalisation, and thereby also the economic dimension of European integration, empowers capital and their interest representatives in domestic policy-making, arguing that reforms are necessary in order to guarantee or strengthen the economic competitiveness of the country. They may even threat moving away if their demands are not respected (exit option) (Milner and Keohane 1996). The losers are trade unions, but also the government. Still a different approach has been developed by scholars with a comparative politics approach.6 They understand European integration (or a European policy) as a new opportunity structure that redistributes resources and power among domestic actors such as the government, the parliament, and interest groups, in particular the social partners (Héritier et al. 2001; Knill and Lehmkuhl 2002; Thatcher 2004). Which actors will be empowered by this opportunity structure depends on domestic actors coalitions and on other domestic characteristics. However, by offering justification for a domestic reform, this opportunity structure will mainly strengthen actors in favour of the corresponding European policy (which is often about market-making). Even more, these actors can “use” the European policy as an impulse in order to set the topic on the domestic agenda. Although this is a resource particularly useful for executives, the main domestic agenda-setters, it is not limited to them - social partners such as business associations can push toward a reform by lobbying (Moravcsik 1994; Thatcher 2004).

Eu ro pean integratio n an d t he do m estic executiv e-legisl ati ve rel ation ship As regards the executive-legislative relationship, it is often assumed that the executive will be reinforced to the detriment of the parliament because the former is more involved in multi-level governance (Andersen and Burns 1996;

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