27 February 2001, the Economic and Social Committee, acting under
Rule 23(2) of its Rules of Procedure, decided to draw up an additional
Section for the Single Market, Production and Consumption, which was
responsible for preparing the Committee's work on the subject, adopted its
opinion on 21 November 2001. The rapporteur was Mr Walker.
its 386th plenary session (meeting of 29 November 2001) the Economic
and Social Committee adopted the following opinion by 62 votes in favour, with
5 votes against and 5 abstentions:
1. Summary and recommendations
over-regulation of Business is primarily a national problem but it also has a
European dimension that needs to be addressed. The EU must not only give the
lead in the process of simplification but must exhort the Member States to
follow suit. Even where legislation originates at the European level, market
surveillance is the responsibility of the Member States and Member State
administrations interpret European legislative instruments in the light of
their own administrative culture; they put a national "spin" on it.
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. Clear and simple objectives should be adopted
for this work, which needs to be carried out at European, national and local
levels and must be geared to the achievement of real results; declarations of
principle and assurances of good intent will not suffice. The Committee awaits
with interest the publication of the report which the Commission will present
to the Laeken Council.
regulatory review must focus not just on the future but also on the existing
body of legislation and must be orientated not only towards simplifications and
improved methods but towards quantitative reductions.
principle underlying the review of existing legislation and the introduction of
new legislation should be the same – that, unless a clear case can be made in
the public interest for its retention or introduction, the legislation should
be abolished or not introduced. Existing legislation which it is decided to
retain should be re-written, where necessary, to make it simpler, less
ambiguous and more transparent.
order to avoid national variations in the regulatory framework which would
create distortions of competition in the Single Market, there must be a large
degree of harmony between the legislative instruments in force in the different
Member States. This can only be brought about by originating more legislation
at the European level and ensuring a greater degree of uniformity in its
incorporation into national law and, equally importantly, in its enforcement.
Standardisation is an essential element of simplification. The regulatory
environment should contribute to the establishment of a "level
playing-field" for European businesses. As matters stand, the
transposition and implementation of Directives in the Member States are a source
of additional complexities, divergences and delays. There is a manifest need
for a parallel approach to simplification in the Member States if the process
is to succeed at the European level.
possible, alternatives to regulation should be sought before having recourse to
new legislation. This might take the form of self-regulation, co-regulation or
even no regulation. Where circumstances permit, the possibility should be
examined of moving markets that are currently regulated towards self-regulation
must be, inter alia, accessible,
relevant and proportionate. The accessibility of the existing acquis leaves a great deal to be
desired. While there is a need for regulations to be framed with sufficient
flexibility to enable them to cope with rapidly-changing circumstances, they
must be stable over time in order to create a climate of legislative certainty.
legislation is inherently more flexible and gives businesses greater freedom
within predetermined limits but there is the risk that it will simply shift the
regulatory process to a lower level and create greater divergences between the
regulatory climates of different Member States. The same dangers attach to the
application of the principle of subsidiarity.
are frequently extended delays in the final adoption of Commission proposals
for simplified legislation by the Council. The Committee urges the Council to
cooperate more effectively with the simplification process by adopting
Commission proposals within a shorter timescale.
Committee makes the following specific recommendations for improving the
regulatory framework at the European level:
A Regulatory Review Body should be set
up to monitor the review of 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 Business.
Specific targets should be set for
achieved reductions in the volume of legislation, e.g. to reduce the total
volume of regulations and directives by 20% over five years.
All new regulations, and all existing
regulations which are renewed, should be given a finite life, at the end of
which they would automatically expire unless further renewed.
SMEs, and particularly
micro-businesses, should be exempted from some regulations or from certain
parts of some regulations. This exemption could be on a sliding scale, with
more comprehensive exemption for micro-businesses employing less than ten
The acquis communautaire should be streamlined by producing a “core acquis” and bringing about some
semblance of external order and rationalisation by the introduction of a
codification process on the Swedish model.
The accessibility of the acquis should be improved by reviewing
the Official Journal and making the acquis available on-line.
Alternatives to regulation should be
sought, wherever possible.
The "public-interest test"
should be applied to all legislative proposals.
· Full use should be made of advances in information technology and
communications to reduce the compliance cost of regulations.
· In future, impact assessments made by the Commission on legislative
proposals should include a report on their examination of alternative,
opinion is a follow-up to the Committee’s opinion on Simplifying rules in the Single Market, which was adopted on 19
October 2000. In that opinion, the Committee stressed the urgent need to embark
on a process of simplifying regulations in the Single Market whilst improving
the quality of their provisions, their incorporation into national law and the
freedoms and responsibilities of the civil society players.
this end, the Committee called upon the Stockholm European Council in the
Spring of 2001 to adopt, on a proposal from the Commission, a multi-annual
simplification plan, setting out objectives, priorities and methods and
earmarking budgets and resources for monitoring and follow-up action. The
Committee took the view that this plan should be reassessed each year at the
Spring European Council, on the basis of a Commission report.
Committee proposed a number of specific measures:
the adoption of codes of conduct by
the EU institutions to help promote the simplification of rules, rather than
making them more complex;
the Commission to set an example by
inculcating a culture of simplification internally;
Member States and their
administrations to adopt codes of conduct and assist in disseminating best
improving the impact assessments which
must accompany all draft legislation;
the Commission to reassess its choice
of the regulatory instruments to be employed;
the Commission to ensure that it is
actively involved in the framing, implementation and annual review of the
the Commission to consult the
Committee every year on key topics which merit coverage in SLIM projects and
order to make an effective contribution to the simplification process, the
Committee itself adopted a Code of Conduct. A copy of this is attached as Appendix 1.
mandate from the Lisbon European Council also stressed the need for action at
national level. The vast majority of the legislative burden on Business
originates at national and local level; even where legislation is introduced at
the European level, its incorporation into national law, implementation and
enforcement are functions of the Member States. The success of the initiative
to simplify and improve the regulatory environment therefore depends on the
active commitment of all players throughout the "legislative chain";
it requires coordinated action between the Community institutions and the
attention must be paid to the interplay between EU and national institutions;
for the EU, an ability to foresee the effects of new regulations in various
national systems is important. New regulations can have massive repercussions
at national level if they are transposed into national law with excessive zeal,
the "gold-plating" effect. This is particularly true of regulations
which lay down a "minimum standard", leaving Member States free to
impose stricter requirements at will.
is in the nature of things that the primary concern should be to eliminate
obsolete regulations but, if regulatory simplification is to exert a positive
impact on Business, it is essential to work on current regulations and on
procedures for developing new ones. The former represents the bigger task but
the latter is the more important in the final analysis; both elements must be
included from the start in order to avoid the process getting bogged-down in
general discussions of principle.
procedures for developing new regulations should encompass the setting up of
mechanisms for the ex-post evaluation of the effects of legislation in
the drive for simplification, full use needs to be made of the opportunities
offered by advances in information technology and communications. In
particular, the text of legislative instruments at all levels should be freely
available to the public on open web-sites. Computers can also reduce the burden
of mechanical tasks and thereby facilitate the compliance process but their
availability should not be made an excuse for imposing more tasks.
simplification of legislation is an issue which impacts not only Business but
all of society. The social partners, consumers, NGOs and the other elements of
organised civil society are all adversely affected by the confusion and
uncertainty arising from legislation which lacks clarity, conciseness, cohesion
and compatibility. Where regulation results in increased costs for businesses,
these are invariably passed on to the consumer. Above all, it is the individual
who suffers most from this state of affairs.
is also a Single Market issue. The lack of harmonisation of regulatory
instruments is a major handicap to the completion of the Single Market and
frequently results in distortions of competition. While the mutual recognition
process goes some way towards offsetting this, it cannot produce the degree of
conformity that a true Single Market requires.
3. Progress to date
Committee has consistently supported the SLIM (Simpler Legislation for the
Internal Market) initiative, which it has always regarded as a move in the
right direction. It feels, however, that something more is needed if real
improvements are to be made.
SLIM initiative was launched by the Commission in May 1996 but it has to be
said that progress to date has been distinctly disappointing. In its interim
report to the Stockholm European Council on "Improving and Simplifying the
Regulatory Environment", the Commission adopts many of the Committee’s recommendations,
detailed above in its proposals for future action to assist in achieving the
objective set out at the Lisbon Summit of making the EU, "the most competitive and dynamic knowledge-based economy in the
world, capable of sustaining economic growth with more and better jobs and
greater social cohesion". Since this objective was set, little has
been achieved to realise this ambition; other priorities have supervened and
the momentum generated in the aftermath of the Lisbon Summit has been largely
1995, the Molitor Report set out eighteen general recommendations. These are
contained in Appendix 2. A year ago
the Committee commented that, “Many of these have since been largely put on the
backburner”. The situation remains essentially unchanged.
the Commission acknowledges, real progress in improving and simplifying the
regulatory environment is essential if this goal is to be achieved. In its
Report to the Stockholm European Council, the Commission points out that,
“individuals and businesses, and small and medium-sized businesses in
particular, need a clear, effective and practical regulatory environment on
what is a rapidly-changing world market”.
Committee endorses this approach. It has repeatedly drawn attention to the
need, in particular, to ease the burden of regulation on small and medium-sized
enterprises and, especially the micro-businesses, which are the primary source
of economic growth and job creation in any dynamic society. In a recent survey
in the UK, conducted by the Institute of Directors, a majority of
micro-businesses cited the burden of regulation as the greatest disincentive to
starting a business and the greatest handicap to expanding it.
Committee believes that, if the mission statement of the Union, which was set
out at the Lisbon Summit, is to be fulfilled, regulation must meet its social
objectives without acting as a constraint on trade.
Commission has set out the following main principles of a regulatory strategy:
legislative action only where
broad consultations and impact
analysis before any proposal;
choose the appropriate instrument;
speed up the legislative process;
ensure rapid and correct transposition
and effective application;
evaluate the effects of legislation;
speed up the simplification and
codification of existing texts.
Committee wholeheartedly supports these principles but feels that the existing
mechanisms for putting them into practice are deficient. As the Commission
says, the strategy will have to be developed within the European Union’s
institutional framework. The Treaties offer opportunities and impose
constraints at the same time. The Commission intends to continue to make full
use of Treaty instruments and to play its driving role, having regard to the
powers available to it.
Commission sees the drive to improve and simplify the regulatory environment as
not just a synonym for "deregulation"; its aim is better regulation,
not deregulation. Again, the Committee endorses this principle but would point
out that achieving better regulation will inevitably involve reducing the
number of existing regulations without compromising any of the necessary
regulatory objectives, including those concerning social and environmental
standards or the supply of important services to all citizens. This need not,
and should not, equate to deregulation; the effectiveness of regulation is
dependent on its quality, not on its quantity; in many ways, quantity is the
enemy of quality. Regulations should be:
should also be mutually compatible, efficient and cost-effective.
often, the requirements of one regulation are in conflict with the demands of
another. This is particularly true of subsidiary legislation introduced at the
regional and local levels. This can only impair the efficiency with which they
achieve their regulatory objectives. Above all, they must be cost effective;
the benefits derived must be at least commensurate with the costs imposed;
these costs are measured not only in financial terms.
the context of the Single Market, effective regulation must be aimed at
achieving fair competition and non-discrimination. It should ensure that
citizens are protected from fraud, misrepresentation and mismanagement; it
should also provide market operators with a "level playing field";
beyond that, regulation needs to be flexible and avoid unnecessary intervention.
Regulatory frameworks must be sufficiently flexible to address new developments
and keep pace with rapidly-changing technologies but at the same time they must
be stable and predictable.
particular, regulation should not inhibit the development of the market, or
place European businesses or citizens at a disadvantage in seeking to harness
the full potential of the market to create jobs and improve standards of
regulation must involve an element of deregulation; simplification cannot be
achieved merely by replacing old regulations with new regulations; what is
needed is a complete rethinking of the regulatory framework.
objectives should be clearly defined in Community or national law. They should
be designed to promote consumers’ interests through effective competition and,
where appropriate, to ensure universal service provision.
is now essential to bring about real results in the sphere of regulatory
simplification at the European, national and local levels. The work must not be
limited to declarations of principle. A change
of culture and a new regulatory
climate are needed.
EU’s current focus on the broadening of membership makes even more urgent the
need to simplify the Union’s regulatory structure.
4. Alternative forms of regulation
may take one of three forms:
three forms may co-exist in the same market and it is probably more meaningful
to view co-regulation and self-regulation as complementary approaches rather
than as alternatives to statutory regulation.
clear example is provided by the liberalisation of markets that were formerly
dominated by a monopoly supplier, usually State-owned. In the early stages of
liberalisation, a high degree of regulation and government supervision is often
required. To an extent, this regulation is a substitute for competition. One of
the principle objectives of such regulation should be to ensure fair and
effective competition in the marketplace and, more importantly, to promote
competition, although in doing this, steps must be taken to guarantee the
supply to all citizens of important services, as described, for instance, in
the concept of universal service for services of general interest.
fair and open competition has been established between a number of independent
market operators, the consumer is protected against over-pricing,
discrimination and unfair market practices by the force of competitive
pressures; companies can only improve their market position by offering better
services, wider choice and lower prices. In these circumstances, greater
reliance can be placed on the general competition rules of the Treaty and the
regulator can gradually withdraw in favour of market forces, ultimately
limiting regulation to areas where policy objectives cannot be achieved solely
by competition. This may lead to self-regulation or co-regulation.
is voluntary and is based on cooperation between all interested parties,
incorporating Community rules governing agreements between the parties, where
appropriate. The New Economy is characterised by rapid technological change,
swift market evolution and increasing globalisation. In this fast-moving
environment, self-regulation can be a powerful tool. The Commission has
consistently advocated self-regulation as a flexible, efficient and
cost-effective alternative to regulation in many areas. The Committee agrees
with this approach provided that certain conditions are met. Self-regulation
does not equate to self-enforcement; it must be in conformity with, and backed
by, the law; it must be founded in a community of interest between Business and
the Public; it must be enforceable, verifiable and auditable; it must also be
effective, with clear means of recourse, particularly across borders.
Self-regulation is not a panacea (nationally-based self-regulation may, in some
instances, add barriers to the free circulation of services and regulations
imposed by business associations can have an adverse impact on firms which are
not members of the association, particularly SMEs) but in the right conditions
it can be a useful instrument to avoid cumbersome law-making.
combines the elements of legislation, more especially in its predictable and
binding nature, with the more flexible regime of self-regulation. It implies
taking self-regulation one step further in a cooperative approach to
governance. It limits public intervention to what is essential and leaves
Business the greatest possible choice in how to meet its obligations. Rather
than mere co-existence of self-regulation and regulation, it involves the
sharing of responsibilities between public and private partners. This has
already been used in various fields. These include:
· the "New Approach", where the essential requirements are
laid down in a framework directive, leaving market operators to decide for
themselves how best to meet their obligations; a key factor of these essential
requirements is that they are technology
the possibility, introduced by the
Maastricht Treaty, of using agreements between the social partners (on their
own initiative or after consultation by the Commission) as an alternative
method of regulation in fields concerned with working conditions and access to
challenge for co-regulation is to define, maintain and preserve policy goals
while allowing for greater flexibility in the regulatory framework. In order to
do this, it is firstly necessary to identify areas where co-regulation will
work best. Secondly, there is a need for comprehensive responses; piecemeal
solutions will not work. Finally, it is necessary to move quickly; the
pressures of globalisation will not permit the adoption of a relaxed
colloquium on co-regulation in the Single Market, held in Brussels on 3 May
2001 under the auspices of the Committee’s Single Market Observatory, concluded
that the co-regulation processes emerging in the Single Market still differ
substantially. In some areas (standard-setting, social) they are well
thought-out, structured and tested at European level; in others (consumer
affairs, environment, financial services) they are still in the early stages,
haphazard and decentralised, despite having considerable development potential.
these practices have the advantage of simplifying rules, taking the strain off
the legislative machinery, speeding-up adjustment to change and fostering
co-responsibility among economic and civil-society actors. To be successful
they require margins for manoeuvre by Business and organised civil society,
partnership with the public authorities, representative players, transparent
procedures, effective implementation and stringent monitoring of their impact
and follow-up, including by public authorities.
co-regulation approaches involving the socio-economic groups can make a
valuable contribution to improving the working of the Single Market in facing
the three-fold challenge of widening, deepening and globalisation.
alternative to regulation is no regulation, where the responsibility is left to
the market. While this solution would not be appropriate in all cases, it is an
alternative that should not be entirely overlooked. The first question to ask
in respect of any legislative proposal is, "Why is any legislation
necessary at all?" This is an issue that the Committee could address in
its opinions on legislative proposals. The same question should be applied to
the introduction of co-regulation and self-regulation systems.
impact of any regulatory regime, whether it be statutory, co-regulatory,
self-regulatory or an amalgam of these, will be negative in terms of trade if
it is not uniform and uniformly applied. Nothing is more destructive of
business activity than a climate of legislative uncertainty.
5. Simplifying existing legislation
simplification and systematic updating of existing legislation should ensure
that the current corpus of legislation is always appropriate to its objectives.
To this end, the Commission intends to:
rapidly assess any feedback indicating excessively complex and unjustified
lay down a multi-annual plan for simplification action, updated regularly and
applying politically-binding time scales as agreed by the various institutions;
propose an agreement between the institutions with a view to laying down the
principles of simplification and entering into a political commitment to speed
up legislative work to this end;
systematically introduce a simplification element in any periodic
review of directives or regulations currently in force;
build on action already undertaken
with regard to codifying, recasting and
consolidating existing instruments (and systematically and rapidly publish
the consolidated texts) for information purposes, whenever an amendment is
Committee approves these measures in principle but fears that they will not be
sufficient, in themselves, to bring about the dramatic improvement in the status quo that is so obviously needed.
The current acquis communautaire runs
to more than 80,000 pages, comprising nearly 10,000 legal instruments of nine
different types, and is of such a degree of complexity that only
specially-trained and experienced lawyers can grapple successfully with its
labyrinthine content. This not only imposes a heavy burden on businesses within
the existing Member States but is creating an almost insupportable situation
for the candidate countries since, in many cases, the rate of accretion of new
legislation is greater than the rate at which they are capable of transposing
the existing acquis.
Committee is concerned that, if the review of existing legislation is only to
be triggered by feedback from the marketplace, the process is likely to be
haphazard and ineffective. What is required is a thoroughgoing, root and branch
overhaul of all existing
legislation. The guiding principle of this review should be that, unless a
clear and compelling case can be made for the retention of each individual
legislative instrument in the public interest, it should be repealed forthwith.
is not sufficient, however, to remove obsolete regulation. Even where
legislation is clearly still required, it does not follow that it should take
the form of the present statutes. Community legislation has evolved in a
piecemeal fashion with existing legislation being amended to adapt to changing
circumstances. This has led to multitudinous amendments to some Directives and,
each time the situation changes, new impositions are bolted on to an already complex
structure. This has resulted in legislative instruments which are complicated,
confusing and, sometimes, contradictory. In many cases where Directives are not
repealed it will be necessary to carry out a fundamental rewriting in order to
restore clarity, coherence and conciseness to the legislative structure, in
which, however, the consequences of changes to social and environmental
standards must be examined carefully.
6. The Swedish experience
any exercise of this sort, it is instructive to examine best practice and
Sweden is one of the Member States that has made a systematic approach to the
problem of simplifying legislation.
examination of the regulatory framework in Sweden is instructive. At the top,
there are Laws passed by Parliament;
these currently number slightly in excess of 1,000. Below these, come Ordinances issued by government, of
which there are estimated to be more than 2,000 in force. Below these, come the
regulatory instruments of the central-government agencies, which are divided
into Official regulations and General recommendations; the former are
legally binding; the latter are not but, in practice, they are accorded
considerable importance, even by the courts. In aggregate, there are some 7,000
major regulatory instruments in the above categories comprising about 40,000
pages of text; of these, around 8% are linked to the EU. The rate of accretion
of new and amended legislation is running consistently at around 5,000 pages
per annum; of this, some 80% comprises amendments to existing legislation
rather than “new” legislation. In other words, businessmen and their advisors
have to absorb 5,000 pages of new legislative requirements and “unlearn” 4,000
pages of existing legislation every year. These numbers are much higher in some
other Member States.
these major regulatory instruments are three further categories of regulation; regional government regulations, municipal
regulations and collective
-agreements. The latter are negotiated by the social partners. These
subsidiary regulations should not be overlooked nor their importance
are three important conclusions to be derived from the Swedish figures:
the rate of accretion of new and
amended legislation at government level is around 12.5% per annum;
the proportion of legislation
attributable to EU intervention is
the volume of legislation increases
the lower one goes in the legislative hierarchy.
these figures relate specifically to Sweden, it is most probable that this
picture will be reflected, with relatively minor local differences, in the
other Member States. In particular, the ratio of EU-generated legislation to
domestic regulation is likely to be similar across the board.
the end of the 1980s, Sweden embarked upon a rationalisation of the sets of
agency regulations. Special codes of statutes, now 55 in number, were organised
in the central agencies to produce an orderly system and make the regulations
more easily accessible to the Public and Business.
Swedish experience showed that central ambitions for simplification on the part
of the government and Parliament will be largely fruitless unless the agencies
themselves take an interest in the matter. Another lesson which was learnt from
this process was that a central initiative has meagre prospects of success
without leadership being placed at the very top of the hierarchy. It also
demonstrated that it is essential to set specific targets.
legislation has been an increasingly important phenomenon in recent years.
While this has demonstrated clear advantages compared to the
excessively-detailed legislation of former years, particularly in the context
of rapid technological advances, it has had a downside in that it has resulted
in a proliferation of legislative instruments at a lower level. For example,
the Swedish Food Act, a modest law of 35 sections running to just six pages,
has spawned more than 100 agency statutes, totalling more than 1,800
has taken measures to relieve the burden of regulation on SMEs by exempting, or
partly exempting them from the need to comply with certain regulations or
relaxing the degree of compliance required. Similar measures have been taken in
the United States, where they have been very effective in encouraging
entrepreneurial activity. Contrary to popular conception, the United States is
a highly-regulated society but the Small Business Administration (SBA) has
acted to reduce the burden of regulation, particularly on the micro-businesses.
example might well be adopted on a wider basis in Europe. Obviously, there will
be some regulations from which no exemptions can be permitted but many
regulations bear with disproportionate severity on micro-businesses and act as
a deterrent to their formation; in such cases, a degree of relaxation could be
justified without under-mining the principles behind such legislation.
7. The Economic and Social Committee’s Code of
The promotion of simplification was boosted by the
initiative taken by the ESC in developing and adopting a Code of Conduct. In
order that that momentum is not lost, it is essential that the Committee
focuses greater attention on the implementation of this Code.
of the key elements of its Code of Conduct was to introduce systematic
monitoring of the impact assessment for each piece of draft legislation but few
of the opinions which it has issued in the interim have focused on that issue.
Committee agreed to draw the attention of the EU institutions to the possible
need to steer EU rules towards an approach based on contractual agreements,
self-regulation and co-regulation. To this end, the Committee's Single Market
Observatory organised a colloquium in May 2001, which was attended by
representatives of five Directorates General of the European Commission and
other European institutions.
Committee undertook to establish dialogues with the European economic and
social players, the Committee of the Regions and the economic and social
councils in the Member States in order to contribute to the success of the
simplification process. Such dialogues do not yet exist in any structured
format, but the Single Market Observatory intends to initiate a series of
visits to national Economic and Social Councils in the next year, at which the
question of simplification will be the topic of discussion. Preliminary
contacts have also been made with the Committee of the Regions.
Code of Conduct observed that, while being broadly supportive of Commission
initiatives for simplification, the Committee rarely proposed simplification on
its own or put forward simpler alternatives to the Commission’s proposed line
of action. Regrettably, that is still the case.
is clear that the Committee, as well as the Commission, the other institutions
and the Member State governments, need to take more positive action in this
8. Some regulatory issues
subject of regulatory simplification is as complex as the nature of the problem
with which it seeks to deal and raises a number of conflicting issues.
question of framework legislation is a case in point. There can be no doubt
that detailed and over-prescriptive legislation is out of place in a
rapidly-evolving marketplace where the pace of technological change threatens
to render legislation obsolete almost before it is enacted. This leads to a
need for constant updating and amendment of the statutes, which creates a
climate of legislative uncertainty and frequently results in legislative
instruments that are so complex as to be virtually incomprehensible. In this
context, legislation should be couched, as far as possible, in general terms
which are better able to adapt to new developments.
the principle behind framework legislation is that businesses should enjoy
freedom within the limits laid down; this principle is violated if framework
legislation at the European level is interpreted in different ways by national
legislation or framework legislation at national level is filled in by agency
or local regulations. Framework regulations are preferable if they provide the
flexibility to cope with rapid change and give companies freedom of action
within predetermined limits but can be harmful if they merely shift the
regulatory power from the political sphere to a lower level.
case in point is the question of subsidiarity. It is widely accepted that the
principle of subsidiarity should form the basis of all regulatory efforts.
Accordingly, the EU must regulate nothing that can be regulated nationally or
resolved in some other way than by regulations; similarly, nothing should be
regulated by a Member State centrally that can be better managed at regional or
practice, the application of this principle gives rise to considerable
difficulties for businesses and Member State administrations alike. Where the
subsidiarity principle dictates that legislation should be enacted at national
level, this frequently leads to substantial differences in the way in which the
legislation is framed within each Member State. The same is true, to an even
greater extent, of regulatory powers exercised at the local level. Thus, the
principle of subsidiarity can lead to businesses being confronted by
conflicting legislation on the same subject in different Member States and even
within the same Member State. Subsidiarity and diversity go hand in hand.
is arguable that the requirement for uniformity in the Single Market should
lead to the application of the subsidiarity principle resulting in a much
greater proportion of legislation being
enacted at the European level than is presently the case. Moreover, such
legislation should be framed in such terms that it could not be substantially
modified in the process of incorporation at the national or local level. After
all, it should not be forgotten that one of the intrinsic aims of EU
legislation is to simplify things by harmonising and unifying the fifteen
different sets of rules in the Member States in order to enable the Single
Market to operate effectively.
issue which is germane to this subject is that of enforcement. Even in those,
relatively few, areas where there is conformity of legislation between Member
States, there are frequently widespread disparities in the level of enforcement.
Again, this creates distortions of competition in the Single Market.
of the key elements in effective legislation is accessibility. Businesses and
other users of legislation need to know where they stand under the law and
should be able to obtain access to the body of legislation without undue
difficulty or expense. It is an unfortunate fact that the acquis is not only difficult to grasp but relatively inaccessible.
The first problem could be tackled by identifying a "core acquis"
comprising the fundamental elements of the approximately 1,200 Directives
and Regulations issued by the Council and the 2,500 associated directives and
regulations issued by the Commission. It would also be beneficial to initiate a
process of codification similar to that which has been carried out in Sweden.
The second problem would require a review of the Official Journal of the European Communities, where the present
publication system appears unnecessarily complicated and difficult to overview.
This should be supplemented by making the whole of the acquis available on a special web-site, highlighting changes to the
legislation as they occur.
proportionality principle is also of fundamental importance. In the regulatory
sphere, this principle requires that no greater burdens are laid on Business
than can be genuinely justified on the basis of public interest. It should,
therefore, be an essential prerequisite of the introduction of any piece of
legislation at European, national or local level that the proposers should be
required to demonstrate clearly that it is necessary in the public interest.
The same test should be applied in the review of existing legislation.
is a need for regulations to be relevant and unambiguous. Unfortunately, this
is not always the case at the European level and tends to be even less so in
the lower levels of the legislative hierarchy. Regulations that are seen to be
required to meet a specific case are frequently “tacked on” to existing
regulations which were not originally conceived for that purpose. This creates
instances where it is unclear, even to experts, whether a given set of
circumstances is governed by one part of a regulation or by another part of the
same regulation, or by a different regulation or not at all. Such lack of
clarity is inimical to the interests of all the parties concerned, Business,
the Public, national administrations and European institutions.
Committee believes that there is a pressing need for a review of existing
legislation and the setting out of guidelines for the introduction of new
legislation. The question arises of how and by whom this review should be
conducted. The Swedish experience has shown that the best results are obtained
under the following conditions:
when the agencies concerned are
involved in the process;
when leadership of the process is
placed at the very top of the political hierarchy;
when there is active dialogue between
agencies and markets; and
when specific targets are set.
However, it is perhaps
unrealistic to expect civil servants to be the prime movers in the process of
reducing and rationalising legislation; their involvement is essential but the
impetus must come from another source and that source can only be political but
political leaders have many other demands on their time and many other
responsibilities to fulfil.
its previous opinion on this subject, the Committee drew attention to the need to make impact
assessments more independent and to enhance their quality by ensuring adequate
funding, use of the right of initiative, use of the right methodologies and
effective consultation of the socio-economic players directly concerned. One
way in which it felt that this could be achieved would be for the Commission to
entrust the impact assessments to an external body having the requisite
qualifications and meeting the necessary criteria of independence.
Committee believes that this should take the form of a permanent body at
European level, which could also be charged with monitoring the simplification
review process. In order to ensure an active dialogue between agencies and
markets, the review body should contain representatives of Business, in
addition to representatives of the Commission, the agencies and the other
socio-economic players. This is a shortcoming in the existing process. The EU
has been meticulous about allowing representation on drafting bodies for all
national agencies but spokesmen for the markets have been nowhere near as well
represented. Businesses are the “consumers” of legislation and it is as
essential for them to be directly represented on the review body as it is for
the agencies. They are, after all, best placed to assess the impact of
legislation on their activities. Ideally, this body should be replicated at national
level to perform the same function on the much greater mass of national
legislation. Obviously, it would be desirable for close contact to exist
between the European body and its national counterparts. The national bodies
could perform the additional function of testing national laws for their
compatibility with EU legislation.
addition, this body could perform some or all of the following functions:
identifying existing legislation for
inclusion in the SLIM initiative;
setting out guidelines for the
introduction of new legislation;
setting targets for legislative
codifying the acquis communautaire;
formulating impact assessments;
conducting ex-post evaluations of the
effects of legislative instruments in practice;
taking over the work of the European
monitoring the progress of the
Business Environment Simplification Task Force; and
co-ordinating the various existing
simplification initiatives (SLIM, BEST, test panels, impact assessments).
measure which would greatly facilitate the work of this body and make a major
contribution to the long-term simplification of the regulatory structure would
be for all new regulations (including existing regulations which it is decided
to retain as a result of the review process) to have a finite life, at the end
of which they would automatically expire unless renewed (so-called "sunset legislation"). This
would ensure that these regulations were brought forward for review on a
systematic basis and that the rationale behind their existence would be
re-examined to establish whether there was an ongoing justification for their
retention. The period of finite life need not be the same for all legislative
instruments; some might be introduced for a period of, say, seven years while
others, by their nature, might have a shorter life. A similar process should be
instituted at national level.
simplification process needs to be speeded up dramatically in order to
facilitate the enlargement of the Union. An unnecessary burden is being imposed
on the candidate countries in their attempts to transpose the acquis by the inordinate complexity of a
large proportion of European legislation. Furthermore, if this situation is not
rectified prior to their admission, their businesses, and particularly their
SMEs, will have to bear the burden of the additional and unnecessary costs
which are currently being imposed on their counterparts in the Member States.
These costs will weigh more heavily on businesses in the candidate countries
than on those in the Member States by virtue of the fact that they are
operating in economies which are much less developed.
complexity of existing legislation also raises issues concerning the rule of
law. Ignorance of the law is no excuse and many small businesses are in danger
of being forced to operate on the wrong side of the law because they find it
impossible to determine the nature and extent of their legal obligations. The
complexity of the legislation has resulted in a situation where the
interpretation of the more arcane issues involved has become the preserve of a
few highly-specialised lawyers who, because of their scarcity and expertise,
command exorbitant fees which puts their services beyond the reach of all but
the largest organisations.
is an extended hierarchy of legislation, which is composed as follows:
European level: Council Regulations
National level: Transposition of EU legislation
Central government agencies: Official regulations
Subsidiary legislation: Regional government regulations
government laws and bye-laws
government agency regulations
addition, there are regulations emanating from international bodies such as the
WTO and ILO and from international agreements, both bilateral and
many, if not all, Member States the volume of regulation increases the further
down in the regulatory hierarchy one goes. Moreover, the application of
regulatory powers is frequently more severe and more inconsistent at these
lower levels. The burden of legislation, particularly for SMEs, therefore,
impacts businesses most severely at the municipal, local and regional levels.
It is exacerbated by the differences between the Member States in business
customs and practices which, while they do not have the force of law, are
nevertheless arbitrarily applied in many instances.
impact of subsidiary regulation should be viewed not only in terms of the cost
and bureaucratic burden for Business, but also from the standpoint of
democratic legitimacy. Subsidiary regulations are often produced without any
real legal basis. The fact that parliaments and governments allow anonymous
agencies to assume regulatory powers undermines the legitimacy and
acceptability of the regulatory process. It is also the case that the process
of producing subsidiary regulations often lacks transparency.
of the reasons for the complexity of European legislation is the substantial
and sometimes conflicting amendments which are made to legislative proposals in
the Parliament and the Council in an attempt to achieve consensus. While the
Committee has no solution for this problem, it would point out that there is a
correspondence between consensus and complexity. In addition, impact
assessments are carried out on the basis of the Commission's proposals and are
not necessarily relevant to the resulting legislation, which may differ
considerably from the original proposal.
9. The role of the
Economic and Social Committee
its previous opinion, the Committee recognised the important role which it, as the only
assembly representing the full range of "users" of regulation, had to
play in the formulation and monitoring of a new European policy on
simplification; it called upon the Commission to enable it to exercise this
role more effectively by:
consulting it, wherever possible, at
an earlier stage in the procedure so that the added value provided by the
Committee’s advice on simplification is not seriously compromised;
in particular, to consult it each
year, on the occasion of the presentation of the Commission’s annual indicative
programme of referrals to the Committee, on the preparation of the report for
the Spring European Council on progress with simplification;
to directly involve it in discussions
on improving and strengthening the impact assessment.
Committee now reiterates these requests.
its part, the Committee undertakes to be more active in implementing the
provisions of its own Code of Conduct.
are few new ideas in this opinion. The simplification process does not need new
ideas; what it needs is the effective implementation of the ideas which have
already been expounded by the Committee itself, by the Commission, by the
Lisbon European Council, by the Molitor Report and by numerous other concerned
bodies. While the Committee acknowledges that it is often simple to complicate
matters and complicated to simplify them, it would observe that there is no
point in talking about commitments if we are not prepared to implement them and
it is futile to introduce new commitments when the existing ones are not being
29 November 2001.
Economic and Social Committee
Economic and Social Committee
N.B.: Appendices overleaf.
1 - ESC code of conduct designed to make a contribution to the simplification
order to make an immediate contribution both to the simplification process and
to the codes of conduct which it is recommending to the EU institutions, the
Committee has adopted the following code of conduct:
and foremost, the Committee undertakes to keep a watching brief on what has to
be done to achieve simplification, and on the quality and efficacy for users of
the draft regulations referred to it.
Committee undertakes to take the necessary steps, when organising its work, to
enable it to respond in good time to any early consultations by the Commission,
the European Parliament or the Council, when the latter wish in this way to
take greater account of the Committee's opinions on questions relating to
simplification of the rules.
Committee decides to draft an annual information report on the progress of the
multiannual simplification plan, to contribute to the Commission's annual
assessment for the Spring European Council.
Committee agrees to introduce systematic monitoring of the impact assessment
for each piece of draft legislation.
Committee agrees to draw the attention of the EU institutions to the possible
need to steer EU rules towards an approach based on contractual agreements,
self-regulation and co-regulation, under the supervision of the European
legislator, with the onus being on the socio-economic partners in the fields
and sectors concerned to take appropriate steps to respond to this expectation
within a reasonable period of time.
Committee agrees to establish a dialogue with the European economic and social
players to encourage them to take on the kinds of responsibilities -
particularly contractual responsibilities - that will enable them to make a
direct contribution to Community provisions.
Committee agrees to establish a dialogue with the Committee of the Regions in
order to establish ongoing cooperation in this field, particularly with respect
to the regional aspects of simplification.
Committee agrees to establish a dialogue with the economic and social councils
in the Member States so as to enable them to play an analogous role at national
level to the role which the Committee has set itself at European level, in
order to contribute to the success of the simplification process.
Appendix 2 - General Proposals Report of the Group of Independent Experts on Legislation and
The present work
undertaken by the EU institutions to consolidate legislation ("codification") in the
different areas of actions of the Community should be accelerated. Member
States should take a similar effort with respect to the transposition of
Community legislation into national law.
In respecting the "acquis communautaire", a
programme of simplification, leading where necessary to deregulation, should
cover all existing EC legislation and its transposition into national law with
the objective of lowering the burdens on business and consumers and creating
more opportunities for employment and competitiveness.
should be tested against the same criteria as new legislation (proposals 4 and
6). The outcome and recommendations should be published as to whether, in the
view of the Commission:
the legislation is usable as it
it should be amended;
it should be withdrawn.
putting forward legislation the following questions should be addressed:
is public action either necessary or
on which level is the action required
(Community level, national level?)
is there an acceptable cost/benefit
relationship for public action? (taking all quantitative and qualitative
factors into account, including impact on competitiveness and employment, in
particular on SMEs)
what are the alternatives for public
if public authorities are to act, what
is the most appropriate mechanism of action?
can the length of the period for which
action is necessary be limited?
drafting a new piece of legislation, the Commission must ensure that a study is
carried out on its incorporation into Member States' national legislation and
publish the findings of the study.
legislative proposal should respond to the following criteria:
are the provisions understandable and
are the provisions unambiguous in
are the provision consistent with
does the scope of the provisions need
to be as wide as envisaged?
are the time scales for compliance
realistic and do they allow business to adapt?
what review procedures have been put
in place to ensure even enforcement and to review effectiveness and costs?
Expert studies made for
preparation of legislation should be published in order to create greater
transparency in the legislative process.
Consultation with those
who are concerned by new regulations, in particular consumers, business and
workers, should be effective, systematic, and carried out in due time.
memorandum of all new proposals should indicate the expected impact on
employment and competitiveness, costs and innovation.
The grounds on which a
Member State has supported or opposed a new piece of Community legislation
should be made public.
important Community legislation should provide for a procedure for assessing
its results, in particular the attainment of its objectives. These assessments
should be made public.
Member States should, in
parallel with the Commission, simplify their legislation at all levels
(national to local), including that which result from the transposition of
The Commission should
take a vigorous and active approach to auditing transposition and enforcement
of EC legislation at national level in order to avoid, in particular, that
national legislation or practices hamper the unity of the Community market. The
strengthening of the enforcement unit should be considered by the Commission in
The possibility of
imposing financial penalties on Member States which fail to comply with
judgements of the European Court of Justice concerning failure to implement or
to enforce Community legislation, should be actively explored.
The Community should
consider whether there are areas in which Community regulation (as an
alternative to directives) would provide the best reconciliation of
simplification and Single Market objectives.
The Community should
energetically pursue the principle of mutual recognition wherever possible
within a comprehensive simplification framework.
The Community should, as
far as possible, announce its legislative programme in the different areas at
an early stage. The use of white and green papers by the Commission should be
in simplification leading, where necessary, to deregulation at EC and national
levels, should be monitored by the Commission and reported to the European
Parliament and the Council. The Commission should allocate overall
responsibility for this to one of its Members supported by a small central