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ip/97/1034

Brussels, 25 November 1997

SLIM: new approach to simplifying Single Market legislation bears fruit

Concrete suggestions for simplifying Single Market rules on Value Added Tax (VAT), fertilisers, banking services and the combined nomenclature for external trade have been put forward at the end of the second phase of SLIM (Simpler Legislation for the Internal Market). These suggestions, together with a summary of measures the Commission intends to take, are featured in a Communication just adopted by the European Commission, on the initiative of Single Market Commissioner Mario Monti. The results of the second phase have once again proved the value of the SLIM approach, in which small informal teams of experts from national administrations, users of the legislation and the Commission identify problems with the existing rules and suggest solutions to these problems. However, the crucial measure for the success of the SLIM approach is the speed and ease with which the teams' recommendations are acted on, first by the Commission in preparing specific legislative proposals and other measures and subsequently by the European Union's Council of Ministers and the European Parliament. The Communication therefore also reports on the follow-up to the first phase of SLIM, completed in November 1996 (see IP/96/990), concerning collection of intra-EU trade statistics (Intrastat), construction products, recognition of diplomas and ornamental plants.

"We launched the SLIM initiative as a pilot project in spring 1996," recalled Single Market Commissioner Mario Monti. "It has proved so effective and received such support from business and national authorities, that we have decided to include it as a permanent feature in the Action Plan for the Single Market. Simplification has become a concrete and effective way of enhancing European competitiveness and employment potential" concluded Mr Monti.

The SLIM exercise forms part of the "rolling programme of simplification" outlined in the Action Plan for the Single Market (see IP/97/478), endorsed by the Amsterdam European Council in June 1997. For the second phase of SLIM, the teams started work in June 1997 and completed their reports at the end of October 1997. The Commissioner responsible for the legislation in question nominated the Chairman of each team. The main results are as follows:

VAT

The current VAT system, and notably the 6th VAT Directive, needs to be reviewed because it imposes excessive costs and administrative burdens on business, particularly small and medium-sized enterprises (SMEs), discourages trade between Member States and gives rise to distortions of competition. The VAT transnational system has been identified as the main source of concern by business (See Memo/97/99).

The Commission has presented a work programme in July 1996 for introducing a new common system of VAT, which would solve these problems and constitute a major simplification.

For the time being, following the recommendations of the SLIM team, the Commission intends to:

* propose before the end of 1998 a reinforcement of mutual assistance on recovery

 of outstanding VAT

* propose a legislative reform to ease the requirements on tax representation in

 other Member States

* undertake a reflection on a more radical reform of the returns procedures so that

 taxable persons could obtain reimbursement in the Member State where they are

 established of VAT paid in another Member State

* undertake a study in 1998 on electronic invoicing.

* examine the time needed for refunds of VAT within the Community and

* present shortly, within the framework of its VAT Strategic Programme, a proposal

 for the harmonisation of deductibility rights, and a study on the system applicable

 to SMEs.

Fertilisers

The SLIM team identified a clear need for EU legislation on fertilisers to be rationalised and clarified. The Commission has endorsed the team's recommendations and will table the corresponding proposals:

* a single consolidated fertilisers Directive to replace all the existing Directives,

 clarifying and modernising the legislative approach

* a clarification of definitions for fertiliser and for "EC Fertiliser" and defining the

 scope of harmonised rules so as to provide, inter alia, for future coverage of

 organic and organo-mineral fertilisers

* simplification of procedures for bringing new fertilisers within the scope of EU

 rules

* a uniform system of enforcement control and reporting by accredited laboratories,

 in keeping with the Action Plan for the Single Market (Target 1 making the rules

 more effective) and

* new procedures to ensure that Commission's proposals to add new fertilisers and

 new groups of fertilisers are preceded by an examination by the appropriate

 Scientific Committees.

Combined Nomenclature for External Trade

The SLIM team recommended that the Combined Nomenclature (CN) for External Trade should be not only simplified and made easier to apply, but also rationalised so that the number of 8-digit subdivisions are significantly reduced in forthcoming years. They also recommended that a 'Code of Conduct' should be set up to target specific areas for simplification and to provide tools to facilitate reporting of data. The Commission has endorsed these suggestions and intends to initiate as soon as possible an exercise to clean up the Combined Nomenclature in order to enable changes to be applied from 1 January 1999 and to ensure all CN headings are validated (over a period of time).

Banking services

The SLIM team considered that existing problems in banking legislation do not stem from its complexity, although certain aspects of the legislation should be re-examined. Following the team's recommendations, the Commission will:

* propose the abolition of the requirement on credit institutions and investment firms

 for a prior notification of cross-border services

* invite all national, EU and international authorities imposing reporting

 requirements to avoid duplication

* examine the functioning of the whole comitology procedure so that amendments

 to legislation that are purely technical or result from lengthy international

 discussions (e.g. in the Bank for International Settlements framework) can be

 adopted quickly

* examine rapidly the various problems of inconsistencies or discrepancies

 between Directives which are revealed in the process of codification of the

 banking Directives

* respect the special needs of small banks when proposing legislation for complex

 supervisory rules

* examine whether to extend the information procedure on general good rules for

 cross-border branching to cross-border services

State-of-play on implementation of phase I SLIM team recommendations

Concerning Intrastat, the Commission has already adopted two Regulations simplifying the declaration of net mass (2385/96/EC) and statistical value (860/97/EC). The Commission has also presented two proposals for European Parliament/Council Regulations concerning the reduction of the data elements collected and a simplified nomenclature. As regards simplification measures for the medium and long term, the Commission has launched a large number of studies in co-operation Member States to assess the impact on business, and especially on SMEs, of introducing alternative data collection methods; such as sampling, a two tier system and a one flow system.

On recognition of diplomas, the Commission has just put forward a proposal for a European Parliament/Council Directive to streamline the functioning of the Advisory Committees for diplomas and to simplify the updating of the lists of diplomas eligible for automatic recognition. The Commission services, together with the Advisory Committee for Training of Nurses, are also examining the possibility to introduce a more output-oriented approach to the definition of education and training requirements.

In the area of ornamental plants, the Commission intends to make a proposal to the Council before the end of 1997 for a major revision of Directive 91/682/EEC. The aim of the proposal is to simplify the existing legislation and enhance the competitiveness and employment-creating potential of business.

Finally, as regards construction products, efforts have focused on rendering the process of preparing standards in this field more efficient. A modification of the Construction Product Directive (CPD) is also being examined. The Commission accelerated the process for setting mandates for the European technical standards body CEN to establish European standards, and a harmonised standard for several construction products is expected in 1998.

The construction products Directive (89/106/EEC, as amended by 93/68/EEC) needs to be amended and brought into line with other New Approach Directives in order to remedy remaining barriers to a Single Market for construction products. Those amendments would be aimed at making it possible for manufacturers to apply for a CE mark, even in the absence of harmonised technical specifications, provided that the producer can demonstrate conformity of the product with the essential requirements laid down in the Directive.


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