EU – Baltic States, Law and Regulations, Legislation, Markets and Companies

Whereas regulation at EU level is essential in many areas, the EU laws are often accused of stifling businesses, especially the smallest ones, or of interfering too much in citizens' daily lives. According to the Commission, about 74% of Europeans believe that the EU generates too much red tape (see MEMO/13/833 and IP 13/891).

 In response to that concern, the Commission has made a concerted effort over the past few years to streamline legislation and reduce regulatory burdens. In 2013 State of the Union address in September 2013, President Barroso stressed the importance of smart regulation and declared that the European Union needs to be "big on big things and smaller on small things".

In October 2013, the Commission takes another important step in ensuring that EU legislation is fit for purpose. In a Communication the Commission sets out in a concrete way, policy areas where it will take further action to simplify or withdraw EU laws, ease the burden on businesses and facilitate implementation. It is the result of a screening of the entire stock of EU legislation. The Commission also announced in October the intention to publish a scoreboard to track progress at European and national level in this regard. This exercise is at the heart of the Commission's Regulatory Fitness and Performance Program called REFIT.

The background

In September 2013, in the State of the Union address, President Barroso said that the EU valued seriously the subsidiarity principle. It’s not a technical concept, he added, it is a fundamental democratic principle. An ever closer union among the citizens of Europe demands that decisions are taken as openly as possible and as closely to the people as possible. Not everything needs a solution at European level. Europe must focus on where it can add most value and where this is not the case, there is no need for EU interference. The President added that “the EU needs to be big on big things and smaller on smaller things – something we may occasionally have neglected in the past”.

The EU needs to show it has the capacity to set both positive and negative priorities. Both the EU and the states’ governments need to take extra care of the quality and quantity of European regulations knowing that, as Montesquieu said, “Useless laws weaken the necessary ones”.

However, there are those areas of major importance where Europe must have more integration, more unity and where only a strong Europe can deliver results.

Commission’s opinion

According to President Barroso, the EU institutions shall assist in finding solutions to the “big challenges” that the member states are collectively facing. However, to be effective, these integration efforts shall concentrate on the right priorities and have the right dose of regulation. “Not everything that is good for the states is good at European level”, he said and added that making EU legislation shall be a vital task for both the EU and the states.

Hence the Commission’s REFIT program is to “make the EU law lighter and simpler”. The  Commission added that the EU “resolute application of the principles of subsidiarity and proportionality will not put into question the important benefits for citizens and business of EU regulation, particularly the rules underpinning the Single Market”. Therefore the REFIT package provides a pragmatic outlook for the future of regulation in Europe just a few months ahead of the European elections in May 2014.

Source: European Commission – IP/13/891 02/10/2013. 

Active EU legal regulation

In the REFIT Communication, the Commission gives an overview of what has been achieved in recent years to keep EU laws fit for purpose by simplifying and reducing costs. During the past 10 years the Commission has initiated major policy reforms. These include proposals for the reduction of the cost of broadband deployment, the Water Framework Directive, the Schengen Visa Code initiative, the Consumer Rights Directive, the Services Directive, the Unitary Patent Regulation, and the Union Customs Code.

Since 2005, the Commission approved 660 initiatives aimed at simplification, codification or recasting. More than 5.590 legal acts have been repealed. The Top Ten consultations of SMEs on the most burdensome EU laws have fed-in the priorities of business into the Commission's regulatory fitness agenda.

Concrete improvements are being introduced for SMEs, for example, the requirements for recording equipment (tachograph) in road transport are being simplified and fees for SMEs under REACH have been reduced by between 35-95%. Besides, a standard VAT declaration will be proposed in October 2013.

Between 2007 and 2012, a decrease of 26% of administrative burden for businesses has been achieved, equivalent to savings of € 32.3 billion per year with a further € 5 billion still pending adoption by the co-legislators. The Commission itself has gone beyond the target by tabling proposals with a burden reduction potential close to € 41 billion (33%).

Unfortunately, some of this potential, estimated at more than € 3 billion, was lost in the legislative process as the Commission proposals were amended. Promoting e-invoicing in the VAT area as well as exemptions or special regimes for SMEs in the areas of accounting, electronic waste and intra-EU trade statistics were among the main achievements of the REFIT program. 

Source: European Commission, Press release- IP/13/891, Brussels, 2 October 2013.

Above all, the way in which the Commission prepares regulation has changed significantly: Impact assessments, stakeholder consultations (including with social partners) and ex-post evaluations are systematically applied across the Commission and will be strengthened further.

Commission presents important legislative initiatives for simplification and burden reduction that are before the EU co-legislators, for example in the area of animal health, consumer product safety and market surveillance, public procurement, the Common Consolidated Corporate Tax base, clinical trials for pharmaceuticals and package travel.

lists areas for further action for 2013-14 to simplify existing legislation through amendments and consolidation of existing EU law (e.g. in the areas of information and consultation of workers, business statistics, company law, introduction of a standard VAT declaration, zoo-technical measures and trade regulations).

The member states and the EU institutions will follow-up on evaluation recommendations: a major outcome of the screening exercise was the identification of areas that need assessment to better identify regulatory burden relief so as to meet EU policy goals at least cost and best achieve the benefits of EU regulation. Up to the end of 2014, the Commission will have carried-out or launched 47 evaluations, Fitness Checks or other reports with a view to reducing regulatory burden.

A particular effort is made in the areas of environment, enterprise and industry and employment. This includes new Fitness Checks in the fields of chemicals not covered by REACH, NATURA-2000, approval of motor vehicles, waste management and the general food law. Evaluations with a focus on regulatory fitness have notably been programmed on health and safety at work, the temporary agency workers Directive, on assessment and management of environmental noise, remedies in public procurement and excise duty arrangements.

The Commission is also starting to plan evaluation of the coherence of the new range of EU regulation in the financial services sector.

Legal efficiency

The REFIT program identifies those areas where the Commission considers withdrawing pending proposals and repealing existing EU law.

Broadly speaking one can distinguish the following spheres:

1) Areas where the Commission continues to work assessing the issues but where the Commission has decided not to table proposals. This includes legislation in the area of occupational safety and health for hairdressers pending on on-going evaluations, muscular skeletal disorders and screen displays and environmental tobacco smoke.

2) Legislation that is no longer needed in light of developments and where the Commission plans to propose their repeal. 10 proposals to repeal legislation are planned, for example legislation on the promotion of clean and energy-efficient road transport vehicles, the supply of crude oil and petroleum products, the classification, packaging and labelling of dangerous preparations, steel statistics.

3) Proposals that have stalled in the co-decision procedure and where there is little realistic chance of progress. Therefore the Commission will consider to withdraw proposals identified in this category including the soil directive and a directive simplifying VAT obligations, a proposal on the statute of a European private company², the regulation on statistics on steel and the retrofitting of mirrors to heavy goods vehicles.

Outlines new horizontal actions to make EU law fit for purpose. The Commission would for example identify the administrative obligations stemming from EU law and its national implementation and review it regularly to identify possibilities for reduction. Best practice exchange among Member States will be facilitated to keep national implementation of EU law as light as possible. The Commission will also undertake dedicated actions to facilitate the implementation of new obligations, particularly in areas of specific concern to SMEs. The Commission will also identify all REFIT legislative initiatives including withdrawals, repeals and consolidations in its annual work program. Business, including SMEs, and all other interested parties will be in a position to suggest areas in which they see potential for Fitness Checks.

The Commission announces the annual publication of a REFIT scoreboard to track progress at European and national level and facilitate dialogue on regulatory fitness with citizens, member states, business and civil society at large.

Other spheres in REFIT

= Regulating at EU level adds value in areas such as competition, trade and the internal market to build a level playing field that creates opportunities for business and consumers. It also protects the health, safety and rights of citizens. EU legislation creates a common framework by replacing or aligning twenty eight different national laws. It allows the EU Member States to work together to deal with problems that do not respect national borders.

= Smart regulation is a continuous process, not a one off operation. Ensuring that EU legislation is 'fit for purpose' is essential for putting Europe back on track towards more growth and jobs. Therefore, the Commission initiated a Regulatory Fitness and Performance Program (REFIT) in December 2012. REFIT is the expression of the Commission's commitment to a simple, clear, stable and predictable regulatory framework for businesses, workers and citizens. It will benefit citizens and businesses alike, provided that also the other institutions and Member States show a similar level of ambition.

Next steps

In order to be successful in implementing the commitment to smart regulation, the European Parliament and the Council need to show a similar level of ambition so that the proposed measures to simplify and reduce regulatory burden can be adopted swiftly. The Commission will make every effort with the other institutions to ensure this. It will also continue to cooperate closely with member states and stakeholders to collect views and suggestions on regulatory fitness that can be addressed within the REFIT program and to further improve its effectiveness.

Further information:

= More details and examples: MEMO/13/833;

= The text of the Communication, its annex and further information: http://ec.europa.eu/refit;  

= Smart regulation: http://ec.europa.eu/smart-regulation; 

= Main reference: http://europa.eu/rapid/press-release_IP-13-891_en.htm