European Union: European Commission Promotes Better Regulation for Growth and Jobs in the EU

The European Commission recognises that improving the quality of regulation can significantly spur growth in the EU economy and assist business. To this end, it issued a Communication on "Better Regulation for Growth and Jobs in the European Union" in March 2005. This sets out an ambitious agenda designed to cut the regulatory burden and red-tape faced by business and to ensure a better balance between costs and benefits of legislation.

Early EU initiatives to improve regulatory quality were rather piecemeal and variable in application. It was recognised that to be successful the EU needed a new, more structured approach and a co-ordinated framework. The Commission therefore established an expert group (the "Mandelkern Group") to advise it on the best way forward.

As a result of the group's recommendations, the Commission issued two packages of measures on better regulation in June and December 2002 that were designed to improve EU legislation and governance in a comprehensive and holistic way. These communications covered, among others: principles and minimum standards for consultation of interested parties by the Commission and on the collection and use of expertise by the Commission; a commitment to carry out impact assessments for all major policy initiatives, including a commitment to consider alternatives to legislation (such as self-regulation); and an operating framework for future European Regulatory Agencies.

Combined, these documents marked an important step forward, not least in so far as they recognised that progress demands joint effort on the part of the EU Institutions and the Member States.

This recognition was subsequently reflected in an Inter-Institutional Agreement on Better Law making signed by the Commission, European Parliament and the Council of Ministers (that is, Member States) in December 2003. Under this agreement, the Institutions committed, among others, to observe general principles such as democratic legitimacy, subsidiarity and proportionality. They also agreed to improve the co-ordination of their legislative activity during the policy-making and decision-making process.

Despite the good intentions, it became apparent that additional efforts were required. A major initiative - the so-called Lisbon Agenda - was launched by the Union in 2000 with the aim of making the EU the world's most dynamic and competitive knowledge-based economy in the world by 2010. However, in the wake of the EU's continued disappointing economic performance, the Lisbon strategy was re-launched in Spring 2005 focusing on growth and employment. It was accepted that European competitiveness and hence growth and employment would not be stimulated without regulatory reform and an improved approach to designing and implementing better regulation and to achieving the desired outcomes without imposing disproportionate or unnecessary economic costs.

Consequently, the Commission issued its follow-up Communication on Better Regulation for Growth and Jobs in the European Union in March 2005. The Commission claims that better regulation will help to make the European Union a more attractive place for business to invest in but also for citizens to work as it will have a significant impact on the framework conditions for economic growth, employment and productivity by improving the quality of legislation. This, it argues, creates the right incentives for business, cuts unnecessary costs and removes obstacles to adaptability and innovation. Moreover, the Commission believes that it will ensure legal certainty and by that efficient application and enforcement throughout the EU.

The Communication foresees three key action lines:

• Promoting the design and application of better regulation tools at EU level, notably in respect of impact assessments and the simplification of existing legislation
• Working more closely with Member States to ensure that better regulation principles are applied consistently throughout the Union by all regulators. The Commission underlines that the transposition of EU legislation by Member States and national regulatory initiatives impact directly not only on national administrations and citizens but also on businesses, particularly small and medium-sized enterprises ("SMEs") across Europe
• Reinforcing the constructive dialogue between all regulators at the EU and national levels and with stakeholders.

Within these main action lines, a number of specific activities are foreseen.

The Commission has developed a rolling programme for simplification and has already presented some 30 initiatives to simplify regulatory issues for economic operators, citizens and national regulators. In parallel, the Council of Ministers has identified a priority list of some 20 pieces of EU legislation that might benefit from simplification and the Commission has developed action plans for simplification for a number of these. Legislation identified for simplification includes Directive 2000/13 on the labelling, presentation and advertising of foodstuffs and various EU and related national laws on weight indications on pre-packed products, including food and drinks.

The Commission intends to pursue further simplification of existing legislation on the basis of a follow-up Communication due to be presented in October 2005. Issues that shall be considered include evaluation of legislative methods, including alternatives such as self-regulation, voluntary agreements and codes of practice and wider use of European standards as alternatives for legislation or as technical support to European legislation.

The Commission claims to be committed to integrated impact assessment. Existing impact assessment ("IA") tools will be strengthened and IAs themselves will include more in-depth economic analysis of the impacts of policy options to better inform policymaking. In addition to economic and competitiveness aspects, IAs will also pay attention to social and environmental consequences of proposed measures.

To this end, the Commission agreed, in June 2005, revised impact assessment guidelines to be followed by Commission officials in assessing the possible impact of proposals. The guidelines incorporate reference to the main elements of the Lisbon strategy, as well as specific guidance to encourage early consideration of alternative regulatory and policy options, such as self-regulation or standards.

Such impact assessments are, according to the Commission, to go hand-in-hand with wide-ranging consultation to allow all stakeholders to contribute to the shaping of new rules. In parallel, the European Parliament and Council are also committed to undertaking impact assessments of substantive amendments that they intend to make Commission proposals when the co-decision procedure applies. To this end, the three institutions are seeking to develop key elements of a common approach to assessments carried out at the different stages in the legislative process.

Several hundred Commission proposals pending in the European Parliament and Council are to be screened to assess their general relevance, their impact on competitiveness and other effects. This will focus on proposals adopted before 1 January 2004 and for which impact assessments have not been carried out.

This screening could lead to the Commission deciding to modify, replace or even withdraw proposals. One example of a proposal that has been withdrawn is that for weights for coffee and chicory extracts, as the Commission decided it would be more efficient to regulate pack sizes for all products in a single horizontal Directive.

The Commission has acknowledged that reporting and information obligations of EU laws can place excessive burden on Member States. It is therefore supporting the development of a common flexible methodology for measuring administrative burdens focusing on labour costs and overheads required. In the first instance two pilot projects are to be completed as soon as possible in 2005; these are checking the administrative burden for two complex fields of EU law, namely construction products and statistics.

The Communication acknowledges that many measures that could help to reduce red-tape are in the hands of the Member States and that the latter therefore have a crucial role to play in delivering better regulation.

In particular, it notes that evidence from the advance notification of national technical rules and infringement procedures underlines the fact that Member States can often create unnecessary red-tape. It has therefore recommended that all Member States should, like the UK and the Netherlands, set up national better regulation strategies, including impact assessment systems and simplification programmes.

In an effort to help identify and ultimately reduce red-tape at all levels, the Commission launched on 1 June 2005 an on-line consultation on the issue¹. The intention is to ask business how the business environment may be improved and administrative burdens reduced. Respondents to the on-line questionnaire are asked to identify "particularly burdensome" rules and make suggestions as to how best to simplify them. The deadline for input is 31 December 2005.

Footnote

^{1. The on-line questionnaire can be accessed via the Commission's website at: http://europa.eu.int/yourvoice/consultations.}

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