EU’s revamped industrial policy dogged by ‘better regulation’ dispute


Industrial policy is on the EU agenda. [Wojtek Gurak/Flickr]

This article is part of our special report An industrial policy for Europe ?.

SPECIAL REPORT: An overhaul of EU industrial policies scheduled for early next year will come under intense scrutiny as stakeholders squabble over related initiatives aimed at simplifying European laws and assessing their wider impact on business and society.

El?bieta Bie?kowska, the Polish EU commissioner responsible for the internal market, industry, entrepreneurship and SMEs, said she will launch proposals in early 2015 “to support the competitiveness of European industry”.

In an interview with EURACTIV, Bie?kowska stressed that the European Commission’s policies “have to be overhauled”.

“Promoting competitiveness, which is the overarching aim of industrial policy, must be woven into the fabric of all policy areas, at all levels of government,” she said.

>> Read the interview: Bie?kowska: ‘Our policies have to be overhauled’

As part of the the industrial policy review, the Commission intends to overhaul its so-called “better regulation” agenda – now rebranded smart regulation – which aims at simplifying EU laws and scrap those that are no longer necessary.

The review will also look into the Commission’s impact assessment studies, which are now routinely conducted to predict the likely consequence of EU legislation on citizens and the wider economy, in a detailed cost-benefit analysis.

First Vice-President Frans Timmermans has a mandate from Commission President Jean-Claude Juncker to cut red tape and deliver “better regulation”. 

He is currently analysing about 130 pieces of pending legislation left over from the Barroso Commission to decide if any should be dropped.

More broadly, the European Commission President, Jean-Claude Juncker, has tasked Timmermans to report within a year of his mandate on how to strengthen the Commission’s approach to better regulation.

Timmermans has already indicated that reviewing existing legislation will be a major part of that review.

“The better regulation agenda is not just about optimising future proposals but also about reviewing laws which no longer serve the purpose they were intended for, and then removing them from the statute books to remove any obstacles they create to growth and job creation,” Timmerman’s spokeswoman Natasha Bertaud told EURACTIV.

Better regulation agenda is contentious

But the simultaneous reviews of better regulation and impact assessments are likely to cause controversy as business and NGOs see the debate from very different perspectives.

NGOs fear the better regulation drive could be hijacked by business as a means of promoting a deregulation agenda, in particular with regards to environment, health and social legislation.

In his Parliamentary hearing, Timmermans nodded to such fears, emphasising that deregulation “will fail if it is an attack on social rights or environmental protection”.

Nevertheless, the EU executive is clear that it is mandated to ditch rules that impede business.

Bie?kowska confirmed this, telling EURACTIV that, “We will not hesitate to drop initiatives if we are not fully convinced of their added value, nor are we afraid to approach things differently.”

“We need to improve the investment environment by removing non-financial barriers in key industrial sectors,” said the Polish Commissioner, adding: “Investment in new manufacturing technologies in smart and clean industries will not happen if the regulatory framework at EU level is not conducive to growth.”

Opposition mounts

The issue is likely to stoke dispute between industrial and NGO interests.

An example of that dispute surfaced last week, when the employer’s group BusinessEurope sent a communication to Timmermans recommending that the EU executive withdraw four proposals currently on the table – the financial transactions tax, rules affecting pregnant workers, gender balance on company boards and air quality.

“These are proposals where business has said from the outset that they would impose disproportionate burdens for European companies, or are not in line with subsidiarity  and/or  better  regulation  principles, and  can  therefore  not  be supported by us,” the communication said.

>> Read: Gender equality and environment laws on business lobby hit list

Green NGOs were quick to denounce the BusinessEurope initiative as an assault on environmental laws. “The real scandal would be if President Juncker were to buy into BusinessEurope’s regressive agenda under the veil of ‘better regulation’,” the European Environmental Bureau’s (EEB) secretary-general EEB’s Jeremy Wates said in reaction to the paper.

Impact assessments part of the equation

Division over better regulation is reflected in the parallel issues of impact assessment and scientific advice which are also under review.

The European Commission is currently reviewing the guidelines on how it carries out impact assessments and has committed to publish new ones by the end of this year.

Impact assessments are routinely conducted to predict the likely consequence of EU legislation on citizens and the wider economy, in a detailed cost-benefit analysis.

These may have far-reaching consequences: such questions turn explosive when science is thrown into the mix – on topics such as climate change, renewable energies, GMO authorisation, and shale gas.

On each of these, the Commission seeks advice from the scientific community to determine what form of regulation is needed, if any, applying the precautionary principle.

A big challenge for the incoming European Commission will be to disconnect its evidence gathering processes from the “political imperative” that’s driving policy proposals, according to Anne Glover, the EU’s chief scientific advisor.

>> Read our LinksDossier: When science meets politics: the EU’s impact assessment review

But the cessation of Glover’s role with the incoming Commission is also creating doubt as to how scientific evidence will be balanced in the new regime.

Juncker has not yet decided whether or how to replace the chief scientific adviser role when Anne Glover leaves the EU executive in February next year.

“President Juncker believes in independent scientific advice. He has not yet decided how to institutionalise this independent scientific advice,” is the line currently being taken by the Commission.

The new announcements on industrial policy will have to maneuver these various controversial strands delicately.

“I believe that the result [the new industrial strategy] will be a robust, comprehensive and coherent strategy, resulting from teamwork within the Commission and close co-operation with the Vice-Presidents,” according to Bie?kowska.

There will be plenty of observers on all sides of the debate ready to test that optimistic outlook, however, when it is launched early next year.

“This Commission does not believe ideologically in 'stricter' or 'looser' rules. We will look sector-by-sector, issue-by-issue at the best way to stimulate growth and help job creation in Europe. The keyword here is pragmatism,” according to Natasha Bertaud, the spokesman for First Vice-President Frans Timmermans.

"We and our members support President Juncker and his first vice-president in screening 130 pending legislative proposals in order to identify which proposals should be pursued and which should be withdrawn.  This is in line with the EU’s drive to comply with the principles of subsidiarity and proportionality,” said a spokesman for BusinessEurope.

The European Commission sought to break with years of inaction on industrial policy when it unveiled a new strategy in 2012, promising a "new industrial revolution".

The strategy's headline goal is to raise industrial activity to 20% of EU gross domestic product by 2020, compared to just over 15% today, taking it back up to pre-crisis levels.

Europe is a world-leader in many strategic sectors such as engineering, automobiles, aeronautics, space, chemicals and pharmaceuticals, the Commission argues, saying it must build on those strengths to relaunch manufacturing.

  • Oct. 2012: Commission unveils new industrial policy strategy, aiming to raise industrial activity to 20% of EU gross domestic product by 2020
  • 25 Oct. 2013: Commission’s industrial competitiveness report shows industry’s share in Europe’s GDP declined from 15.5% of GDP in 2012 to 15.1% in summer 2013
  • Jan. 2014: Commission unveils communication calling for “a European industrial renaissance”
  • Sept. 2014: Council adopt conclusions on mainstreaming industrial competitiveness in other policy areas

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