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Günter Verheugen

Vice-President of the European Commission responsible for Enterprise and Industry

A simple CAP for Europe –a challenge for all

Conference on Simplification of CAP
Brussels, 3 October 2006

Ladies and gentlemen,

Dear Commissioner Marian Fischer Boel,

I do not need to remind you of the pre-eminent position of the Common Agriculture Policy amongst the different European Community policies. Since its implementation in the sixties it has been affected by substantial and successive changes. This is still true now as this Common Policy must adapt itself to take into account the challenges of Globalisation, which is characterised by an ever increasing volume and diversity of trade exchanges.

In my capacity as Vice President of the Commission in charge of Enterprise and Industry, I am fully committed to boosting the competitiveness of our economy in general. This of course includes the agri-food sector. Indeed the European Food Industry is our number one industry in terms of turnover (around 800 € billion, that is 13.6% of the total), bigger than our automobile industry (at 11.3%) and chemicals (at 9.1%); it is also the largest industrial employer with an estimated 4.1 million people. Quite obviously, the competitiveness of the European Food Industry relies on a healthy and dynamic European Agriculture.

European Agriculture therefore plays an important part in the Lisbon Strategy, re-launched as the strategy for Growth and Jobs in early 2005. As you may know, this re-invigorated Lisbon Strategy encompasses ten priorities covering three well defined domains of action.

  • The First Domain calls for every effort to be made with a view to improving the “Creation of sustainable jobs” within the Community.
  • The Second Domain deals with the ambitious and necessary commitment to mobilise “Knowledge and Innovation” for the sake of economic growth and more widely the achievement of European construction.

There is, however, a Third Domain of action linked to the Lisbon process which is very close to my heart; it aims at making Europe "the most attractive place in the world to invest and to work”. It corresponds to a concept, which is very well known in my country; we call it “standortpolitik”, which basically means providing an attractive environment for business.

In order to build Europe's attractiveness as a place to invest and work we will concentrate our efforts on:

  • improvement and extension of infrastructures to fit with the requirements of advanced technologies;
  • expansion and completion of the Single Market; and
  • ensuring an open economy that permits real competition within and outside Europe;

However, I would particularly like to expand on one way in which we can make Europe attractive for business and job creation...This is through Better Regulation and Simplification; a process that must take place at both Community level and at national level. A new phase of the European Union simplification work, focusing on the Lisbon Agenda objectives, was launched in October 2005 with the publication of a major Communication[1]. This sets out the Commission’s view of how modernisation and the simplification of Community rules can have wide reaching benefits for businesses and citizens.

Simplification work on the Common Agriculture Policy, which is the main purpose of this Conference, is therefore not tacking place in isolation. It fits into this overall European Commission emphasis on Better Regulation. So, what are the important elements of this approach?

Let me make it clear that Better Regulation and Simplification applies to all legislative instruments, whether they are in force or yet to be adopted .

Let us look first at existing legislation. Here I must stress that you should not confuse Better Regulation with Deregulation. They are not necessarily the same.

The new strategy for Better Regulation develops a methodology for streamlining and modernizing the indispensable Acquis communautaire. We are committed, however, in our endeavour to achieve our competitiveness aims, not to override other important policy objectives enshrined in European Legislation. This is particularly true for the Common Agriculture Policy.

The legislation targeted for revision is the legislation which has been shown to be disproportionately burdensome and complex for European citizens, businesses, farmers (and so on) relative to the public interests it aims to safeguard. It is only where public interests can be equally well served by simpler, lighter, more proportionate means, that legislation will be modified or repealed.

On this basis we established in our 2005 Commission communication a rolling programme of simplification for over 220 legislative instruments, which will be reviewed in the next three years. As you can imagine, this is a tremendous task.

Let us now look at how Better Regulation applies to new legislation that is initiated by the Commission. Under the Barroso Commission an Impact Assessment has become compulsory before any new proposal can be adopted by the Council. They must provide a wide ranging and "proportionate analysis" of the potential economic, social and environmental impacts of all policy options. They must consider impacts on regions, on consumer interests and on competition. They must challenge the approach proposed by looking at all of the alternative means of reaching the desired objective; and these may well include non-legislative means. Only by analysing all these alternatives and comparing their advantages and disadvantages can we justify the proposed approach and ensure we take an informed decision.

In late 2005 the Commission, the European Parliament and the Council also agreed on a common inter-institutional approach to Impact Assessment. In addition, both the Council and the European Parliament agreed that any "substantive amendments" they make to proposals in the co-decision procedure should be subject to further impact assessments. Of course, the co-decision procedure is not often applied in the Common Agriculture Policy domain.

There should be no doubt in your mind about the Commission's commitment to rapidly improve the regulatory environment. Indeed, I re-emphasise the fact that this Commission views Better Regulation as a key element of the Lisbon strategy for growth and jobs

Let me now move on to Simplification. Simplification is not a ‘one shot’ exercise, but rather a continuous challenge. The Commission intends to design a new simplification package by the end of this year and is starting to identify new candidates for legislative simplification, notably through the screening of the Acquis communautaire in all policy areas and taking into account the findings of the ongoing sectoral studies.

In certain domains the accumulation over many years of successive layers of legislation has lead to a strange and counter-productive situation where we all have to cope with considerable unnecessary burdens. Up to a point, this is the endemic disease of so many administrations, including the Commission, and therefore this is the task of Simplification to eradicate bureaucratic excess,

This is particularly true for the Agriculture legislation framework. Here, the concept of “technical simplification” aims at complementing recent agricultural reforms by focussing on revision of the legal framework, administrative procedures and management mechanisms to achieve streamlining and greater cost effectiveness, without changing the underlying policies.

For example, the decision to amalgamate the 21 existing Common Market Organisations (CMOs) into a single Common Market Organisation will provide a single set of harmonised rules for a long list of classic areas of market policy such as: intervention, private storage, import tariff quotas, export refunds, safeguard measures, promotion of agricultural products, State aids, communication and reporting of data. This breakthrough, which is underway, will be carried out without changing the substance of the existing instruments and mechanisms!

Among the key elements of the European Union’s better regulation and simplification initiative, I would like to insist on much greater use of what we call “co-regulation” that is to say, for example, the use of existing, independent standards rather than creating specific European Union standards. This is one aspect of what we call the “New approach”, which is in fact already 20 years old.

The Commission is making great efforts to achieve deliver on its simplification objectives, but all Institutions must wholeheartedly support the strategy and assume full responsibility for their share of the effort if it is to succeed. There are 18 simplification proposals now pending before the Council and the European Parliament and these must be given higher priority.

Later this year, as we promised to the Spring European Council, the Commission will present an “analysis of the progress to date and of where further work is needed to continue to make progress in all areas of better regulation”. This will make several suggestions:

  • One of the main new elements will be the establishment of independent quality control of Commission impact assessments within the Commission.
  • Another priority is to press forward with our simplification work.
  • It will also call for important work in relation to reducing administrative costs. The Commission has already updated its impact assessment internal guidelines to include a methodology for ex ante assessment of administrative costs. When we speak about administrative costs we must distinguish between, on the one hand, “inevitable costs which are directly imposed on stakeholders by having to comply with legislation” and, on the other hand, “ancillary administrative costs” or if you prefer “extra administrative burden” caused by the legislation, which is a real issue for many companies.
  • My services are now developing measurable targets for reducing administrative burdens and on methods for delivering on these targets.

So, here we are for the time being. We have indeed engaged in a monumental effort to quantify administrative costs in the European Union. Next month, in its Better Regulation package, the Commission will list some of the policy areas to be measured and suggest areas for immediate action. There are pieces of legislation that with minor revisions can already yield important gains to European firms. At the beginning of 2007 the Commission will provide an elaborate operational strategy for the measurement and reduction of administrative costs. At the next spring Council, the Commission and the Member States will commit to a joint cost reduction target.

To summarise, if new legislation must be well prepared and proportionate, we also must review whether existing legislation can be simplified to obtain the objectives of such legislation in a less complex and burdensome manner!

The Commission, I must say, is encouraged by the generally positive assessment of its effort in Better Regulation, both by Member States and various stakeholders, including many elements of the Agriculture sector.

Ladies and gentlemen, this is the message I wanted to deliver to you this morning before you commence your two day work.

I wish you stimulating discussions when you deal with specific features of Common Agriculture Policy.

Commissioner Fischer Boel is at the forefront in the exercise of simplification in the Commission, and she is showing with concrete actions that simplification is possible. It is very important that each Member of the Commission commits itself to better regulation and regulatory simplification.

Mrs Fischer Boel's task will not be easy and therefore needs the support and co-operation of all of you. She certainly has my full support.

Thank you very much for your attention.

[1] “Implementing the Community Lisbon programme: A strategy for the simplification of the regulatory environment”).

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