The Need for Supranational Governance

Regarding environmental constraints by governments affecting the micro-level, i.e. companies, one inherent problem is a country’s competitiveness. The higher constraints a government imposes, the higher cost structures and inferior flexibility for manufacturers result, while consumers have to pay greater prices. Consequently, such restrictions undermine the competitiveness of an economy. In some industries, however, it may also lead to a higher competitiveness; for instance, if European car manufacturers would have been more innovative and would have kept the conditions of the voluntary agreement between their association ACEA (Association des Constructeurs Européens d’Automobiles) and the European Commission, the ‘Prius Hype’ in the US (prior to Toyota’s quality crisis) could have been around a car from a French, German, Italian, etc. car manufacturer.

To simplify this blog entry though, I will rather stuck to the claim that national constraints tend to undermine competitiveness and impede the attraction of FDI which then postulates supranational governance. Sustainably restricting policies do not distort the international competitive landscape if the whole landscape is affected. In 2002, the European Commission passed the directives for ‘RoHS’ (Restriction of Hazardous Substances) and ‘WEEE’ (spoken W triple E – Waste Electrical and Electronic Equipment). “The objective of these schemes is to increase the recycling and/or re-use of such products. It also requires heavy metals such as lead, mercury, cadmium, and hexavalent chromium and flame retardants such as polybrominated biphenyls (PBB) or polybrominated diphenyl ethers (PBDE) to be substituted by safer alternatives.”

In practical terms, retailers have to adapt their procurement processes accordingly, include these increased efforts in their price calculations and are obliged to accept returned e-waste free of charge. These directives were a milestone in terms of multinational ‘green’ policies affecting the micro-level, although advancement with higher mandatory collection targets was already announced by the Commission due to dissatisfactory treatment of electronic trash. A step-by-step implementation is obvious in multinational policy-making anyway.

In my opinion, such joint approaches can be the only solution. Otherwise, in addition to the question of competitiveness, cross-border dumping and exploitation may be provoked as observable within the scale of the abovementioned directives. “Illegal trade of electrical and electronic waste to non-EU countries continues to be identified at EU borders.”

Sustainable efforts, which require concessions or sacrifice by citizens (e.g. higher prices), are not deliverable towards societies/electors if other states act inconsiderately.  With respect to the current global disputes in politics regarding sustainability, predominantly the failure of the Copenhagen summit in December 2009, the European Union plays an even more crucial role and should be a pioneer. Due to its unique level of supranational integration, the implementation of constraints like RoHS or WEEE is highly facilitated as opposed to global endeavours.

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Posted in government policy, Uncategorized
One comment on “The Need for Supranational Governance
  1. jeremy says:

    Constanze, while business will be the key driver towards sustainable development, the state has to provide the socio-legal framework within which firms must operate. Without this — as you correctly point out — the system is open to abuse, and incentive structures become distorted.

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