EC Activities

The European Union has been criticized on the grounds that its approach to governance is too disconnected from the concerns of ordinary residents of the member states. To address these concerns, tile European Commission prepared in early 2001 a white paper entitled "European Governance," which describes major areas of concern and promising directions for reform of governance in the E.U. Public consultation on the contents of the white paper is scheduled to extend until March 2002, with conclusions drawn by the EC prior to the next Intergovernmental Conference, where European governance will be debated.

The white paper addressed broad concerns about good governance and the need for increased openness, participation, accountability, effectiveness and coherence. These five principles are designed to reinforce the overriding principles of proportionality and subsidiarity. Before launching an initiative, applying these principles means checking systematically to determine: (a) if public action is really necessary; (b) if the European level is the most appropriate one; and (c) if the measures chosen are proportionate to the objectives.

Concern about regulatory policy-both the EC's and the member states roles-is featured in the white paper. As the executive arm of the European Union, the EC was granted the exclusive power to propose or initiate legislation and policy for Europe. The European Parliament (elected representatives of the people) and the European Council (comprised of representative ministers from member states) can modify EC proposals but do not have the power to initiate proposals. The EC has the initiating role in both "regulations," which become law throughout Europe after Council and Parliament approval, and "directives;" which must be "transposed" (i.e., tailored and implemented) by the Member States before they are legally enforceable.

The white paper calls for attention to "improving the quality, effectiveness and simplicity of regulatory acts". The mechanisms cited include formal regulatory analysis, consideration of various policy instruments, choice of the right type of instrument, consideration of "coregulation" involving cooperation among regulated entities, more cooperation among member states oil practices and targets, evaluation and feedback once rules are established, discouraging overly complicated proposals, and faster legislative processes. The white paper, recognizing the extent of existing regulation but the absence of credible regulatory agencies in some areas, calls for both a comprehensive program of simplification of existing regulations as well as the creation of some new independent regulatory agencies (e.g., in airline and food safety where public confidence in Europe is low). The white paper also notes that a stronger regulatory system in Europe will allow tile EU to be a more effective advocate of regulatory management in international settings.

Soon after the Commission adopted the while paper in July 2001, a more specific "communication" was issued by the EC on "Simplifying and Improving the Regulatory Environment." This document calls for at least a 25 percent reduction in the overall volume of European regulation (measured as tire number of printed pages of laws) and the withdrawal of 100 or so pending yet outmoded proposals from before 1999. With regard to new actions, the communication calls for enhancement of consultation, especially on-line consultation, and impact analysis. The latter, defined as "pre-assessments" of draft proposals to determine which proposals merit detailed impact analysis, including assessments covering economic, social and environmental consequences.

A far more detailed report on "better regulation" was prepared by an authoritative group chaired by the distinguished Frenchman Dieudonne Mandelkern, known as the Mandelkern Report. As published in November 2001, this report emphasized the economic significance of regulatory policy, suggesting that regulatory expenditures comprise perhaps 2 percent to 5 percent of the European gross domestic product. The report rejects unthinking deregulation but recognizes that better regulation is necessary to enhance public confidence in government and assure that the public-welfare benefits of regulatory policy arc attained in the future.

The Mandelkern Report provides a detailed action plan on the themes of impact assessment, consultation, simplification, institutional structures to promote better regulation, alternatives to regulation, public access to the texts of regulations and "transposition" (or the tailoring and implementation of EC directives by the member states of Europe). Annex A of the Mandelkern Report draws from the recent OECD regulatory work to define the crucial steps in achieving better regulation.

Late in 2001 the Economic and Social Committee of the European Parliament issued an "Opinion" on regulatory simplification by a vote of 62 votes in favor, 5 votes against and 5 abstentions. The Committee concluded as follows:

  • The over-regulation of business is primarily a national problem but it also has a European dimension that needs to be addressed.

  • There is a manifest need for a fundamental overhaul of the regulatory framework within the European Union, accompanied by a streamlining and simplification of the existing body of legislation.

  • This regulatory review must focus not just on the future but also on the existing body of legislation and must be oriented not only towards simplification and improved methods but towards quantitative reductions.

  • The regulatory environment should establish a level playing field for businesses operating throughout Europe, which means a reduction in the variability in the requirements on businesses established by the member stales.

  • A regulatory review body should be set up to review existing legislation and set out the guidelines for introducing new legislation. It should also conduct ex-post evaluations of the effects of legislation. This body should comprise representatives of the Commission, the national agencies and the business community.
The stage is obviously set for a vigorous public debate about which steps should actually be taken to accomplish better regulation throughout the European Union. It is too early to assess what actions will be taken, but the next stops taken by the European Commission may be critical in determining whether meaningful regulatory improvements will occur. Even if the EC does take concrete steps, supportive steps will also be required by the other EU institutions as well as the member states.