The Changing Role of EU Trade Associations

In this paper, Prof. Justin Greenwood analyses how
European trade associations differ from those – often larger
ones – operating at national level, their
membership structure and the challenges they face.

The following was contributed to EURACTIV
by Prof. Justin Greenwood (Aberdeen Business
School, and College of Europe).

European Trade associations differ from
national associations in that they are
primarily oriented towards dialogue with the
decision making institutions of the EU rather
than to providing a range of membership
services.  Most of the 1000 or so trade
associations are confederations (58%), i.e.
associations of national associations, with the
remainder admitting large companies directly
into membership.  Neither national trade
associations nor large companies need the range
of business services typically found in
national trade associations, but rather created
European associations to act as a collective
voice for them in EU decision making. 
These realities mean that, compared to national
associations:

• all European trade associations are small
  operations relative to those which can be
  found in the larger EU member states
• there is a very high density of
  membership and relatively low levels of
  membership turnover.

Where industries are dominated by
multinational enterprises geared up for cross
border trade, so EU trade associations tend to
be based on direct company membership; where
industries are based around nationally based
players reliant on trade in their own national
market they tend to have national associations
as members; and industries with a mix of the
above tend to have a mixed membership
structure.

EU institutions need interest groups of all
kinds for specialist input to EU policy
making.  The European Commission is
smaller than many medium sized city
administrations, and so it needs expert help in
drafting workable legislation and in monitoring
its implementation.  EU policy making is
increasingly evidence based, favouring those
able to supply a strong factual basis to their
policy input.

The European Commission also hopes that
interest groups will provide a bridge between
their members and the EU.  For these
reasons it has spent time building up the
landscape of European interest groups, and
provides substantial funding for citizen
interest groups to operate a Brussels
base.  There is an active policy within
the European Commission of open access for all
comers, supported in recent years by mechanisms
such as open, web based consultations, and
extended impact assessments to assess the
impact of proposed measures upon a wide range
of stakeholders, irrespective of whether they
are lobbying on them or not.  

Because there is no system of accredited
dialogue partners, associations have to draw
their internal strength less from their status
with political institutions and more from their
ability to reach common positions, which tends
to lead to a high degree of specialism,
sometimes competing, in the landscape of
business interest associations.  Despite
the logistical problem of finding common
positions between interests from so many
European countries, industries with shared
interests, problems and common features can
always work well through their
associations.  Commodity product
industries, where regulation is unlikely to
divide members, therefore tend to do best.

Through the exceptional transparency of EU
policy making via its Europa web server, the EU
equips interest groups to keep the political
system accountable.  It also intends
interest groups from all walks of life to act
as checks and balances upon eachother to help
ensure that no one type of interest routinely
dominates EU policy making.  The natural
fragmentation of power in the EU decision
making system, between member states and EU
institutions, also makes sure that no one type
of interest can routinely dominate. 

These realities mean that EU politics is
based around compromise and consensus. 
Because there is no ‘government’ with
an inbuilt majority, every dossier has to find
its own majority.  EU trade associations
have to learn to live with pluralism, which
means that alliances are key.  EU politics
is currently gripped by the need to create a
‘Europe of the citizens’, so much of
the work of EU trade associations can involve
reconciling enlightened self-interest with
wider public goals through devices such as
self-regulation, and in partnerships with
citizen interest groups.  Environmental
groups are particularly strong, founded on very
high public support for environmental
protection in Europe (the EU now has, by a
distance, the strongest protection regime in
the globe), and some well resourced European
branches of international brand name
environmental interest groups which effectively
co-ordinate their work.   

The ‘big issue’ prioritised by the
new European Commission is the ‘Lisbon
agenda’.  Whilst economic
competitiveness (through a knowledge base) is a
key driver in shaping Europe’s ability to
compete with low cost production economies,
less well recognised are the social and
environmental components of the Lisbon
agenda.  Similarly, the ‘open method
of co-ordination’, based around national
benchmarking rather than legislation, brings in
a new set of national interests in the delivery
of EU policy goals, and a series of issues
about the accountability of national
governments in their achievement. 
National governments differ vastly in their
implementation of EU wide legislation, and the
European Commission of recent years has been
more reluctant to play the role of enforcer in
the European Court of Justice.  

These factors demand a much more
co-ordinated relationship between European and
national trade associations, and efforts are
underway in some key industrial sectors to
design a joined up, Europe wide system. 
Changing ownership structures of industries,
with an increasing degree of ownership by
finance houses, has also led to increasing cost
pressures upon associations, which has led to
more business-like European trade associations
with a high degree of professional
competency.  These are reflected in
increased levels of satisfaction with their
performance displayed by their members are
policy interlocutors when compared to a decade
or more ago.