Markets and Challenges of De-federalization in Europe and the United States

• In Event: Comparing Rights and Legitimacy in EU Market Governance to the United States

Abstract

Market-making, or the development of a functioning internal market, has been an important element in the federalization of the European Union and the United States. In effect, the internal market is constitutive for the EU as a political system, which became readily apparent during the UK’s departure from the EU, with the EU insisting that the four market freedoms are indivisible. That seems to imply that a weakening of the internal market could constitute de-federalization, with potential risks for the coherence and stability of the EU system overall. A variety of problems in the EU hint of such risks, like calls to moderate internal-market policies to help support European “champions,” and side-effects of the green transition that make single-market standardization and other policies slow and onerous. The United States, too, is built around a continental open market, and also shows its own signs of de-federalization today. Policy divergences between “red” and “blue” states continue to widen, raising a host of issues for interstate trade and mobility. This paper proposes to conceptualize processes of de-federalization in other to analyze and compare these developments. We posit that de-federalization can take three forms: a) decline in or undermining of the political culture of federalism (federal spirit or federal comity); b) a decline in or undermining of the federal institutional arrangements that ensure a viable balance of shared rule and self-rule; and/or c) polity fragmentation and possible exit of a subunit. We evaluate recent developments in the EU and the U.S. in these terms, and then take a step back to ask what benchmarks we can establish for each of the three forms of de-federalization. The ultimate aim is to develop a clearer understanding of de-federalization based on a composite index.

Authors

• John Erik Fossum, University of Oslo

• Craig A. Parsons, University of Oregon