‘Re-regulation through backdoor’: Revisited European Commission’s challenge of defence offsets

The interplay between the Commission’s enforcement power and legislative power has aroused increasing attention in the literature. In the seminal works, Susanne Schmidt shows that the Commission could utilise coercive enforcement to force member states to adopt legislations which they had opposed (Schmidt, 2000, 2018). Take a step further, Weiss & Blauberger argues that through opportunistic enforcement, the Commission may promote its regulatory objectives in the stage of implementation which were politically unagreeable in the prior-legislative process (Weiss & Blauberger, 2016). In essence, both Schmidt and Weiss & Blauberger agree that in order to achieve its policy objectives, the Commission’s enforcement actions have to be embedded in the supranational legislative process. In this article, I postulate that through strategic enforcement, the Commission might also drive its preferred policy changes directly and accumulatively at national territories of member states. This process is referred as ‘re-regulation through backdoor’. By calling ‘re-regulation’, the proposed argument emphasises that the Commission either has no intention or is not able to change the regulatory status-quo at the supranational level. By calling ‘backdoor’, the Commission is theorised to mainly rely on its enforcement power rather than the conventionally legislative agenda-setting power to steer policy changes. Comparatively, ‘re-regulation through backdoor’ has a stronger flavour of hieratical direction (Scharpf, 2001) and thus it also requires to compensate member states’ loss of problem-solving capacity (Genschel, 2011). Arguably, ‘re-regulation through backdoor’ has to be accompanied with capacity building or alternative policy tools provided for member states. To illustrate the proposed argument, this paper zooms into the Commission’s challenge of defence offset policies of Netherlands and the Czech Republic respectively. Defence offsets are economic returns for tendering country’s economy by the successful bidder. The Commission takes issue with offsets due to its discriminatory nature. But because of its political sensitivity, offsets were proactively omitted by the Commission in its proposal of the Defence Procurement Directive in 2007. Even without explicit mention of offsets, Defence Procurement Directive introduced subcontracting as the substitutive for offsets. With subcontracting as an alternative legal tool, Amsterdam relinquished its offset policy in the shadow of Brussel’s relentless enforcement. And Prague agreed to abolish the offset policy in exchange for the Commission letting it off the hook. This research shows that theoretically, the Commission does not necessarily need the supranational legislation and the following national implementation to bring about a unified policy change. Through ‘re-regulation through backdoor’, the Commission could promote accumulative policy changes based on its enforcement discretion.