Keeping the Agents Leashed: The EU’s External Economic Governance in the G20

Abstract

The functioning of the external economic governance of the European Union (EU) hinges on the functioning of the internal economic governance structure to ensure cohesion between the EU's external voice and its internal actions. Consequently the debate has focused almost in its entirety on the internal aspect of economic governance reform. This article, swimming against this current of economic governance analyses, examines the EU's external economic governance in the G20 during the Great Recession using a principal-agent framework. More specifically, it argues that although the terms of delegation in the G20 are incomplete and open to the agents' interpretation, two important sources of agency control limit the discretion of the EU delegation. The system of multiple agents with its inherent inter-institutional rivalry and the presence of the G20/EU members ultimately increase the control of the collective principal at the cost of presenting a unified EU position. At the same time the current design of the EU's external economic governance has fuelled tensions between the EU and underrepresented developing countries. Along similar lines, looking at the possibilities of interest representation, the terms of delegation, with an unequal collective principal, are biased towards large and powerful EU/G20 member states. On the basis of probit analyses it is argued that these states are likely to oppose the increased delegation that would enable the establishment of an external economic governance.

Unpacking the G20

“…Its main challenge has been to speak with a single voice on behalf of its members. Rommerskirchen (2013) has explored the EU's ability to do this in the specific case of macroeconomic policy, arguing that in its initial engagement with the G20, 'the EU has failed to create a consistent system of external representation that might enable it to play a more prominent role on the global stage, considering its overall economic might and the competences that supranational bodies have acquired in the European policy process ' (2013, 348).…”

National Administrations in EU Trade Policy

“…In practical terms, it implies that the member states can only monitor, sanction, or reward the agent through collective action within the Council (hence collective principal). Most applications of the PA model in the EU's external negotiations conceptualise the Council as a collective principal (Elsig, 2007 ;James & Copeland, 2014 ;Rommerskirchen, 2013 ;Schneider & Tobin, 2013 ). In these applications, individual member states do not really matter unless they are able to shape the Council's actions.…”

“…In studying the interaction between member states and the Commission, most scholars have focused exclusively on the member states as part of a collective principal-the Council (Elsig, 2007 ;James & Copeland, 2014 ;Rommerskirchen, 2013 ;Schneider & Tobin, 2013 ). It is the Council that delegates negotiating authority through the adoption of a single mandate and not the twenty-eight member states that each individually delegate such authority to the Commission.…”