Better Regulation

Simplifying and improving the EU regulatory environment is one of the Barroso Commission’s key instruments under the Lisbon Strategy to restore economic growth and create more jobs in Europe. Dubbed ‘better regulation’, the initiative could allow businesses to save billions of euro, according to the Commission, but progress up till now has been sluggish.

The initiative on "better regulation" or "better lawmaking" has its origins in the Edinburgh European summit of December 1992. EU heads of states pledged to make improving the EU regulatory environment one of the Community's main priorities. In the ten years that followed, the results were limited due to the complexity of the task and the lack of real political support. 

Successive summits in Lisbon (March 2000), Stockholm (March 2001), Gothenburg (June 2001), Laeken (Dec. 2001) and Barcelona (March 2002), gave the Commission a renewed mandate to develop "a strategy for further coordinated action to simplify the regulatory environment". In its White Paper on European Governance (July 2001), the Commission committed itself to action on improving the quality of EU legislation. 

As a first follow-up to the Governance White Paper, the Prodi Commission adopted in June 2002 an Action Plan for Better Regulation. The plan identified 16 measures for improvements at various stages of the legislative cycle, from early policy conception to implementation. 

From 2003, the Commission has progressively introduced a system where each major policy initiative must include:

  • a consultation with stakeholders
  • an analysis of the measure's expected impact 
  • a justification of action at EU level in accordance with the principles of subsidiarity and proportionality



The strategy:

 

"Better regulation" is one of the key instruments that the Barroso Commission intends to use to re-launch Europe's flagging economy (see our Lisbon strategy relaunch LinksDossier).

The communication adopted in March 2005, entitled "Better regulation for Growth and Jobs in the European Union", defines the issue in a simple equation: "Less red tape = more growth". It sets out three objectives:

1. Impact assessments for new proposals:

Since the beginning of 2005, all major draft laws issued by the Commission must be accompanied by an impact assessment study that assesses the costs and benefits of the proposal and ensures that it is consistent with the Commission's drive for improving business competitiveness.

On 15 June 2005, the Commission published new guidelines on how impact assessments should be conducted (EURACTIV 16/06/05). These include:

  • defining the appropriate level of action, in accordance with the principle of subsidiarity and proportionality. The option of taking no action at all at EU level should always be considered
  • ensuring consistency with other EU policies along the three pillars of sustainable development (economic, social and environmental)

Compared to previous versions, the new impact assessment guidelines stress the relative dominance of economic performance and competitiveness over social and environmental aspects. 

2. Withdrawing or re-drafting pending legislation:

In March 2006, Enterprise Commissioner Günter Verheugen adopted plans to withdraw 67 pending proposals following the screening of 183 proposals that were in the legislative pipeline (EURACTIV 28/09/05). Examples of proposed laws to be axed include:

  • a directive on labelling, presentation and advertising of foodstuffs;
  • a directive imposing a weekend ban on trucks;
  • a directive protecting workers from optical radiation ('sunshine directive').

3. Simplifying existing EU legislation:

On 25 October 2005, Enterprise Commissioner Günter Verheugen presented plans to simplify, repeal or rewrite over 220 EU laws in more than 1,400 legal acts. The process is to last until 2008 (EURACTIV 26/10/05).

Priority areas include the car industry, construction, foodstuffs and pharmaceutical sectors (see full list of the legal acts under consideration), as well as the EU’s Common Agricultural Policy, which represents the greatest chunk of EU rules (see our LinksDossier on Simplifying the CAP).

The Commission also plans to simplify and scale down the entire body of Community legislation adopted since 1957 (the acquis communautaire) through a process of codification, which entails bringing together the provisions of existing acts with all of their subsequent amendments into one single law. 



The review:

 

In his strategic review of better regulation presented in November 2006 (EURACTIV 15/11/06), Commissioner Verheugen pledged to speed up efforts towards cutting red tape after new figures revealed that the initiative has so far had limited results and that the annual burden for business due to administrative costs of EU legislation will actually be double the original estimate of €320 billion. 

The plan is to strengthen Commission action in this field by: 

  • reducing the administrative burden of existing regulation: The Commission estimates that administrative costs amount to around 3.5% of EU GDP. It thus proposed setting a legally binding target for cutting these costs by 25% by 2012 - a move which it says could produce a €150 billion boost to the European economy. It has also established a concrete action plan for on measuring Administrative Costs and reducing Administrative Burden’. EU leaders meeting in March 2007 for the Spring European Summit (EURACTIV 9/03/07) agreed to this goal but discarded the idea of binding targets at national level. 
  • improving the quality of impact assessments through the creation of an independent panel of experts (the Impact Assessment Board or IAB), which will be responsible for examining draft impact assessments. The establishment of the IAB follows criticism about the fact that, in most cases, impact assessments were being carried out by the same people that had drafted the new legislation. 
  • Adding another 43 initiatives to its programme for simplifying existing regulations. 
  • In 2007, withdrawing a further 10 proposals currently pending before the Council and Parliament. 
  • Finalising a programme to reduce the volume of the existing legislation through codification by 2008. 

Vice-President Günter Verheugen explained: "We want to tackle red-tape and over-regulation on all fronts. It will only work if member states do their bit as well. This exercise is definitely not about less Europe, but about a better Europe." Commenting on the lack of progress on this agenda, he said: “I'm impatient because I feel it is a matter of urgency.” 

Denmark and the Netherlands, which have embarked on ambitious schemes to simplify their business regulation, are also concerned about the slow pace of EU bureaucratic reform. “The Commission's plan was to simplify 54 laws this year, but only five have been tackled. That is alarming,” said Dutch finance and Danish business ministers in a joint letter

German Chancellor Angela Merkel has announced that she will make the drive towards better regulation one of the top priorities during her country's EU presidency in 2007. 

UNICE, the Confederation of European Business, welcomed the Commission’s committment to simplifying and improving the regulatory environment in Europe but said: "Progress on simplification is far too slow even if the Commission manages to speed up the adoption of proposals. Almost all simplification proposals which have been adopted by the Commission are still pending before the Council and European Parliament and there is a considerable risk that new burdens will be added during the legislative process." UNICE President Ernest-Antoine Seillière  added: "Only real results will boost confidence in the overall worth of the project.” 

Some members of the European Parliament have expressed concerns about Verheugen's Better Regulation initiative, saying that 'deregulation' does not amount to 'better regulation' and calling for more say in the process of withdrawing existing proposals. 

The Commission's "better regulation" efforts have also raised criticisms among environmental NGOs and trade unions for being purely business-driven and the product of an economically liberal-minded, right-leaning Commission. 

In a joint press statementthe European Trade Union Confederation (ETUC), the European Environmental Bureau (EEB) and the Platform of European Social NGOs (Social Platform) said: Europe and its citizens and businesses need better regulation. But better regulation should not become synonymous for simple deregulation and a one-sided cost approach…The Commission and the Council [must] avoid giving ultimate priority to favouring limited cost savings for business, rather than safeguarding people’s health and environmental or social protection.”. 

  • 14 November 2006: The Commission presented the results of its ‘Strategic Review of Better Regulation in the EU’. 
  • 9 March 2007: EU leaders agreed to the Commission's proposed goal of cutting administrative burdens for businesses by 25%. 

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