Barroso’s bid for ‘smart regulation’ yet to convince SMEs


The European Commission's latest attempt to take up the mantle of improving EU legislation was released in a paper last Friday (8 October), but critics say a failure to address flaws in impact assessment pinpointed by the European Court of Auditors shows that reforms are losing momentum.

'Smart regulation' was pushed atop the EU agenda when Commission President José Manuel Barroso made a key pledge to improve the quality and relevance of EU legislation when he took office.

The proposals single out three action areas designed to better meet the EU's objective of smart, sustainable and inclusive growth spelled out in the 'Europe 2020' strategy, including reducing the administrative burden on SMEs.

According to a recent report issued by the European Court of Auditors (CoA), the Commission has so far now failed to give due consideration to the principles of clarity of objectives, transparency and accountability.

Critics point out that without setting priority areas for analysis, the changes risk being mainly cosmetic. SME representatives lament that 'smart regulation' proposals are still lacking concrete measures to deliver the 'Think Small First' principle, which is supposed to take into consideration the impact of proposed legislation on the smallest companies first.

Arnaldo Abruzzini, president of Eurochambres, the European association of chambers of commerce, regretted that the Commission's Impact Assessment Board had failed to quantify the costs and benefits of regulation on SMEs, which only took place 11% of the time in 2009.

The entire policy cycle, from consultation to impact assessment, is targeted by the new Commission proposals, ensuring that evidence from evaluating legislation is put "at the heart of the design" of new and revised laws.

Describing smart regulation as a "shared responsibility," President Barroso pledged to "work with member states for strict enforcement" of legislation. National 'gold plating' of regulation by member states, who add extra clauses, is the source of more than half the total burden of red tape for SMEs, according to the European Association of Craft, Small and Medium-sized Enterprises (UEAPME).

The Commission estimated in its 'Europe 2020' strategy that administrative burden on businesses can be reduced by €40 billion – a 25% reduction – by 2012.

Expressing his disappointment with the proposed target, Abruzzini said he expected greater ambition from President Barroso.

One ray of light, however, came with a pledge to "strengthen the voice of citizens and other stakeholders," said Abruzzini.

The Commission does indeed want to increase the period for public consultation from eight to 12 weeks.

In its position paper on smart regulation, the European Association of Craft, Small and Medium-sized Enterprises (UEAPME) said that more came from national legislation rather than at EU level, as member states 'gold plate' EU directives with additional clauses and may transpose EU ones incorrectly.

"Member states should resist the temptation to tinker with their contents as much as possible," the report said.

"'Gold plating', the practice of exceeding the terms of EU legislation and adding undue and unnecessary clauses, is one of the main sources of red tape. Member states can and should adapt EU legislation to the national circumstances, but must make sure that their action does not generate extra burdens for the national business community," it added.

Simplifying and improving the EU regulatory environment was one of the priorities of the first Barroso Commission and is a key element of the Lisbon Strategy and the Small Business Act (EURACTIV 1/10/09). 

The EU executive is working to lower costs for SMEs by reducing the administrative burden of unnecessary regulation by 25% by 2012. In the process, it hopes to shed its long-standing reputation as an overly bureaucratic institution. 

As well as cutting back on existing regulation, new legislation is analysed to ensure that it does not add to the burden on businesses. In 2007, the Commission established an independent High Level Group of Independent Stakeholders on Administrative Burdens (HLG) chaired by Edmund Stoiber, charged with pinpointing specific areas where red tape can be cut.

  • Second half 2012: Commission to report on progress of smart regulation agenda.


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