Better Regulation in Germany and the EU – Time to see results

Germany and the EU have laid the institutional foundations for a successful reduction of bureaucracy, but more needs to be done, according to a recent Deutsche Bank research paper.

The paper identifies the adoption of a 25% reduction target both in Germany – to reach by 2011 – and the EU – by 2012 – as most essential step to foster the reduction of administrative burdens. For the EU, the burden for businesses is estimated at € 600 billion. 

Comparing the different approaches, which the EU and Germany pursue to improve regulation, the authors of the paper voice preference for the EU approach. This is in large part due to the fact that at the EU level regulatory impact assessments (RIAs) play a larger role than in Germany, where the standard cost model (SCM) – as in various European countries – is still given preference. 

The EU has been introducing the RIA system in successive stages since 2003 in order to systematically improve the quality of EU legislation by applying scientific methods to evaluate different governance options. In 2004, Better Regulation units were set up within the DGs ‘Enterprise and Industry’ and ‘Internal Market’. According to the authors, RIAs have the benefit of going much further than the SCM. 

In recent years, the number of reviewed legislative initiatives has been steadily rising. In addition, the Commission in 2006 set up the so-called Impact Assessment Board (IAB), which is responsible for reviewing all regulatory impact assessments conducted by the Commission. The long-term goal is that all proposed regulatory acts in the Commission’s annual work and legislative program will undergo an RIA. 

Although the Deutsche Bank paper shares the Commission’s positive overall balance on the RIA system, the authors still see some room for improvement. According to them, the quality and scope of the RIAs conducted so far vary considerably and often fall short of the expected standards. The paper mentions for instance the lack of market research or the missing quantification of effects. 

One central recommendation of the paper is to set up an independent body to carry out the RIAs so that the objectivity and quality of the impact assessments can be systemically improved. Although its creation is already being widely discussed the authors regret that this step does not seem to be politically feasible at present. 

Beside the RIA system, the Deutsche Bank paper points at other positive steps which were taken at the EU level. For instance, in 2007 the Commission has incorporated for the first time the simplification measures in its legislative and work programme. The authors also consider notable the Commission’s plan to propose around 350 codifications initiatives by 2008 and the recommendation to the Council to call on the member states to set comparable reduction targets at the national level by October 2008 at the latest.