What Makes an Effective EU Business Association?

What Makes an Effective EU Business Association?

There are 950 EU business associations from a total of 1400 EU interest groups of all types. They range from the familiar, such as the European Chemicals Industry Association, the Union of Industrial and Employer’s Confederation of Europe, and the EU Committee of the American Chamber of Commerce. Most organise a specific trade, interest, or even issue. They include the highly specialist, such as the European Technical Caramel Association, the Alliance on Beverage Cartons and the Environment, and the European Association of Flexible Polyurethane Foam Blocks Manufacturers.

The average secretariat is less than 5 staff. A sizeable clutch have between 20-50, and just one, the ‘CEFIC’ family, has over 100. Some are even ‘virtual’ organisations, like the European Modern Restaurants Association. Just about all of them are smaller than their large national counterpart associations, because they were set up with a narrower remit – political representation. They do not undertake the range of functions taken on by national associations, such as training and export promotion. Because they concentrate on political representation, they are highly dependent upon member subscriptions.

This over dependence upon members for resources means that EU associations are often too closely controlled by their members. Certainly, an association has to represent the views of its members. But real leadership is about creating a sense among members as to what their interests are on a given range of issues. This delicate task involves gaining autonomy from members, rather than being too closely controlled by them.

Autonomy partly comes by design. Associations representing a small number of companies tend to be over controlled by them. This is the cost of high specialisation. It us an understandable option to take, in the interests of finding common ground between members, but it can place the association in a straitjacket. Whilst broader constituencies make common agreement more difficult, so there is less chance that any one member, or type of member, can over control the association. But how can broadly based associations reach meaningful common positions?

Part of the answer lies with political institutions. In ‘Germanic’ Europe, associations are ‘licensed’ by government as governance partners to take on public governance tasks. This licence to govern makes them worthwhile organisations for their members to join, and provides the incentive for members to reach common positions and to comply with them in the interests of running their own affairs as an industry. The association policies and delivers industry wide compliance with agreed regulations to government in return for delegated authority.

To be fair, these arrangements are somewhat difficult in political systems like the EU where there is such fragmented authority. A deal made between the Commission and an association may not last the Parliament’s scrutiny. And the sheer number of access points to EU decision making means that associations can easily be by-passed by their members. Yet the Commission could make a start by ‘accrediting’ interest groups that meet certain criteria of representativity and accountability. Although official Commission policy is not to accredit in the way that the UN does, access to its latest database of interest groups is controlled by a number of criteria for internal association capacities, and in any event the Commission has long accredited groups through the Social Dialogue.

The White Paper on Governance provides a chance to do this. The aim should be to have fewer, stronger, associations, able to contribute to governance. The problem is not, as the White Paper tells us, one of ‘democratic deficit’, but of democratic overload – the EU system is collapsing under the she er weight of interest representation, and soon policy making will be paralysed.

One thing the White Paper has already changed is the climate in which policy making happens – the door is wedged open for citizen interests. In the future it will be no good to submit a list of demands based around the health of an industry, but instead proposals will have to be framed in the language of wider public interest. I have already found evidence of changing patterns of consultation by Commission officials, where they prefer to place documents on the internet for responses by anyone who cares to read them, rather than to engage in bilateral consultation with business.

The sheer openness of EU politics mean that most associations find their interests are contested by another interest – perhaps an NGO, perhaps a labour union, perhaps another business interest. This insulates the EU political system from domination by any one particular interest, along with the fragmentation of power between the Commission, the Parliament, and the Member States. Clever policy makers are adept at the game of ‘divide and rule’.

There are some predictors of associational effectiveness. Concentrated industries tend to work together better than do fragmented ones. Industries with cross border transactions work together more at the EU level than do industries rooted to particular member states. Industries with high sunk costs tend to work together through associations to protect their investments, as do those facing a common problem of overcapacity. And those industries facing a visible ‘common enemy’ also have a good reason to work together collectively. These are ‘given’ factors and somewhat difficult to influence. Or are they?

Associations can also influence the way in which members work together as a cohesive unit. Associations can achieve a lot just by getting their members to know eachother well. On the face of it, another ‘given’ factor seems to be the type of issue. It helps yours is an interest that is technical, non-ideological, and one on which policy makers are genuinely undecided. But issues can be defined and presented in these terms, calling for high skills among association staff. This brings us nicely to other things that associations can do to make a difference to their performance, such as to have a resource on which others depend, such as a monopoly of expertise or specialist information.

To find out more about the which factors make EU business associations effective, see the information on a Commission funded conference on

<em>’The Challenge of Change in EU Business Associations’, 7-10 May 2002.

• Related EURACTIV overview:LinksDossier on Governance;
• Recent story on Governance:EThe European Parliament calls for a boost to EU information policy(18 March 2002)