I. INTRODUCTION
While the literature on transatlantic affairs mainly explores intergovernmental relations,Footnote 1 the parliamentary dimension thereof remains understudied. This is unsurprising because parliamentary prerogatives in foreign affairs are more reduced than in domestic affairs and because they are traditionally geared towards control over the national government more than towards autonomous actorness in international affairs.Footnote 2 However, the international role of parliaments is an emerging field in both political practice and theoretical studies, and there are important global and regional avenues of parliamentary participation that merit scholarly analysis because of their potential impact on international and EU law.Footnote 3
Propelled by the disaggregation of nation-state sovereignty,Footnote 4 international parliamentary actorness is an embodiment of postnational constitutionalism.Footnote 5 This phenomenon is manifested in unilateral, bilateral and multilateral action of parliaments beyond the polity in which they are established.Footnote 6 Unilaterally, parliaments may issue statements, declarations and resolutions as well as pass legislation with external effects.Footnote 7 Similarly, they may organise visits to, and from, other parliaments and executive officials, and thereby maintain their own international relations. Parliamentarians may also establish bilateral forums for dialogue on common challenges, such as immigration, trade liberalisation, environment protection, and combatting terrorism.Footnote 8 The most distinct form of international parliamentary actorness evolves at the multilateral level through ‘legislative networks’Footnote 9 or ‘international parliamentary institutions’.Footnote 10 These can take the form of parliamentary organs of international organisations or independent associations of parliamentarians. Their activities seek to mirror intergovernmental diplomacy and are, thus, often labelled parliamentary diplomacy.Footnote 11
The goals of international parliamentary actorness range from participating in transnational rulemaking, to overseeing interregional partnership agreements, to increasing the transparency of international negotiations.Footnote 12 Parliamentarians may also express protest against an event or misconduct in international affairs,Footnote 13 or bring their political weight to bear on conflict resolution and mediation.Footnote 14 Closely related is parliaments’ promotion of the values of liberalism and democracy,Footnote 15 which facilitates the capacity building of legislatures and reinforces the effectiveness of domestic governance.Footnote 16 This may consequently contribute to the democratisation of regional and global governance.Footnote 17 Above all, the international actorness of parliaments strengthens their deliberative and communicative functions.Footnote 18
The impact of such actorness can be both legal and political. Legal impact is chiefly sought through pronouncements in legislative and treaty-making processes, while effects of a political and sociological nature are achieved through institutional pressure, persuasion or advocacy.Footnote 19 Yet legal actorness is more conducive to exerting influence because it may directly produce binding consequences. Parliaments engage in international actorness both ex ante and ex post. As the case studies will show, both types of intervention can be effective in occasioning a reaction by their addressees.
The salience of parliamentary engagement in transatlantic affairs is twofold. On the one hand, transatlantic policy making is dominated by governmental cooperation in opaque frameworks, which hampers democratic participation and oversight.Footnote 20 Secrecy is a ubiquitous problem that prevents timely parliamentary responses.Footnote 21 It is also commonplace that diplomacy and democracy are in tension, and that international lawmaking is farther removed from the national legislature than domestic lawmaking, which allows executive branches to play two-level games.Footnote 22 On the other hand, organisations outside parliament cannot perform democratic functions satisfactorily, because they are not vested with a political mandate to represent the electorate. Though civil society and interest groups fulfill certain representative functions,Footnote 23 they are not conferred in a democratic process but rely on voluntary acceptance. The ‘highly formal theory of democracy’ is hence not necessarily blind to the ‘loss of public participation’.Footnote 24 Unlike civil society, parliaments can apply political sanctions against the government and participate in treaty ratification and implementation.Footnote 25 Lacking these levers of influence, the democratic legitimacy of civil society activism is limited.Footnote 26
This article analyses the bilateral international actorness of parliaments in the legal sphere through the lens of transatlantic relations between the EU and the US as two key global strategic partners and it does so from the perspective of EU law. The objective is to establish how the European Parliament (EP) and Congress respond to regulatory interdependencies, whereby policies adopted on one side of the Atlantic significantly impact those adopted on the other side of it, and, potentially, elsewhere in the world. The relevance of this inquiry lies in the fact that policy disparities encumber business and trade, dissuade investment, harm transatlantic and global security, and affect the citizens’ fundamental rights. With increasing EU–US economic integration, the law and governance dimensions of parliamentary involvement are becoming ever more salient.Footnote 27 Evidence of this is the creation in 1999 of a Transatlantic Legislators’ Dialogue (TLD), as an informal forum for biannual consultations between the EP and Congress,Footnote 28 which institutionalised the relations that had evolved between them since 1972. The establishment of an EP Liaison Office in Washington DC in April 2010 further helped foster contact between EU and US lawmakers.
This article argues that the EP and Congress frequently use their powers against the spirit of the EU–US strategic partnership and that transatlantic relations suffer from insufficient ex ante interparliamentary dialogue. This is demonstrated with four case studies, selected to depict the variety of policy-making frameworks in which the EU and US legislatures utilise their constitutional powers in transatlantic affairs. They are divided into two groups: one related to international agreements and the other to domestic legislation. In the first group, the bilateral Transatlantic Trade and Investment Partnership (TTIP) and the multilateral Anti-Counterfeiting Trade Agreement (ACTA) are analysed to show that the prerogative of consent crucially determines the level of parliamentary actorness. The second group investigates the transatlantic impacts of the US Helms–Burton and Sarbanes–Oxley Acts to show that legislative spillover caused by parliaments in areas of regulatory divergences considerably impedes the EU–US alliance. The analysis then queries whether a more constructive dialogue between the EP and Congress would benefit the transatlantic relationship and examines whether the establishment of a legislative early warning mechanism could promote regulatory approximation, avert the adoption of mutually harmful policies, and decrease juridico-political tensions.
The article proceeds to chart the international actorness of the EP and Congress (Part II). This will set the stage for the argument that the contribution of the EP and Congress to transatlantic trade disputes constitutes the key rationale for their closer ex ante cooperation (Part III). This is then operationalised in concreto through the case studies (Parts IV and V) in order to assess the possibility of a transatlantic legislative early warning mechanism (Part VI). The insights gained will substantiate the conclusion (Part VII) that EU–US interparliamentary cooperation is fraught with difficulties inherent in the differing European and American constitutional contexts, which may only be overcome through greater political will of both parties to the strategic partnership.
II. EU AND US LEGISLATURES AS INTERNATIONAL ACTORS
Despite executive preeminence, both the EP and Congress have a significant record of engagement in international relations. They have long played a prominent role in the shaping of their polities’ diplomacy both through international agreements and wider engagement in international affairs.
A. The European Parliament
The Lisbon Treaty has greatly empowered the EP, endowing it with a right of consent to most EU international agreements.Footnote 29 The EP’s global action is inspired both by the protection of the rights of EU citizens and by an endeavour to increase its institutional power against the Commission and the Council.Footnote 30 To this end, the EP engages in the worldwide promotion of democracy, human rights and the rule of law.Footnote 31 This value-oriented diplomacy of members of the EP (MEPs) is complemented by region-oriented diplomacy.Footnote 32 In addition, the EP plays an active part in conflict resolution, nuclear non-proliferation, and climate change prevention.Footnote 33
To ‘extend its influence on global politics’,Footnote 34 the EP has an intricate system of delegations established specifically for relations with third countries, regions and international organisations. Committees for Civil Liberties, Justice and Home Affairs (LIBE), International Trade (INTA), Development (DEVE), and Foreign Affairs (AFET) along with its Subcommitee on Human Rights (DROI), also play an essential role in strengthening the EP’s posture in global governance. The EP is rightly regarded as the world leader in parliamentary diplomacy,Footnote 35 and its pronouncements ‘carry the weight of its institutional legitimacy’.Footnote 36
The EU–US international agreements on the US Terrorist Finance Tracking Programme (TFTP) and Passenger Name Records (PNR) exemplify how the EP succeeded ‘effectively to represent EU citizens externally’.Footnote 37 Due to privacy and data protection concerns, MEPs effected the amendment of both agreements amid tremendous political pressure. The TFTP Agreement aimed to prevent terrorism after the 9/11 attacks by enabling the US Treasury Department to access data on EU citizens’ financial transactions processed by the Society for Worldwide Interbank Financial Telecommunication (SWIFT). Thanks to the EP’s rejection of the interim Agreement,Footnote 38 safeguards were introduced to ensure greater protection of such data.Footnote 39 The current TFTP Agreement of June 2010, which is up for renewal in August 2015, foresees that Europol and European Commission overseers in Washington DC may verify US compliance with the requirements for data requests and transfers.Footnote 40 When it comes to transatlantic flights, the current PNR Agreement of April 2012, which superseded the 2004 and 2007 agreements but is up for renewal in 2019, had a similar fate.Footnote 41 MEPs played a ‘leading part in bringing about a change’ in the manner in which the US Department of Homeland Security may access data on EU citizens’ flights.Footnote 42 The ‘push’ method now fully replaces the ‘pull’ method, which improves EU control over data transfers.Footnote 43 Nevertheless, these agreements continue to attract the criticism that the US may still use personal data against the interests of EU citizens.Footnote 44
B. The US Congress
American law distinguishes between three types of international agreements: treaties, congressional-executive agreements and sole executive agreements. While they all constitute binding agreements under international law, their domestic classification determines the level of involvement of Congress. According to the US Constitution’s Treaty Clause, the President may only ratify treaties after two thirds of the Senators have given their consent.Footnote 45 Congressional-executive agreements rely on the Commerce Clause, which empowers Congress to ‘regulate commerce with foreign nations’,Footnote 46 and require approval by majorities in both the House of Representatives and the Senate. Sole executive agreements do not require congressional approval.Footnote 47 The President decides whether an international agreement is submitted to Congress as a treaty or as a congressional-executive agreement. Since the 1940s to date, more than 90% of US international agreements were concluded as executive agreements, among which a large majority have been congressional-executive agreements.Footnote 48 The latter’s sharp rise was caused by the difficulty of mustering supermajorities in the Senate and by the increasing overlap between the subject matter of international agreements and Congress’ regulatory authority. Oona Hathaway convincingly argues that circumstances that led to the constitutionalisation of the treaty procedure have been superseded and that congressional-executive agreements enjoy stronger democratic legitimacy.Footnote 49
Congress has been developing a strong agenda in international politics for decades. As Ernest Griffith wrote in the 1960s, the power of the US President in foreign policy creates ‘an inherent uneasiness in Congress and leads to the search for ways and means, not so much to circumscribe the President as to insist on a sharing in crucial decisions’.Footnote 50 While the President and Congress are portrayed as collaborators in foreign policy making,Footnote 51 Congress aspires to build an autonomous profile in external relations. Far from passive or obstructive, Congress uses its powers strategically to:
assure or reassure other nations that [they] can count on the necessary legislative support if they agree to our official proposals. Similarly, they may serve as warning to other nations as well as to our own negotiators that such support in all probability will not be forthcoming unless certain conditions are met, or perhaps not at all.Footnote 52
Moreover, congressional hearings and plenary debates ‘may exert considerable influence in the highly sensitive field of international policy’, and speeches, particularly by prominent congressmen, ‘are listened to outside the United States as well as, or perhaps even more than, within our own official circles’.Footnote 53 The executive-congressional relationship is in constant flux,Footnote 54 however, and one of ‘creative tension’.Footnote 55 Consultation between the President and Congress is nonetheless the ‘most effective way to strengthen US foreign policy’. This may foster mutual trust, reduce inter-branch clashes, discourage Congress from obstructing foreign policy making, and give the President additional perspectives on foreign affairs.Footnote 56
In the 1970s, Congress began granting the so-called ‘fast-track’ or ‘trade promotion’ authority to the President to negotiate trade agreements, while retaining the right to approve or reject such agreements en bloc.Footnote 57 Furthermore, the joint congressional War Powers Resolution, adopted in 1973 through an override of the presidential veto, was an attempt, with modest success,Footnote 58 to constrain the President’s power to commit the US military abroad.Footnote 59 Finally, through its budgetary power Congress may approve or deny appropriations necessary for the implementation of international agreements or provision of foreign aid.Footnote 60
The international actorness of Congress members equips them with better information, which they can utilise to shape public opinion,Footnote 61 and influence international negotiations.Footnote 62 Yet, as with the EP, the practical impact of congressional diplomacy remains elusive.
These features of the EU and US constitutional systems show that the EP and Congress have ample politico-legal means to affect the development of transatlantic relations. However, the following section shows that these are utilised in a fairly protectionist fashion, with a narrow focus on the national interest, and with scant regard for problems that this might engender for the EU–US strategic partnership.
III. REGULATORY DISCREPANCIES AND TRADE DISPUTES AS TRIGGERS FOR TRANSATLANTIC LEGISLATIVE COOPERATION
Regulatory approximation in EU–US relations is highly significant for liberalising trade and investment, stimulating economic growth and reducing legal disputes.Footnote 63 Disagreements primarily arise due to different cultures of standardisation and risk regulation, whereby the EU espouses the precautionary principle and the US the reactionary one. The examples below demonstrate that legislation, which is made by or in cooperation with parliament, often causes a dispute. They also highlight why legislatures may benefit from a tighter ex ante dialogue.
Agriculture is the most striking instance of transatlantic regulatory divergence. Different European and American regulation of genetically modified organisms (GMOs) and the EU’s de facto moratorium on their use gave rise to ‘one of the most difficult and intractable disputes’.Footnote 64 The US challenge thereof before the World Trade Organization (WTO) in the Biotech dispute was feared to ‘escalate into a transatlantic war’.Footnote 65 At stake was the 1997 Novel Food Regulation,Footnote 66 which remains salient in light of the Commission’s April 2015 proposal to allow EU Member States to restrict or prohibit GMO use.Footnote 67 Another high-profile dispute relates to the EU’s import ban of certain hormone-treated US beef, contrary to the WTO Sanitary and Phytosanitary Measures Agreement.Footnote 68 This ban was enacted by a series of Directives adopted in the 1980s and mid-1990s,Footnote 69 culminating in a 2003 Directive permanently banning one hormone and provisionally banning five.Footnote 70 Congress retaliated by enacting the Trade and Development Act in 2000, targeting the goods of the countries that have failed to implement WTO dispute settlement recommendations.Footnote 71 It also held numerous hearings, passed resolutions and tabled bills to press the EU to drop its policy.Footnote 72 This dispute will end if the 2009 EU–US Memorandum of Understanding is fully implemented.Footnote 73 Other agricultural disputes include those over the EU’s preferential imports of bananas from certain former colonies in the Caribbean,Footnote 74 as well as over the EU’s refusal to import US chlorinated poultry meat.Footnote 75
Aviation furnishes further examples of regulatory fallout. Whether it is subsidies to large aircraft manufacturers, such as Airbus and Boeing, or the EU’s prohibition of sound-absorbing mufflers called ‘hushkits’,Footnote 76 parliaments contributed to these disputes through legislation and concession-seeking oversight. In 2012, the EU’s Emissions Trading Scheme (ETS), which imposes penalties for carbon emissions made by airplanes flying from or into EU territory,Footnote 77 was rejected by Congress in hearings and by statute.Footnote 78
In the chemicals field, the EU’s REACH Regulation,Footnote 79 has ‘stirred up a major, transatlantic regulatory clash’,Footnote 80 despite serving as a model for American legal reform,Footnote 81 and offering an ‘unprecedented opportunity’ for regulatory cooperation.Footnote 82 Additionally, memorandums of understanding between the EU and some US States, particularly California, may spark regulatory developments without parliamentary participation.Footnote 83
These examples support the case for a more constructive relationship between the EP and Congress in creating public policy.Footnote 84 It has been argued that the TLD could be used to reinvent transatlantic politics.Footnote 85 According to Hugo Paemen, a former Head of the European Commission’s Delegation to the US, legislative and regulatory dialogues might be ‘the best way to avoid built-in conflicts’.Footnote 86 The next section presents the case studies of international agreements and extraterritorial legislation to elucidate why greater transatlantic legislative liaison might be advantageous to the EU–US alliance.
IV. INTERNATIONAL AGREEMENTS
The previous section has shown that unilateral parliamentary involvement in EU–US regulatory governance may prejudice the attainment of common goals. Parliamentary actorness in TTIP negotiations and ACTA showcases the intensive activity of the EP and Congress in shaping a deeper transatlantic relationship and their continued, but thus far lacklustre, efforts to transform interparliamentary dialogue into concrete policy results.
A. Transatlantic Trade and Investment Partnership
TTIP negotiations, begun in July 2013, are paving the way for the largest free trade agreement in history.Footnote 87 Its central objective is to remove the remaining obstacles to trade and improve regulatory cooperation. Given such high stakes, the EP and Congress have actively scrutinised these negotiations.
On the European side, MEPs endorsed the negotiations in May 2013, requesting several sectoral safeguards, such as the exclusion of cultural and audiovisual services and the inclusion of financial services.Footnote 88 The EP further stressed the necessity of protecting personal data, intellectual property rights and geographical indications.Footnote 89 MEPs also highlighted agricultural sensitivities calling on the US to lift its ban on EU beef ‘as a trust-building measure’.Footnote 90 Crucially, MEPs advocated an ‘early upstream regulatory cooperation’ mechanism to prevent future trade barriers and ensure lower regulatory and administrative burdens.Footnote 91 The EP also committed to ‘collaborating with its US counterparts when introducing new regulations’ and working closely with EU institutions and the US Administration and Congress.Footnote 92 Finally, MEPs warned that their positions should be ‘duly taken into account at all stages’ if they are to approve TTIP.Footnote 93
The US National Security Agency’s online surveillance over EU institutions and citizens through the PRISM programme caused MEPs to caution, in July 2013 and March 2014, that this endangered their consent to TTIP and that they are ready to engage in dialogue with Congress to ensure equal protection of EU citizens in US courts.Footnote 94 To this end, MEPs launched the so-called ‘European Digital Habeas Corpus’ and called for the convention of a Trust/Data/Citizens’ Rights group between the EP and Congress and other parliaments.Footnote 95 The intransparency of negotiations was also fervently protested, after which the Juncker Commission published the EU’s negotiating mandate and texts.Footnote 96 Unlike in Congress, a matter of great controversy remains the investor-state dispute settlement (ISDS) mechanism.Footnote 97
Across the Atlantic, Congress also supported the initiation of TTIP negotiations.Footnote 98 Accordingly, in June 2015 Congress granted the US President the trade promotion authority, enabling the Administration to conduct negotiations without congressional interference if certain guidelines and negotiating objectives are adhered to.Footnote 99 As evidenced by the objections of a large group of Senate Democrats,Footnote 100 congressional influence on US foreign trade policy is facilitated by political divisions, which characterised the passage of the TPA. Since it takes the form of a statute, this authority arguably affords Congress greater ex ante leverage on TTIP than resolutions do in the case of the EP. TPA also enables Congress to increase the transparency of negotiations and hold the executive to account thanks to provisions allowing their members to access the negotiating texts, receive debriefings, attend negotiation rounds, and create groups advising the Administration on the substance of negotiations.Footnote 101 Like the European Commission, the Office of the US Trade Representative has been more transparent in TTIP negotiations than with previous trade agreements.Footnote 102 Surveys reveal that while US legislators broadly support TTIP, protectionist impulses are tangible in more sector-specific discussions. Such is the case with access to the US public procurement market or the regulation of geographic indications.Footnote 103
In both the EU and US legislatures, TTIP negotiations are also examined in committee debates. Within Congress scrutiny is conducted through the Trade Subcommittees of the House of Representatives’ Ways and Means Committee and the Senate’s Finance Committee as well as through a bipartisan congressional caucus on TTIP.Footnote 104 Within the EP, the INTA, LIBE and AFET committees take the lead alongside the specially created TTIP monitoring group. The EP’s July 2015 mid-term review of TTIP negotiations shows wide internal engagement, with 15 out of 21 committees offering opinions on TTIP, which resulted in no less than 69 concrete recommendations,Footnote 105 among which that outlawing the ISDS mechanism.
TTIP has also been discussed within the TLD. At its June 2015 meeting, Congress and the EP emphasised the need for their close involvement in monitoring TTIP negotiations and, eventually, supervising its implementation.Footnote 106
These parliamentary reactions affirm that EU and US legislatures play an increasingly important role in setting the parameters and red lines that need to be observed lest the final agreement be jettisoned in the ratification phase.Footnote 107 Giving the EP and Congress the right of formal input in the TTIP institutional framework is one way of heeding their demands.
B. Anti-Counterfeiting Trade Agreement
At least regarding the parliamentary ‘battle’ for transparency,Footnote 108 TTIP follows in the footsteps of the multilateral Anti-Counterfeiting Trade Agreement, which the US signed in October 2011 and the EU in January 2012.Footnote 109 This agreement seeks to establish global mechanisms for the enforcement of copyright laws.Footnote 110 ACTA therewith pits the protection of intellectual property rights against a range of fundamental rights, including privacy and data protection.Footnote 111
Before ACTA was signed, the EP objected to the secrecy of the negotiations asking the Commission to publish all relevant documents.Footnote 112 Although this was hailed as a ‘victory for the transparency critics’ because negotiations began opening to the public, swathes of information continued to be withheld.Footnote 113 Recalling the EU’s high level of fundamental rights protection, the LIBE Committee reiterated that the Union must not allow ‘fundamental rights laundering’.Footnote 114 Consequently, the EP rejected ACTA in July 2012.Footnote 115 This testified to the MEPs’ efforts to defend EU values and alert foreign partners that its standpoints need to be given due regard.
Ten days later, MEP Sophie in ’t Veld (ALDE) brought an action before the European Court of Justice seeking annulment of the Commission decision that denied full access to ACTA documents.Footnote 116 The March 2013 ruling only partially granted her requests.Footnote 117 Deidre Curtin, however, argues that there was nothing in the ACTA negotiating mandate that necessitated such a high level of secrecy, for it solely contained a list of items to be dealt with in the agreement.Footnote 118
On American soil, congressional involvement was avoided by treating ACTA as a sole executive agreement.Footnote 119 As in the EU, the problem of opaqueness received considerable criticism.Footnote 120 ACTA negotiations were conducted with ‘unprecedented secrecy’, in a manner that evaded public review and inter-branch accountability, and risked ‘eroding the legitimacy of US trade policy’.Footnote 121 This has been impugned as unconstitutional,Footnote 122 and Congress protested accordingly.
Most notably, Senator Ronald Wyden (D-OR), the then Chairman of the Senate’s Subcommittee on International Trade, publicly questioned why ACTA had been negotiated in isolation from Congress.Footnote 123 He engaged in a series of correspondences with the Administration.Footnote 124 A fortnight after ACTA was signed, he wrote first to President ObamaFootnote 125 and later to Harold Koh,Footnote 126 the then Legal Adviser in the State Department, to express reservations about ACTA’s constitutionality.Footnote 127 The first Wyden’s letter was replied to by the then US Trade Representative, Ron Kirk, reaffirming that ACTA was ‘fully consistent with US law’ and with ‘a long line of trade-related agreements’ that had previously entered into force without congressional involvement.Footnote 128 Kirk added that ex ante consultations had been held with Congress and that its views were reflected in ACTA. In reply to Wyden’s second letter, Koh argued that the Administration had had a congressional mandate to conclude ACTA.Footnote 129 He based this claim on the 2008 Prioritizing Resources and Organization for Intellectual Property Act, which called on the executive to work with other countries to enhance enforcement of intellectual property rights.Footnote 130 Wyden strongly disagreed.Footnote 131
Subsequently, on 19 March 2012 he submitted two amendments to the Jumpstart Our Business Startups (JOBS) Bill, one of which explicitly sought congressional approval of ACTA.Footnote 132 However, the amendment was ordered to lie on the table, which means that the Senate’s presiding officer held it without further consideration.
The activism of the EP and Congress in ACTA negotiations signifies that legislatures utilise all manner of legal and political tools to affect international negotiations and hold the executive accountable. These tools represent litigative and legislative forms of parliamentary actorness and these have been employed both ex ante and ex post. The ACTA case study lays bare the conclusion that ignoring parliamentary preoccupations can backfire, frustrate the positive elements of the agreement, and chip away its legitimacy.Footnote 133
V. TRANSATLANTIC LEGISLATIVE INTERDEPENDENCE AND EXTRATERRITORIALITY
The previous section shows that in international negotiations legislatures may have common concerns, such as transparency and information access, that may be better dealt with through concerted rather than individual action. While a mere 1–2% of transatlantic trade is estimated to cause legal controversy, this section demonstrates that extraterritorial legislation jeopardises transatlantic relations and that direct parliamentary exchange remains wanting. Joanne Scott makes a compelling case that although the adoption of extraterritorial legislation remains exceptional, the EU frequently uses the legislative technique of territorial extension to broaden the regulatory and jurisdictional catchment of EU law.Footnote 134 In effect, the US acts in much the same way.Footnote 135 The following analysis centres on two empirical examples of policy irritants: one in the field of sanctions and embargoes (US Helms–Burton Act) and the other in that of finance and accounting (US Sarbanes–Oxley Act).
A. Sanctions and embargoes
American legislation examined here is rooted in several congressional acts decried by the EP. In particular, in a 2006 resolution MEPs condemned ‘the extraterritorial approach that typifies much of the United States’ foreign policy and foreign economic/commercial policy, as exemplified by the Helms-Burton Law, the Torricelli Law and Section 301 of the US Trade Act’.Footnote 136
The 1996 Cuban Liberty and Democratic Solidarity (Libertad) Act, known as the Helms–Burton Act,Footnote 137 was enacted in response to the shooting down by the Cuban Air Force of two civilian US-based airplanes operated by an anti-Castro group.Footnote 138 By virtue of Title III of this Act, Congress extended an economic embargo against the Fidel Castro regime inter alia by providing for the liability of any person or company that traffics in property claimed by American citizens but confiscated by the Cuban Government after the 1959 Revolution.Footnote 139 This enactment built on earlier legislation seeking to isolate Cuba, including the 1992 Cuban Democracy Act, known as the Torricelli Act.Footnote 140 The Administration unsuccessfully attempted to persuade Congress to drop this provision.Footnote 141 The EP opposed the Torricelli Act from the very beginning too and urged Congress to repeal it.Footnote 142
The Helms–Burton Act directly prejudiced the rights of EU citizens and companies. In retaliation, the Council of Ministers passed a Joint Action and a Regulation explicitly prohibiting compliance with the Helms–Burton Act.Footnote 143 The EP was excluded to avoid delaying the latter’s adoption.Footnote 144 Despite this, the Regulation was seen as a ‘surprisingly robust display’ of the EU’s resistance to the encroachment of American law.Footnote 145 The Regulation also encompasses the Torricelli Act and the US Iran and Libya Sanctions Act of 1996, known as D’Amato-Kennedy Act.Footnote 146
The EU sought to settle the Helms–Burton dispute before a WTO panel.Footnote 147 The saga ended on 18 May 1998, when the EU and the US reached a political agreement,Footnote 148 which did not require parliamentary approval. The US agreed to limit the impact of the Helms–Burton and D’Amato-Kennedy Acts and the EU agreed to freeze further WTO action. The EP was dissatisfied with the EU’s handling of the dispute and passed a resolution three days before the agreement was reached,Footnote 149 recalling that there had been neither time constraints nor any other justification for the lack of ex ante consultation. Some four months later, MEPs requested that the Commission appeal to Congress for it to ‘refrain from attempts to impose legal order on third countries by extraterritorial policy with damaging effects to the world trade order, including European companies’.Footnote 150 It is notable that the EP chose an indirect way to address Congress instead of taking the matter up directly with US lawmakers. In 2002, MEPs once again called for the Helms–Burton Act to be rescinded.Footnote 151
A key scholarly objection to the Helms–Burton and D’Amato-Kennedy Acts is that they upset the separation of powers by instating a ‘very high degree of control over the conduct of foreign policy by Congress’.Footnote 152 As one author maintains, ‘seldom, if ever, has a president handed over the reins of foreign policy to such an extent’.Footnote 153 In the case of the EP, its upheaval was important because:
The Europeans would be committing utter folly if they neglected to oppose the Helms-Burton Act. Unless Congress ceases to enact the type of extraterritorial legislation …, the EU would find a great deal more of its foreign and trade policies being written in Washington rather than in Europe.Footnote 154
It has been argued that the EU’s response was insufficient and that more stringent measures were necessary.Footnote 155 The latter, however, might have been less pressing had a closer relationship between parliamentarians existed.
This case study exposes the constraints facing parliaments in the diplomatic sphere and their keenness to impart their opinion on extraterritorial law. Although US–Cuban relations are thawing with the reopening of the US Embassy in Havana on 20 July 2015, transatlantic interparliamentary coordination remains highly relevant in the field of international sanctions and embargoes, such as concerning Iran’s nuclear programme,Footnote 156 or Russia’s annexation of Crimea.Footnote 157
B. Finance and accounting
In this field, four of the six disputes that arose from mid-1990s to 2008 were directly linked with legislative enactments effected in 2002 on both sides of the Atlantic.
On the American side, the adoption of the Sarbanes–Oxley Act (SOX) on 30 July 2002 reformed the rules on corporate accounting and auditing in the securities market.Footnote 158 The new, stricter rules were made in response to financial reporting scandals that had caused billion-dollar losses to investors.Footnote 159 This Act was drafted with little regard for its international effect and without prior transatlantic consultation, which gravely affected EU investment firms.Footnote 160 Three groups of SOX provisions provoked sharp EU reactions.Footnote 161 One such provision required foreign auditors of US-listed companies to register with the newly created Public Company Accounting Oversight Board, which meant that hundreds of EU-based companies were exposed to regulatory requirements, compliance with which would violate EU law. Another provision introduced new conditions for the independence of corporate boards and auditing committees, which forced EU companies to accept US rules or lose access to American investors. Yet another friction concerned increased costs for EU companies wanting to maintain a listing on US stock exchanges.
On the European side, the passage of the Foreign Conglomerates Directive on 16 December 2002 subjected large US investment banks to consolidated EU supervision unless they met equivalency standards.Footnote 162 Since American supervision did not meet European requirements at the time, US companies would have to undergo costly changes and accept that supervision would be performed by a foreign authority. As Elliot Posner demonstrates,Footnote 163 comparable adverse effects for American companies also flow from the EU’s 2002 Regulation on Accounting StandardsFootnote 164 and the 2004 Markets in Financial Instruments Directive.Footnote 165
These problems were eventually solved through concessions, particularly by the US, which retracted from insisting on the exclusive application of American rules. The perceived need for regulatory alignment led to the establishment in May 2002, just a couple of months before the EU and US enactments, of the Regulatory Dialogue on Financial Services between the European Commission and the US Treasury Department, the Federal Reserve Board and the Securities and Exchange Commission (SEC).Footnote 166
However, once the enactments had been made, the disputes were managed in isolation from parliaments. Although Congress was lobbied by various interest groups,Footnote 167 the disputes were settled by executive actors, primarily the Commission and the SEC. Yet while these two bodies have a wide margin of manoeuvre, both Congress and the EP possess channels to exert influence on them.
Namely, the SEC’s Office of Legislative and Intergovernmental Affairs serves as formal liaison with Congress.Footnote 168 This Office closely monitors congressional legislative activities and hearings concerning securities markets, and maintains regular communication with Congress members and staff. The Office also administers congressional requests for documents and testimony of SEC members.
The EP is not powerless either. The 2010 Interinstitutional Agreement between the EP and the Commission provides for a constructive dialogue between them.Footnote 169 The Commission undertook to provide documentation on its meetings with national experts within the framework of comitology, with a possibility for EP experts to attend them upon request.Footnote 170 This is of specific importance in the field of finance because of the Lamfalussy procedure, which delegated to comitology committees the power to implement financial services legislation and which to a certain extent restricted the EP’s say.Footnote 171 Furthermore, the need for legislative action to enact measures agreed within the Regulatory Dialogue on Financial Services is greater in the EU than in the US, because the SEC possesses far-reaching lawmaking powers.Footnote 172
Discussions on accounting and financial services were also held within the TLD, especially from October 2007 to April 2009.Footnote 173 It is questionable, however, whether this had any bearing on the settlement of disputes, even though it aided the exchange of information on the positions of the EP and Congress. The latter is desirable because EU financial markets legislation adopted in the wake of the financial crisis de facto carries some protectionist effects,Footnote 174 which might create transatlantic ripples again.Footnote 175
These two case studies demonstrate three dynamics. The first is temporal and confirms that, from a historical viewpoint, the EU and US legislatures have contributed to transatlantic tensions over a continued period of time. The second refers to the nature and breadth of the tensions and shows that legislative power is used to affect not only bilateral regulatory interdependence but also foreign policy lato sensu. The third is of a structural character and makes the case for enhancing interparliamentary dialogue to avoid future transatlantic disputes, which is examined hereunder.
VI. TOWARDS AN INTERPARLIAMENTARY EARLY WARNING MECHANISM IN TRANSATLANTIC RELATIONS?
The 1990 Transatlantic Declaration and the 1995 New Transatlantic Agenda (NTA) called for the improvement of links between the EP and Congress. To diffuse regulatory tensions, the EU–US 1999 Bonn Summit established an early warning mechanism for regulatory cooperation.Footnote 176 This is performed through information exchange and consultation with a view to early detection of any initiative that might impact transatlantic relations, so that the interests of the other side could be taken into account. The bodies charged with achieving this are the Transatlantic Economic Partnership Steering Group, the NTA Task Force and the Senior Level Group.Footnote 177 Although the TLD was pondered as a potential participant in this effort,Footnote 178 the regulatory early warning mechanism is essentially an executive arrangement.Footnote 179 To formalise the ties between senior regulatory officials, the High-Level Regulatory Cooperation Forum was created in 2005 and the Transatlantic Economic Council (TEC) in 2007. The Forum agreed in 2011 to inform the EP and Congress of any items in relation to the Commission’s Work Programme and the US Government’s Unified Agenda for regulatory and deregulatory activities.Footnote 180
Yet the regulatory early warning mechanism has made a negligible contribution to preventing policy clashes.Footnote 181 The limitations of grounding transatlantic cooperation in non-binding commitments flow in part from the non-involvement of legislative bodies.Footnote 182 A legislative early warning mechanism, in turn, is requisite because the EU and the US are ‘effectively part of each other’s policymaking processes’,Footnote 183 and because the most bitter disputes between them have sprung from initiatives of the EP and Congress, which adopted legislation virtually without considering its transatlantic implications.Footnote 184 Worse even is that lawmakers often use legislative power to influence the behaviour of both the executive and its international interlocutors and this is emphatically the case with transatlantic relations.Footnote 185 An example of this is EP parliamentary diplomacy in the US on the planned Umbrella Data Protection and Privacy Agreement.Footnote 186
Transatlantic parliamentarism, based on the TLD, remains thin, underused and ineffectual for its incapacity to produce binding results. The TLD has also had ‘little impact’ due to a ‘mix of apathy, lack of funding and interest’.Footnote 187 The political impotence of both the regulatory early warning mechanism and the TLD lies in their failure to alter the incentives of those parliamentarians who are inclined to ignore the externalities of domestic laws.Footnote 188 The EP highlighted this problem following President Obama’s first election by calling upon the EU and US authorities to ‘avoid setting up barriers to inward investment and enacting legislation having an extraterritorial impact without prior consultation and agreement’.Footnote 189 Vested interests are arguably too powerful to be swayed by parliamentary discussions and information sharing.Footnote 190 Yet timely information access is what Douglas Bennet, Assistant Secretary of State in the Carter and Clinton administrations, has labelled ‘the sacred principle of congressional relations’ with the executive in foreign policy making.Footnote 191 A legislative early warning mechanism could help mitigate the reliance of parliaments on information that is often withheld or filtered by the executive.
Despite these shortcomings, the TLD has also been viewed as a ‘good example of the informal but important emergent foreign policy role’ of legislatures.Footnote 192 The TLD has since 2011 established working groups for financial markets and stability, transport security, agriculture and food safety, and cyber security.Footnote 193 As a ‘content-based, constructive body’ for legislative coordination,Footnote 194 a deeper EP-Congress association might be an ‘attractive building block’ for longer-term transatlantic partnership.Footnote 195 According to Robert Zoellick, a former Deputy Secretary of State in the George W Bush Administration:
Parliamentary and other political exchanges can be particularly useful in shaping Congressional attitudes about foreign policy. Fellow elected officials are often the most respected sources for explanations of different viewpoints on political constraints; democratically elected representatives, schooled in the arts of compromise at home, often recognise the limitations of unilateral acts abroad when fellow parliamentarians can speak directly to the counter-productive consequences.Footnote 196
Anne-Marie Slaughter also warns against dismissing the international role of legislators, because they contribute to legislative harmonisation in interstate and interregional economic integration projects.Footnote 197
This article maintains that the highly expert, science-driven and technical character of regulatory action does not preclude parliamentary judgment of the desired trajectories of such action. As representative institutions, legislatures should focus on legitimising or delegitimising the political decision whether to regulate in a certain policy area and, based on informed consultations and impact assessments, how to regulate it. Increased interparliamentary dialogue is not directed only at harmonising diverging legislative solutions, but also at facilitating a thorough understanding of mutual policies and risks posed by regulatory choices, all of which can be achieved by exchanging information and best practice.Footnote 198
TTIP brings novel developments in this respect. As a ‘living’ instrument,Footnote 199 this agreement is meant to be partially self-evolving through ‘forward-looking mechanisms to head off conflicts, including early consultations, impact assessments and regulatory reviews’.Footnote 200 According to the EU’s TTIP negotiating texts of May 2015, these functions are to be performed by a Regulatory Cooperation Body, which will monitor TTIP’s implementation and promote future regulatory convergence.Footnote 201 TTIP foresees the interaction between this Body, and the EP and Congress, although concrete arrangements are still forthcoming. Meanwhile, proposals have been tabled for the EU and the US to publish at least once a year a list of planned regulatory acts with an explanation of their scope and objectives. Where these acts undergo impact assessment, information should be made public as early as possible on the adoption schedule, stakeholder consultations, and the potential impact on trade and investment.Footnote 202 Another mechanism is proposed whereby written comments on the preparation of regulatory acts that one Party receives from the other are transmitted to the EP and Congress.Footnote 203 If adopted, these stipulations might catalyse interparliamentary cooperation.
Though modest, these innovations lay the foundations for enhanced transatlantic parliamentary linkages. The existing TLD framework could be reformed for this purpose.Footnote 204 At the March 2014 TLD meeting, the EP and Congress agreed that any TTIP-derived mechanism for regulatory cooperation must be subject to ‘effective parliamentary and congressional oversight’.Footnote 205 In a similar vein, the June 2015 TLD meeting acknowledged that TTIP is an endeavour to ‘reinvigorate our transatlantic partnership well beyond the obvious trade dimension’.Footnote 206 Interviews with congressional staff reveal that TLD chairpersons, who are members of the TEC Advisory Group, seem ‘fully committed to making the TLD a more active partner in the TEC process’.Footnote 207 The EP’s July 2015 Resolution on TTIP also called for:
a deepening of transatlantic parliamentary cooperation, on the basis and using the experience of the Transatlantic Legislators’ Dialogue, leading in future to a broader and enhanced political framework to develop common approaches, reinforce the strategic partnership and to improve global cooperation between the EU and US.Footnote 208
The EP Liaison Office further contributes to long-term joint legislative planning and early warning through identification of issues of mutual interest.Footnote 209 The fact that several national parliaments, such as in France and Ireland, have asked to be included in the TLD’s work speaks about its continued relevance.Footnote 210 Nevertheless, TTIP will not give birth to a Transatlantic Assembly and legislators’ summits, whose establishment the EP has tirelessly advocated.Footnote 211 Transatlantic governance thus still lacks a genuinely political component.Footnote 212
VII. CONCLUSIONS
This article has investigated the key legal ways in which EU and US parliaments shape transatlantic regulatory cooperation, law and governance. Several conclusions stand out.
First, parliamentary scrutiny of international negotiations and legislative processes on both sides of the Atlantic shows that the EP and Congress are far from idle actors and that they avidly engage in transatlantic affairs. They utilise their formal decision-making prerogatives and informal pressure as bargaining chips to portray themselves as powerful foreign policy actors. Legislative enactments with adverse transatlantic repercussions can be understood as political tools for protecting the autonomy of the EU and US legal orders.Footnote 213
Second, there is a significant degree of alienation between the EP and Congress. The case studies demonstrate that the lack of a meaningful ex ante dialogue hinders the transatlantic partnership. Many transatlantic regulatory discords have been managed in a retaliatory fashion through open confrontation or ‘mutual regulatory disarmament’, such as in the field of finance.Footnote 214 Legislation was a source of problems rather than a vehicle for their resolution or avoidance.Footnote 215 Instead of lawmakers preventing policy irritants at an early stage, rapprochement was sought through exemptions and exceptions.Footnote 216 Most of the parliamentary pronouncements were thus negative and reactionary rather than constructive and forward-looking.
Third, collective transatlantic parliamentarism has proven to be flimsy and the TLD’s influence rather marginal. This forum did not seem to have a wider force beyond deliberation and communication. Yet many of the problems arising out of regulatory discrepancies might have been addressed through more interparliamentary collaboration towards functional legislative equivalence.Footnote 217 The interpenetration of a whole array of sectors speaks in favour of this.
Finally, this study unveils the retributive consequences of restricted hard law rights of parliaments and the limits of a soft law approach to legislative and regulatory approximation in transatlantic affairs. Further, the structural difficulties of finding a workable template of parliamentary cooperation, which derive from different constitutional natures of the EU and US polities, are likely to remain. With the latter clinging to the concept of nation-state sovereignty and the former resting conversely on that of pooled sovereignty, their conceptions of transnational democratic governance are at odds.Footnote 218 Another inherent impediment is that the EP and Congress enjoy vastly different constitutional prerogatives. This was most visible in the ACTA episode, where the EP exercised its full constitutional power and rejected its ratification, while Congress did not even have the right to voice its opinion. These underlying dynamics considerably condition the future roles that the EU and US legislatures will play in transatlantic and broader international relations.
However, as the EU’s experience with a legislative early warning mechanism shows, despite politico-constitutional differences, the existence of hard law guarantees provides a strong impetus for parliamentary activation and a more intensive search for coordinated approaches to transnational decision making.Footnote 219 Better formalised EP–Congress relations could generate similar consequences. They could raise the parliamentarians’ awareness of the high level of regulatory and legislative interlacement and provide for a more inclusive policy-making process that could dissuade confrontation and promote substantive ex ante consultation. TTIP is likely to make a nudge in this direction, but the extent to which it will incentivise the upgrading of the TLD remains uncertain. It is plausible nonetheless that a TLD with enhanced participatory and oversight rights could begin to change the perceptions of MEPs, and especially Congress members, about the value of interparliamentary coordination.
