Changing times, changing priorities

There is still plenty of work to be done for the European Commission’s lawmakers, even if the days of all-out harmonisation are over, the soon-to-retire head of the Commission’s legal service tells Dana Spinant.

Michel Petite, the head of the European Commission’s legal service, has predicted that despite member states’ efforts to retain control of taxation and social policy, the European Union will increasingly come under pressure to take action in these sensitive areas. Petite, who retires in January after 29 years with the Commission, does not believe that the high-water mark of Commission action has been reached. Because of the internal market, it would "be difficult to shelter some sectors, such as taxation or social matters". "There will be pressure to have legislation - not on everything, not on fixing the [tax] rates, but on a system - because advancing through court rulings is not optimal," he said.

Petite said that the European Court of Justice (ECJ) would be called to rule more and more often on cases of taxation or social issues. "The court’s role is to fill the gaps left by the legislator. When a question on direct taxation is posed to it by national courts, the ECJ is obliged to rule, applying the general principles of the treaty, while regretting there is no additional harmonisation on which it could base its ruling," he said.

He said that very often the Luxembourg-based court’s rulings had had the effect of generating legislation, for instance on air transport or the free movement of patients across the EU.

"It is the open-sky ruling, for instance, which de-blocked the air transport," Petite said, referring to the 2002 ECJ ruling, which addressed the legality of bilateral agreements concluded between eight member states and the United States and which triggered an EU policy for international aviation.

The Frenchman was an adviser to two Commission presidents, Jacques Delors and Romano Prodi, before he became the head of the Commission’s legal service in June 2001. He reiterated that despite some member states being irritated at what they see as ECJ interference in policy areas which they want kept under national control, the court had to issue rulings, when courts of the member states referred to it questions of interpretation of EU law.

"Member states are confronted with a paradox: some even contest the competence of the court to rule on some issues, although national judges themselves pose questions to the court, which it is obliged to answer on the basis of general principles of the treaty."

Petite added that the ECJ had a crucial role to play in making sure that in an enlarged and more diverse Union, EU law was uniformly applied by all member states and that no member state, irrespective of size, was given preferential treatment.

"The Court of Justice is a fundamental institution which plays a great role helping to prevent an explosion caused by the size [of EU membership] and to maintain uniform legal rules for all. It is a formidable force against the centrifugal effect of size and against special treatment of some member states."

Petite said that the EU was likely to play as important a role in the fight against climate change in the future as it does on competition and setting regulatory standards today. He said: "There are chances that the EU’s role on climate change will be similar to its role today on global competition."

He refused to comment on ongoing arguments inside the Commission over proposals which would impose on carmakers mandatory targets for reducing carbon dioxide emissions. They are the subject of fierce lobbying from some carmakers. Petite said: "While some industry sectors may think that they are penalised by pioneering EU action on climate change, ideas will evolve, as they did evolve on environmental protection."

Decades ago, industry had protested against stringent EU environment legislation, but now the need to protect the environment was widely accepted.

Petite, who was heading the legal service while the Commission vetoed a planned merger between GE and Honeywell and waged a legal battle against Microsoft, predicted that the EU was likely to remain a global standard-setter and a leading regulatory power in the world.

"The EU’s is one of the major regulatory systems of the world and I believe it is here to stay. It is more and more important."

He said that European standards were likely to be embraced by the other global economic powers because they were "balanced, optimal and are already the result of a compromise between member states".

He said that the Commission’s powers to punish member states for infringing EU law or to rule on global mergers or business practices were now widely accepted.

"What 25-30 years ago used to be considered an obscene Commission decision on infringements, for instance, became a routine decision nowadays. Infringements or competition decisions are daily business."

Petite said that while member states were urging the Commission to cut red tape, they were also putting pressure on the Commission to propose more legislation in some areas: "Those who demand that the EU produces less legislation are very often in the position of requesting more EU legislation." However, he said that he saw an opportunity to better legislate, as many proposals put forward by the Commission were about improving or simplifying past legislation.

"We are not at a time of all-out harmonisation, like at the time of the internal market, but of adaptation of existing norms, to eliminate anomalies, rationalise legislation which was crafted quickly in the past, or update it to technological evolutions. This is a window of opportunity to rationalise laws, in particular on the environment, for instance."

Petite rejected nostalgia for a golden era of EU integration, with a hyperactive Commission, and denied that the current Commission was a paler version of a more ambitious and stronger EU executive of the past: "This melancholy for the past is ill-placed: Europe has evolved very much, also because of its own progress and realisations: the enlargement is done, so are the euro and the internal market."

He added that "what is necessary now is not what was necessary 20 years ago", when the single market was built. "We are not in the accelerated harmonisation phase anymore. We have priorities of a different nature," he added.

Petite defended the cautious approach of Commission President José Manuel Barroso in securing agreement from the member states for most proposals before publishing them: "It is a very admirable political concern not to hit the wall, to estimate the possible room for manoeuvre."

Petite said that "the effect of size", with the addition of 12 new member states since 2004, was being felt by the EU institutions. "It makes decision-making more difficult. Decisions are taken, but practices around decision-taking have evolved - they are different from when there were only nine members, for instance," he said. But he added that the parallel increase in the use of quality majority voting "corrected the effect of the size".

Petite, who advised Barroso on the negotiation of the Lisbon treaty, which was signed last week (13 December) and is expected to enter into force in January 2009, said that the institutional innovations brought by the new treaty were significant, but that member states had to have the political will to apply them. "There is a risk, I believe, of inertia, if the innovations are not fully used in practice, a risk of policies continuing being as they are now."

There is still plenty of work to be done for the European Commission’s lawmakers, even if the days of all-out harmonisation are over, the soon-to-retire head of the Commission’s legal service tells Dana Spinant.