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Günter Verheugen

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

Reducing red tape for Europe

Speech at EU conference: "Cutting Red Tape for Europe", European Parliament
Brussels, 20th June 2008

Dear Members of the European Parliament, Mr Virant, Dr Stoiber, Ladies and Gentlemen,

Welcome to this conference on cutting red tape for Europe. I am delighted that so many of you have accepted our invitation to discuss this very topical subject.

Better lawmaking and cutting red tap are topical issues as they represent two challenges of vital importance for the future of Europe.

  • Firstly we have the dilemma that citizens and businesses want a strong European legal framework offering greater security and good framework conditions. At the same time, everything coming from Brussels is automatically suspected of being yet more red tape. This is a contradiction which cannot be allowed to persist in the long term. We therefore have to become better, and restore trust in our lawmaking.
  • Secondly, Europe is faced with rapidly developing international competition. Every wasted opportunity sets us back and places jobs in jeopardy. We must therefore improve the competitiveness of our businesses, without losing our European values.

Against this background, Mr Barroso and I have placed better lawmaking at the heart of our reform strategy. We have charged policymakers with ensuring that businesses can use their resources to improve their products and services, rather than wasting them on unnecessary red tape. This is essential for ensuring that Europe can continue to offer its citizens a high standard of living, more and better jobs and a social and economic system in line with our perceptions.

It does not mean that ‘anything goes’. Better lawmaking does not necessarily mean fewer laws. It is not a case of deregulation, but rather of modernising our legal framework; a framework which has been to our great advantage so far. The Single Market has harmonised many sectors in 27 different national systems, replacing them with standardised European rules. This development has considerably enhanced the competitiveness of our industry.

In line with this philosophy, new draft regulations are presented by the Commission only once we can explain clearly why we need to act and that the measures in question are proportionate and effective. That is part of the new culture of impact assessment.

The Commission is also convinced that there is still room for further simplification, in particular to reduce the burden on SMEs. This is also why, in a few days, I will be presenting an important policy initiative, the Small Business Act, to release the full potential of Europe’s SMEs, which often labour under unnecessary administrative burdens.

Action programme to cut red tape

In January 2007, we presented our Action Programme to cut red tape, an important step towards reducing bureaucracy. The main objective of this programme is ambitious but realistic: to cut 25% of the current burden by 2012. If the data from the pioneers of this initiative among the Member States can be extrapolated, cutting red tape to this extent could, over time, lead to the EU’s overall GDP rising by around 1.5%.

To achieve this objective, we have created a project the scope of which has never been seen before. We are using the EU's standard cost model (SCM) to identify and quantify the administrative burden in 13 different policy areas, such as company law, food safety and the environment. Let me emphasise at this point that we are not questioning the reasons behind these rules. Quite the opposite – our aim is merely to eliminate unnecessary red tape.

How far have we progressed? The Commission’s consultants have now finished an inventory of the information obligations included in the most important EU legal acts, including obligations to present reports, to provide archives for inspection or to apply for approvals or licences. In all 27 Member States, surveys were carried out simultaneously into how European requirements are applied at national level. This will help us to identify the best places to start.

The first survey, unique in its size and intensity, has already brought some interesting facts to light:

  • The 41 European legal acts covered by the programme account for around 340 European information obligations.
  • These were implemented in the Member States by means of around 6 000 national information obligations.
  • In 500 cases, Member States went beyond what was required of them under EU law.

We found, for example, that lorry drivers in some Member States have to record their driving times twice in different ways, to comply with both EU and national rules. We found in one Member State that businesses had to notify no fewer than six different authorities if they wanted to use certain dangerous substances!

The quantification of all these obligations began in March. Throughout the EU, businesses were asked to assess the time and money spent on all their obligations to provide information to public or private authorities or institutions:

  • They stated that they have to spend more than five hours on each invitation to tender, collecting and providing basic information, even if the tender is for the same client in each case.
  • Life assurance companies complain that they have to spend up to EUR 150 000 per year per Member State, as policyholders had to be notifed of changes to policies in a very specific manner.

The results of the quantification will be completed within the coming months and will provide us with further valuable information on:

  • exactly where the administrative burden lies;
  • which information requirements are particularly irritating for undertakings;
  • how Member States have, on the other hand, transposed EU law particularly efficiently.

Preliminary results indicate that in the company law sector alone, the annual burden may amount to approximately 20 000 million euros.

The final step is the most important; namely deriving specific proposals from the test results. That relates on the one hand to EU legal acts. On the other, we will nominate the most promising approaches to the transposition of EU provisions into national law and call on the Member States to apply them.

I would like to make it clear, however, that the Commission is of course not delaying its own cutting of red tape until the final results of the quantification are available. Both in 2007 and in March of this year, we proposed a package of urgent measures to remove unnecessary burdens quickly and effectively – without infringing on the legislative purpose of the regulations. If agreed upon, these measures will lead to considerable savings.

One of these measures, for example, has abolished outdated requirements from the 1960s, under which freight operators had to carry various transport documents concerning border posts, chosen routes or distances travelled. This simplification affects more than
300 000 hauliers throughout Europe, the majority of them small and medium-sized enterprises.

Other proposals are put forward in a targeted manner: for example, on 9 June the Commission approved a simplified system of import and export authorisations for agricultural products. And new proposals concerning the merging and division of businesses will follow shortly.

The whole business of cutting red tape can only be successful, however, if you support us in drawing up and implementing good proposals for cutting it. Many of you are directly affected by the legislation and are therefore the right people to show us how things can be simplified.

We are therefore using all available information channels, so that businesses can share their ideas with us. There have been over 200 proposals so far. For instance, we have just received very interesting proposals for simplifying life for SMEs from Eurochambres, SME Union and Jade. These relate to such matters as the use of digital tachographs by freight operators or the rules governing waste incineration by smaller businesses.

The Commission will carefully examine all proposals and then inform them, for instance via our website, of the conclusions that have been drawn.

The high-level group chaired by Dr Stoiber is another important source of new ideas and concrete proposals for cutting red tape. I will let Mr Stoiber explain to us how his group advises the Commission, but I would like to stress that their work is of great value to us, as they provide us above all with a challenging and critical perspective from the outside.

Last but not least, I would like to emphasise the important role of the Member States. Irrespective of the Commission's leading role, the action programme will only have its full impact if the Member States launch similarly ambitious programmes. After all, a significant proportion of the administrative costs for European businesses arises from the way in which Member States apply EU law, as well as through exclusively national requirements.

The European Council has welcomed the action programme and called on the Member States to set themselves similarly ambitious goals. I am delighted to see that the action programme has set things moving. So far, 17 Member States have set such a goal and others will follow by the end of the year.

The Commission is considering how it can simplify the quantification and cutting of red tape at national level by developing a “starter kit” and thus support Member States in working out their own reduction programmes.[1]

Ladies and gentlemen,

In conclusion I would like to emphasise my confidence that the European Union will reach its goal by 2012 and achieve concrete results – although we still have a long way to go.

I would like to thank you in advance for both your support and your active participation in this conference.

[1] The "starter kit" would contain a series of key documents, as well as software for recording reporting obligations and calculating possible savings.

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