Alternative Regulation

In the White Paper and in the Better Regulation
action plan, the Commission proposes to make greater use of
alternatives to traditional legislation without undermining the
provisions of the Treaty or the prerogatives of the legislator.
It suggests that certain policy objectives can be achieved with
the use of alternative regulations, such as co-regulation, the
open method of coordination and voluntary sectoral
agreements.

Background

There have long been calls from both EU Member
States and from policy stakeholders for the simplification
and improvement of EU regulation. In 1995, a Protocol was
appended the Treaty of Amsterdam concerning principles of
good regulation. The Lisbon Council (March 2000) advanced
the debate, with its commitment to improving cohesion and
coordination between the community institutions, Member
States and civil society, when 'improving'
regulation and when considering alternatives to traditional
EU legal instruments.

In fact, a number of alternatives to
traditional regulatory instruments have been in use in the
EU for some time. For example:

  • the 'New Approach' (1985) to product standardisation 

    and the ' 
    Global Approach' (1989) to conformity assessment 

    have resulted in a new legislative procedure, based on
    the drafting of essential health and safety requirements
    and the use of harmonized European standards. Alternative
    regulations, in this case detailed rules by which
    products' technical and safety characteristics, are
    then adopted by standards bodies approved at EU level.
    Products complying with these voluntary standards benefit
    from the presumption of conformity that all legal
    requirements are satisfied;

  • the 
    social dialogue process 

    to be found in Articles 138-139 of the Treaty, by which
    the European social partners have been empowered to
    negotiate agreements in order to regulate social policy
    matters governing working conditions. The success of this
    process depends on the existence of well established
    representative bodies at national and European level,
    ready and able to take responsibility in the negotiation
    process and at the implementation stage.

In the White Paper and Better Regulation
action plan, the Commission suggests several policy
instruments, or alternative regulations, which can be used
to simplifying lawmaking activities and legislation
itself:

  • prescriptive regulatory actions (e.g. setting air
    quality standards);
  • co-regulatory approaches (e.g. social dialogue);
  • the Open Method of Coordination.
  • market-based instruments (e.g. emission trading,
    taxation);
  • financial interventions (e.g. taxation, subsidies,
    co-financing, seed or risk financing);
  • action aiming at voluntary agreements or
    self-regulation;
  • information, networking o r co-ordination
    activities.

Issues

This LinksDossier will cover issues related to the
following types alternative regulations (others may be
added in time):

  • co-regulation;
  • self-regulation;
  • open method of coordination (OMC).

Co-regulation

Within the framework of a legislative act, co-regulation
makes it possible to implement the objectives defined by
the legislator through measures carried out by active and
recognised parties in the field concerned. The Commission
remains convinced that co-regulation is an option for
focusing legislative work on essential elements and for
simplifying and improving implementation - circumscribed by
criteria laid down in a future inter-institutional
agreement on better regulation. A co-regulation can follow
either "top-down" or "bottom-up"
approach:

  • In a top-down approach, the legislator sets the legal
    framework, the stakeholders fill in the details and
    public authorities either monitor the outcome or
    sometimes validate those more detailed rules by turning
    them into binding regulation. The best example of top
    down co-regulation at EU level is the so-called "New
    Approach" in the area of the free movement of goods,
    where essential requirements are defined by law, while
    the stakeholders are invited to elaborate the technical
    harmonized standards which provide a "presumption of
    conformity". In this case, the self-regulatory
    process is used in a well-defined manner in support of
    public law.  
  • In a bottom-up approach, it is unlikely that
    stakeholders will make the necessary effort to set up or
    activate a representative body to formulate codes or
    standards, unless they have been invited to do so by
    public authorities and have some reasonably firm
    assurance that the results of their work will be
    endorsed, provided it meets the conditions set in advance
    by public authorities. A good example of bottom up
    co-regulation is the Commission Recommendation on the
    reduction of CO2 emissions from passenger cars following
    voluntary commitments from associations of vehicle
    manufacturers.

In the June 2002 Better Regulation
action plan, the Commission proposes that co-regulation be
used more frequently provided that:

  • the co-regulation is used on the basis of a
    legislative act. Thus, all proposals on the subject
    concerned will be referred to the legislator;
  • the co-regulation mechanism be in the interests of
    the general public;
  • the legislator establishes the essential aspects of
    the legislation: the objectives to achieve;
  • the legislator determines to what extent defining and
    implementing the measures can be left to the parties
    concerned because of the experience they are acknowledged
    to have gained in the field;
  • in cases where using the co-regulation mechanism has
    not produced the expected results, the Commission
    reserves the right to make a traditional legislative
    proposal to the legislator;
  • the principle of the transparency of legislation
    applies to the co-regulation mechanism;
  • the parties concerned must be considered to be
    representative, organised and responsible by the
    Commission, Council and Parliament.

The Commission maintains that even when
it will propose a legislative act in which provision is
made for co-regulation, the proposal must be adopted by the
European Parliament and the Council

Self-regulation

Self-regulation concerns a large number of practices,
common rules, codes of conduct and voluntary agreements
which economic operators, social players, NGOs and
organised groups establishing voluntary bases in order to
regulate and organise their activities. Unlike
co-regulation, self-regulation does not involve a
legislative act.

In some EU Member States,
self-regulation is long-standing in areas such as editorial
(privacy, decency) and advertising standards for print,
radio and broadcast media and for the advertising industry.
With the expanding proliferation and use the Internet,
self-regulation now considered an efficient instrument,
both nationally and internationally, to address the problem
of harmful and illegal content and to ensure the protection
of minors. Due to cross-border developments in the Internet
and information society, self-regulation is seen to have
increasing importance, and there are calls for coordinated
efforts at EU level. 

In the White Paper, the Commission notes
that self-regulation, subject to clearly defined
conditions, may also be a way of achieving the Treaty's
objectives and avoiding excessive regulation. The
Commission has proposed criteria and modalities for the use
of self-regulation and similar alternative instruments, and
these are currently the subject of negotiations on an
inter-institutional agreement.

Open method of coordination

The Open Method of Coordination (OMC) was first introduced
at the Lisbon Summit of March 2000, where EU leaders
suggested that it be used as alternative regulation for
areas such as social exclusion, enterprise policy and
e-Europe, where most or all policy-making power remains
with the Member States.

The design of OMC varies by policy area,
but all OMC processes generally involve:

  • fixing policy guidelines for the EU, combined with
    specific timetables for achieving the goal which they set
    in the short, medium and long terms;
  • establishing, where appropriate, quantitative and
    qualitative indicators and benchmarks against the best in
    the world and tailoring to the needs of different Member
    States and sectors as a means of comparing best
    practice;
  • translating European guidelines into national and
    regional policies by setting specific targets and
    adopting measures, taking into account national and
    regional differences;
  • periodic monitoring, evaluation and peer review
    organised as mutual learning processes.

The Commission and Council may in turn
use harder or softer enforcement mechanisms, require longer
or shorter reporting intervals, and choose to set
guidelines at the EU level or delegate responsibility to
individual Member States. Whether the EC and the Council
use harder enforcement mechanisms (e.g., fines under the
Stability and Growth Pact) or softer mechanisms (e.g.,
non-binding directives and critical recommendations to
Member States for violating the Broad Economic Policy
and/or Employment Guidelines) depends on whether these
institutions have Treaty competence for binding policy
directives in a given policy area.

In the White Paper on European
Governance, the Commission states that the OMC can be used
to "complement" or "reinforce"
Community action, in particular when there is little scope
for legislative solutions.

Positions

Self-regulation and Co-regulation

The 
Parliament

has expressed concerns that some of the new forms of
regulation proposed in the White Paper, such as
self-regulation and co-regulation and the creation of
regulatory agencies, might weaken the role of Parliament.
Commission President Prodi and others have tried to
reassure MEPs by introducing principles and practices to
ensure democratic control.

Among 
EU level environmental and consumer
groups

there is a general scepticism towards the ideas of
co-regulation presented by the C ommission in the White
Paper. One of the main concerns is that the force of law
will be diminished and with it the environment and
consumer interest. For example, the 
European Environmental Bureau (EEB),

which represents eight environmental groups on governance
issues, notes that voluntary agreements on regulation may
lack the strength and breadth of applicability compared
to regulations based on statutory law and that the
pressure on governments to create strong regulatory
bodies might also be reduced.

Enforcement is also a concern of
the 
European consumers group BEUC

who argue that the level of commitment to co-regulatory
agreements may vary significantly and that the diminution
of the statutory dimension may encourage free riders who
are not party to agreements. Similar concerns about the
dilution of the role of law have been expressed by the
European group of consumer cooperatives, 
Euro Coop

.

In the 
working groups supporting the drafting of the
White Paper

, concerns were expressed about the need for industry and
other bodies to organize and coordinate the
self-regulatory process. Self-regulation measures such as
codes of conduct, standards or certification imply
collaboration between industry partners at various
(sectoral, national, regional etc) levels. Industry is
also increasingly seeking to involve other groups, in
particular consumer associations and environmental
bodies. The ability to use self-regulation thus depends
largely on the availability of bodies and processes to
build consensus on the content or rules, to establish
procedures for monitoring and enforcement etc. With the
notable exception of the European standardisation bodies
(CEN, CENELEC and ETSI) and a handful of others, there is
a lack of EU-wide bodies capable of or interested in
delivering self-regulation at the EU level.

Open Method of coordination

Advocates of this 'soft law'
approach

(i.e., not 'hard law' based on legal acts) argue
that the OMC enables the Member States to cooperate
closely, yet recognises their diversity and avoids forced
harmonisation. It allows coordinated action in areas
where it would be politically difficult, or even
impossible, to move forward through a common policy or
legal framework. It allows for a concerted EU approach
while leaving legal competence and authority with the
individual Member States.

Supporters of OMC

highlight the fact that this method has allowed the EU to
extend the concept of joint action into new policy areas.
And it gives a key role to the Commission, not only in
analysing best practice, but also in drafting guidelines
and issuing recommendations on improving the
effectiveness of policies.

Critics

, however, fear that the OMC will at best create
talking-shops and will at worst undermine the traditional
"Community method" of decision-making and lead
to more inter-governmentalism.

Timeline

  • The EU institutions are currently discussing
    a communication by the Commission on using
    the open method of coordination in the area of health
    care (
    COM (2004) 304

    )

Further Reading

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