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EU competences

What does the EU do? And what can it legislate and regulate?

Here are all the things that are in the EU’s exclusive remit to legislate and regulate.

CANDIDATES RUNNING FOR the European Parliament are often criticised for raising domestic issues during their campaigns.

This is because the EU has a complex and strict number of powers which limit what members of the European Parliament (MEPs) can and cannot control in the member states.

In this explainer, we’ll take a look at the EU’s exclusive competences, which are areas of society and the economy of the member states that are within the EU’s control to regulate. 

We’ll also give some examples on what the various European institutions have done to regulate these areas over the last five years.

Before we get into that, here’s a reminder of how the EU institutions work:

  • The European Council represents the member states’ heads of Government (the Taoiseach, Prime Ministers and Chancellors) and set the agenda of the EU
  • The Council of the EU represents the member states’ ministers who agree, disagree and recommend changes to new laws proposed in the EU
  • The European Commission drafts, proposes and amends new laws, based on the agenda laid out by the European Council
  • The European Parliament looks at the Commission’s proposals and makes changes to them before coming to an agreement and sending them back
  • If you’d like to know more about this process, you can read our explainer here.

Every group has a role to play within these powers, known as competences: the European Parliament has one committee per competence, while the Commission has a dedicated Commissioner and ministers in each country oversee the implementation of new laws.

Maynooth University professor John O’Brennan, whose work focuses on European Union institutions and politics, said the EU’s exclusive powers mainly focus on solving “collective action problems”.

Ministers and MEPs from each member state also play a specific role in the “complex tapestry of power and decision making” so that the population of the EU has its say on new laws as well.

O’Brennan said that the introduction of new competences over time “reflects the sense that there were certain things that member states just could not do alone, so they had to be managed collectively”.

Christy Anne Petit, the deputy director of Dublin City University’s Brexit Institute – which studies and examines European policy post-Brexit – also pointed to how previous treaties, signed by all member states, gave the EU consent to take control of these policy areas in full.

So, what are these policy areas?

Customs Union & Monetary Policy

The Customs Union relates to the free movement of people and the completely free trade of goods being imported and exported between member states.

Monetary policies only apply to countries in the Eurozone, which currently covers 20 out of the 27 states.

The EU’s policies around money aim to protect and future proof the euro, monitor how each member state is doing economically and make sure the countries in the Eurozone can survive external market shocks, such as recessions in countries outside of Europe.

ecb-european-central-bank-frankfurt-am-main-hesse-germany The European Central Bank in Frankfurt, Germany. Alamy Stock Photo Alamy Stock Photo

The EU does not have a say in how member states manage their public expenditure or domestic investments, however.

Therefore, it allows the ministers and governments from each European country to decide which schemes to opt in or out of. (By way of example – finance minister Michael McGrath said recently that Ireland would not be investing in defence bonds for the EU).

Instead the EU introduces rules, through the European Central Bank (ECB), for how each Eurozone member prevents the value of the currency from falling or becoming inflated.

The inflation rate, and other measures such as bankruptcy and recession aid, are also managed through the ECB.

Last year the central bank, located in Frankfurt in Germany, increased interest rates 10 times in a row in an attempt to curb inflation rates.

While it did have a big impact on people with outstanding bank loans and mortgages, it stopped the inflation rate from increasing – which would devalue the euro. Petit said this is one of the many benefits of the current monetary policies.

She added that the “medium-term” plan of the EU is to introduce the remaining seven member states into the Eurozone.

While the policies have been a success, there is some debate over whether or not the EU should also develop an economic union to have joint-spending schemes across the bloc.

Currently, certain initiatives by the Commission, Parliament and Council – such as retrofitting public buildings and developing better energy infrastructure – will require states to cover the costs (with their consent). This is called economic coordination.

However, the lack of uniform economic policies does lead to some of these initiatives being cheaper to carry out in some member states than others. Petit said harmonising this is still a “work in progress”.

Competition and Commercial policies

Legislation passed by the EU around competition and other commercial policies is another key area, given the single market which all member states are a part of.

These policies impact businesses operating in the EU.

The EU’s single market is one of the largest economies in the world which makes it an attractive place for businesses, entrepreneurs and other countries who want to trade inside of it.

Regulating these markets to avoid monopolies and create an active, thriving but fair, capitalist economy for European citizens is the main goal for decision makers on new competition and commercial policies in the EU.

Some of this work is done at the European Council and Council of the EU which negotiate trade agreements with other countries.

This is why there was an increased effort from European ministers and leaders to avoid a No-Deal Brexit, as cutting trade agreements between the bloc and the United Kingdom would have had devastating consequences.

the-european-investment-bank-eib-offices-in-luxembourg-it-was-established-in-1958-under-the-treaty-of-rome The European Investment Bank in Luxembourg. Alamy Stock Photo Alamy Stock Photo

Petit explained that the main goal of the competitive policies is to create a level-playing field for businesses, so that each one can compete at the same level in the EU single market regardless of the size of the company.

Recently, there has also been increased efforts from within the EU to bring in stronger regulation on digital markets and, according to Petit, this is seen as the bloc attempting to appear more powerful on a global scale.

Two of the main pieces of legislation brought into action in recent months are the Digital Markets Act (DMA) and the Digital Services Act (DSA). The European Commission and the European Court of Justice are in charge of enforcing these measures.

In March, for example, Apple was hit with an excruciatingly large €1.8 billion fine by the Commission after it was found to be breaching the DMA by not providing equal opportunities for all app developers on their devices.

The DSA aims to ensure that EU human rights laws and other social laws are adhered to on social media platforms.

In December, the Commission opened a probe into X (formerly Twitter) over alleged disinformation that was posted onto the platform about the 7 October attacks.

brussels-belgium-15th-dec-2020-press-conference-by-executive-vice-president-margrethe-vestager-and-commissioner-thierry-breton-on-the-digital-services-act-and-the-digital-markets-act-in-brussels EU Commissioner Thierry Breton is in charge of enforcing the DSA. Alamy Alamy

The EU itself is also a single entity in the World Trade Organisation, where negotiators can network and create better agreements with other countries outside of the single market.

It is hard for the EU to compete with other countries with large markers, such as the US or China, due to the differences in national policy.

However, schemes such as the European Economic Area help to broaden the scope of the single market by including countries in the rest of Europe in a lucrative deal to trade with the EU for free without having to become member states.

Common fisheries policy and International agreements

Fisheries regulation for countries like Iceland, of which the vast majority of its economic activity comes from the fishing industry, or having a third-party broker for international agreements for countries like Switzerland, which holds an enormous value in their neutral stance, wouldn’t sit well with their respective populations.

Therefore the European Economic Area allows these countries, as well as Norway and Liechtenstein, be involved in the valuable single market without being subjected to the same regulations as other member states.

This is an important point considering some of the regulation in these areas has gotten stricter, especially with the introduction and ramping up of the EU Green Deal – which plans to halve emissions in just three years time and reach net-zero emissions by 2050.

clonakilty-west-cork-ireland-20th-apr-2021-irish-fishing-boats-are-now-no-longer-allowed-to-weigh-their-catches-at-sea-the-fishermen-must-now-weigh-their-catches-on-landing-with-immediate-effec Boundaries and licences are also managed and regulated by the respective member states' authorities. Alamy Stock Photo Alamy Stock Photo

The Green Deal completely revamps the EU’s common fisheries policies, by placing a renewed focus on creating a sustainable environment at sea through investing in offshore energy.

Additionally the eco-friendly laws have promoted marine biodiversity and introduced funding for beach and ocean clean ups.

While these measures hope to keep the ocean clean and healthy, other measures, such as increased caps on stock and restrictions on the types of fish which fishers are allowed to catch, have also been introduced.

With these increases, funding for fisheries has also grown to subsidise much of their costs – but there is still a large amount of work yet to be complete to adequately compensate European fishers.

Boundaries and licences are also managed and regulated by the respective member states’ authorities and adhere to regulation introduced by the EU institutions.

The EU, in return, set up trade arrangements and regulate the market, to create sustainable and profitable economic activity in the industry.

Lastly, the EU will intervene and assist with international agreements in three occasions:

  • when the conclusions may require legislative changes at European level
  • when the conclusions are necessary for effective internal operations of the EU
  • or when the conclusions may impact existing common rules in the EU

The most obvious example of this in recent time is Brexit, where negotiations and the conclusions were to impact all three of the criteria.

This is why much of the discussions took place between the UK and the EU and why some member states were required to assist at times where the negotiations were particular to them (think Ireland and the backstop).

This work is co-funded by Journal Media and a grant programme from the European Parliament. Any opinions or conclusions expressed in this work are the author’s own. The European Parliament has no involvement in nor responsibility for the editorial content published by the project. For more information, see here.

It’s a busy year for elections around the world. Before you head out to vote, check out our FactCheck Knowledge Bank for essential reads and guides to finding good information online.

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