Merkel seeks to slash business admin burden

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Simplifying and improving the EU regulatory environment will be top of the German presidency’s agenda, in hopes of saving business billions of euro.

Administrative burdens imposed by government (applications, forms, statistics) amount to around 3.5% of EU GDP, meaning that a 25% cut could produce a €150 billion boost to the European economy, according to Commission estimates. 

The issue is particularly important for Germany, which, according to OECD and World Bank assessments, has one of the most bureaucratic regimes in the world. Administrative burdens are currently thought to cost the German economy between €46 billion and €80 billion annually, according to the Think tank of Deutsche Bank Group. 

To tackle this problem, the German Presidency will be promoting the introduction of a uniform method – “Standard Cost Model” – for measuring the costs of existing and new regulations, based on the ambitious Dutch Model, where administrative costs have already been slashed by 25%. 

The Chancellor will also attempt to get agreement from all member states on setting a target of reducing administrative burdens by 25%. However, a number of member states are reluctant to commit to the target, claiming that the measurement model is in itself much too costly. 

Chancellor Merkel will also examine the possibility of introducing the concept of “discontinuity” in the legislative process, so that legislative proposals would become subject to an “expiry date” every five years, when the Commission’s and the Parliament’s terms end. Any law projects that have not passed the institutions by that time would have to be reconsidered from scratch. 

Chancellor Angela Merkel said that, while the main responsibility for growth and employment lies with member states, "there is much that we can do from Brussels to assist national efforts, be it by reducing red tape and improving legislation". 

She believes that one key to cutting red tape can be that: "Directives proposed by the Commission that have not been finalised by the end of the parliamentary term must expire and be tabled anew. Once something has passed the Commission, it does not perish any more. That is one of the factors contributing to the excess of regulation that so many EU citizens deplore." 

UNICE, the Confederation of European Business, encourages the German presidency’s strong emphasis on implementing the better regulation agenda, stating that progress has been far too slow and that there is a "considerable risk that new burdens could be added during the legislative process". It adds: "UNICE strongly supports the ambitious idea to strive for a 25% reduction of administrative costs by 2012." 

Some members of the European Parliament have expressed the fear that Commissioner Verheugen's Better Regulation plans could amount to deregulation and a lack of Parliament oversight on proposals that are withdrawn. There is also a worry regarding Chancellor Merkel’s discontinuity concept, which could lead to Parliament’s consultation role being overlooked. "This approach cannot bypass the rights of social consultation and must respect the principles of participative democracy," they warned. 

According to Andrea Renda of the Centre for European Policy Studies, Merkel's proposal to introduce an expiry date for legislative proposals would be very difficult to implement: "Almost nobody knows how this would be put into place. The proposal would have to be looked at more closely," he said, adding that it was unlikely that sunset clauses would be introduced for all legislation. 

He said that the most important agenda for Merkel was likely to be the implementation of the standard cost model, which Germany will begin implementing in 2007. 

Germany is making its final preparations before taking over the rotating EU presidency from Finland on 1 January 2007. 

During her six-month period at the helm of the Union, German Chancellor Angela Merkel will focus on promoting the EU's Lisbon Agenda for growth and jobs in the run- up to the Competitiveness Council of 19 February 2007 and the Economic Council on 8-9 March 2007. 

One of her main campaigns to revitalise Europe’s economy and foster employment will be to speed up the Better Regulation agenda – German Enterprise Commissioner Günter Verheugen’s pet project (EURACTIV 16/11/06) and an area in which Germany has been making good progress. 

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