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Smart Regulation – Questions and Answers

Commission Européenne - MEMO/12/974   12/12/2012

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European Commission

MEMO

Brussels, 12 December 2012

Smart Regulation – Questions and Answers

Today's Communication on "EU Regulatory Fitness"1 presents the state of play of the Commission's smart regulation efforts and proposes measures to further advance the smart regulation agenda. In 2010, the Commission launched its Smart Regulation agenda to further improve the quality of EU legislation to enhance growth, jobs and competitiveness2. Smart Regulation targets the whole policy cycle, from when a policy is designed to when it is put in place and finally evaluated. To put evidence even more at the heart of policy-making, a thorough impact assessment system has been complemented with new measures improving the evaluation of existing policies and the strengthening the voice of those directly affected by its initiatives. The reduction of administrative burden by 25% between 2007 and 2012 has been pursued in parallel and is expected, in the medium-term, to lead to an increase of 1.4% in EU GDP, equivalent to EUR 150 bn.

How has the Commission strengthened the role of evaluation in policy-making?

Under Smart Regulation, the Commission has been stepping up its efforts in ex-post evaluation as part of a general move towards more evidence-based decision-making. Accordingly, it is phasing in the principle that all significant proposals for new or revised measures should be based on an evaluation of the policy framework already in place. In the 2012 Commission Work Programme, around half of the initiatives were supported by evaluation work.

Pilot "fitness checks" were also launched to evaluate more comprehensively whether the regulatory framework for a policy sector – as opposed to an individual piece of legislation - is fit for purpose and to identify excessive administrative burdens, overlaps, inconsistencies or obsolete measures.

Pilots launched so far regard freshwater policy, information and consultation of workers, type-approval of motor vehicles, food chain regulation and the internal aviation market. Further fitness checks are being planned regarding waste management in environment policy, the retail sector, occupational health and safety, petroleum refineries and the aluminium industry.

How did the Commission strengthen the voice of citizens and stakeholders?

The Commission has an obligation to consult widely and does so through a variety of means, respecting principles of openness and transparency and following minimum standards which respond to international best practice.

Over the last three years, stakeholders views were sought through more than 300 open consultations published on the ‘Your Voice in Europe’ website. All impact assessment reports completed over the same period relied on extensive open or targeted consultations. In nine open consultations out of ten, the minimum consultation period was respected.

This has been extended from eight to twelve weeks since the beginning of 20123. SMEs and micro companies have also directly voiced their problems and concerns in dedicated conferences organised in Member States. A review of consultation policy has been finalised and its results are detailed in a Staff Working Document4.

What are the results of the Action Programme for Reducing Administrative Burdens?

The Action Programme launched by the Commission and endorsed by the Council in 2007 aimed to reduce the administrative burdens stemming from EU legislation imposed on businesses by 25% by 2012 in 13 priority areas5. In the medium-term the Action programme is expected to lead to an increase of 1.4% in EU GDP, equivalent to EUR 150 bn.

The 25% reduction goal has been achieved and exceeded with the adoption of measures worth EUR 30.8 billion by the European Parliament and the Council. The Commission itself has gone beyond the target by tabling proposals with a burden reduction potential close to EUR 41 billion (33%). Some of this potential estimated at more than EUR 3 billion was lost in the legislative process as the Commission proposals were amended. 

Pending proposals could generate additional savings worth EUR 6.8 billion (5.5 %) if adopted by the European Parliament and the Council. This would raise the total amount of savings 37.6 billion, cutting total burden by a third.

An overview of the results is presented in the table below

Priority Area

Proposed

by Commission

Adopted/ Completed

Pending adoption by co-legislator

Total reduction potential

Million €

-40 875

-30 802

-6 821

-37 623

% savings

33%

25%

5.5%

30.5%

Examples of adopted legislation generating significant savings are:

In the area of Taxation and Customs, the switch to a fully electronic VAT invoicing system will remove obstacles to company’s electronic billing for more than 22 million enterprises. The reduction potential is estimated at more than EUR 18 billion (more information in IP/10/1645).

In the Accounts/Company Law area, the measure adopted by the European Parliament and the Council allowing Member States to exempt micro-entities from EU accounting obligations6 may benefit more than 5 million small businesses and generate savings for businesses worth EUR 3.5 billion.

In the Agriculture priority area the measure adopted reducing inspection costs stemming from marketing standards for fruits and vegetables amounted to a potential burden reduction close to EUR 974 million.

What has the role of the High Level Group of Independent Experts on Administrative Burden been and how will it change?

The High Level Group on Administrative Burdens, chaired by Dr. Edmund Stoiber, was set up in late 2007 to advise the Commission with regard to the Action Programme for Reducing Administrative Burdens.

The mandate of the group was extended to end-2012 to support the finalization of the Action Programme and to prepare a report on best practice in Member States to implement EU legislation in the least burdensome way ("Europe can do better")7. A third of the administrative burdens deriving from EU legislation has been estimated to stem from national implementation.

On 5 December 2012 the Commission extended the Group's mandate until 31 October 2014.8 The Group's work will focus on SMEs and micro enterprises, as well as on how to make Member State public administrations more efficient and responsive to the needs of stakeholders when implementing EU legislation. In this context, the Group will assist and advise the Commission on the planned follow up of the Action Plan at the level of Member States implementation (so called ABR-Plus) to ensure the full of expected benefits for businesses.

What else has the Commission done to reduce the burden of EU legislation on SMEs and micro-enterprises?

The Commission applies a "Think Small First" principle when designing policy. In November 2011, it also set out a strategy to adapt EU regulation to the needs of micro-enterprises9. Policy-design now starts with the assumption that micro-entities are excluded from the scope of new or revised legislation, unless there are demonstrated needs that they should be covered to reach the objective of the legislation. Specific operational guidance was prepared to assess this during the impact assessment process.

Increased consultation with small business is also under way: a series of conferences are being held with SME representatives in several Member States and an internet based survey has been launched to identify the 10 most burdensome legislations from an SME point of view. Special regimes for SMEs and micro-entities have also been introduced on a case-by-case basis, for example, micro-entities were exempted from certain burdensome accounting rules. SMEs can still participate in the consultation on the 10 most burdensome pieces of legislation until 21 December 2012 at:

http://ec.europa.eu/enterprise/policies/sme/public-consultation-new/index_en.htm

In early 2013, the Commission will present a first progress report and scoreboard with a particular focus on the priorities identified by small businesses. The scoreboard will be updated annually showing the progress of ensuing proposals in the co-decision process and during implementation by Member States, with a special emphasis on avoiding "gold plating".

How has the Commission strengthened its impact assessment system and the role of its independent quality control?

The Commission uses its Impact Assessment process as a key tool to ensure that its proposals are prepared on the basis of transparent, comprehensive and balanced evidence on the existence of a problem, the costs and benefits of alternative solutions and the appropriateness of the suggested alternatives from the point of view of subsidiarity. Economic, social and environmental impacts are analysed in an integrated manner for all proposals with significant direct impacts. Over the past two years, operational guidance has been issued for analysing impacts on fundamental rights10, competitiveness11 and micro-enterprises12.

The system is subject to the independent scrutiny of the Impact Assessment Board (IAB).13 The IAB’s members are senior Commission officials with analytical expertise in economic, environmental and social issues. They are appointed by the Commission President for a 2‑year term and act in a personal capacity and thus do not represent the views of their home services. They abstain from discussion whenever a conflict of interest arises. Their role is to provide expertise on the quality of the impact assessments independently of the Commission service preparing the Impact Assessment and the related policy proposal.

The Commission Impact Assessment system is comprehensive and transparent and recognized as first class by various external experts.14 Whether or not an Impact Assessment will be conducted is stated in roadmaps which are publicly available.15 Impact Assessments as well as positive and negative IAB opinions are publicly available. Since 2007, nearly 700 Impact Assessments have been carried out. All have been submitted to the scrutiny of the IAB which has issued negative opinions on the quality of drafts in one case every three on average. Since 2010, a positive IAB opinion is needed in principle before a proposal can be submitted to the Commission for a decision.

What progress has been achieved in implementation of EU legislation so far?

The Commission has stepped up its support to Member States in the implementation of EU legislation through a variety of measures: implementation plans that identify the main implementation challenges and suggest support measures, problem-solving mechanisms such as EU Pilot16 and best-practice exchanges (e.g. the Best Practice Report of the High Level Group on Administrative Burden17). Inter-institutional dialogue and transparency in this area have also been enhanced18. Detailed information on implementation of the EU acquis can be found in the Commission's 29th annual report on monitoring the application of EU law (2011)19.

Further information

On the Regulatory Fitness Communication and the two staff working documents of 12 December 2012

IP/12/1349

http://ec.europa.eu/governance/better_regulation/index_en.htm

On smart regulation

IP/10/1296

On Evaluation

http://ec.europa.eu/dgs/secretariat_general/evaluation/index_en.htm

On Public Consultations

http://ec.europa.eu/yourvoice/

On Impact Assessment and the Impact Assessment Board

http://ec.europa.eu/governance/impact/index_en.htm

On Implementation

http://ec.europa.eu/eu_law/index_en.htm

On administrative burden reduction

http://ec.europa.eu/dgs/secretariat_general/admin_burden/index_en.htm

On the High Level Group on Administrative Burden

http://ec.europa.eu/dgs/secretariat_general/admin_burden/ind_stakeholders/ind_stakeholders_en.htm

1 :

COM(2012) 746

2 :

COM(2010) 543

4 :

SWD(2012) 423 ‘Action Programme for Reducing Administrative Burdens in the EU – Final Report’.

5 :

Agriculture and Agricultural Subsidies; Annual Accounts / Company Law; Cohesion Policy; Environment; Financial Services; Fisheries; Food Safety; Pharmaceutical Legislation; Public Procurement; Statistics; Taxation and Customs; Transport; and Working Environment / Employment Relations.

6 :

Directive 2012/6/EU

9 :

COM(2011) 803

13 :

European Court of Auditors Special report N° 3/2010 ‘Impact Assessments in the EU institutions: do they support decision making?’

14 :

OECD 2011 ‘Sustainability in Impact Assessments — A review of Impact Assessment Systems in selected OECD Countries and the European Commission’, European Parliament 2011, ‘Comparative study on the purpose, scope and procedures of impact assessments carried out in the Member States of the EU’, CEPS/University of Exeter 2012, ‘Regulatory Quality in the European Commission and the UK: Old questions and new findings’.

18 :

See OJ L304/47 and OJ C369/14.


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