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José Manuel Durão Barroso
President of the European Commission
"Rethinking regulation": keynote speech at the 'Smart regulation in the EU' conference
Conference "Smart Regulation in the EU – Building on a Strong Foundation"
Brussels, 14 October 2014
Dear Edmund Stoiber,
Commissioner Nelli Feroci,
President of the Economic and Social Committee, Henri Malosse,
This is a time of transition for the European Union.
Not only this month, which marks the end of my second mandate as Commission President and the start of a new one, under the leadership of my good friend, Jean-Claude Juncker.
But also more generally, because we have gone through years of tremendous crisis in different forms – constitutional, financial, economic, sovereign debt and geopolitical crises – and Europe has shown its extraordinary resilience and has adapted quite spectacularly in response to those challenges.
So we are entering a new phase. Yet the political character of this Union of ours is still not entirely clear. There is a reinvigorated debate about Europe. And in some quarters and parts of our societies there is also renewed scepticism about Europe. There is a need for more political discussion about what we do together, and there is a need for more legitimacy of the things we do together.
This is the broader context in which the debate around smart regulation takes place.
When ten years ago in 2004, at the very beginning of my first mandate, I created a Better Regulation portfolio in the Commission, this was something for specialists, for gourmets. The wider audience, at that time, had not yet discovered this new flavour, or even found it rather unpalatable.
When I today see the great interest in only this conference, with up to 600 participants from all institutions, business sectors, civil society, and the media I come the conclusion that something has happened during these ten years in this new policy field Better Regulation, or Smart Regulation, as we call it today.
The very easy and obvious conclusion is that Smart Regulation has become relevant - relevant to a point that its principles and mechanisms have meanwhile permeated all areas of European policy making.
And still, smart regulation continues to be an area in motion. It sparks controversies. It is sometimes subject to misunderstanding and even abuse. And therefore requires a lot of explanation and pedagogy. And, of course, it needs further refining and further maturing.
And this is why it is important that today we take stock where we stand, before we turn a new page.
Ladies and gentlemen,
I was always concerned that if we lose sight of the context, the call for 'smart regulation' can quickly slide into a simplistic and unfounded insult to be hurled at European laws and institutions. I never made myself accomplice of those who say "more smart regulation" but who in reality are attacking the European institutions or the European project as such.
The same is true the other way round: I never sought to become a better European by regulating wherever possible.
Once this is understood and accepted, and if we succeed in truly rethinking regulation and act upon the lessons we have learnt, smart regulation can really improve the effectiveness and the legitimacy of the European Union.
I have long stressed the need for Europe to be – as I eventually summed it up in my State of the Union speech in the European Parliament last year – 'big on big things, and small on smaller things'. And I am happy that now this expression became so popular.
Being big on the big things is almost natural - the crisis has forced us to rise to the occasion several times, and we have undoubtedly done so. For instance we have created completely new instruments to face the crisis, namely in terms of governance of the euro area. So, there we needed to be big, for instance by proposing a banking union. I remember when I used the expression banking union some capitals called me saying 'Why are you speaking about banking union? This is not in the Treaty.' And I said, it is not in the Treaty, but we need it to realise the objectives of the Treaty. So, sometimes you need to be big on big things with new projects and ambition. In other cases it is more important to be modest and prudent in terms of legislation. But we know that from a political point of view and from an administrative point of view it is difficult sometimes to be an advocate of being small on smaller things. It is not something that comes natural to either politicians or administrations at any level, including the European one.
Therefore, throughout my mandates, we needed to focus the Commission’s energy on the real strategic priorities and challenges for Europe. At the same time, the Commission has worked hard to reduce administrative burden by having less but better regulation.
Because we had to face up to the fact that the European Union is often difficult to read and at times too intrusive. At least this is too often the perception. That the EU does not always make life easier for businesses and does not always make itself more popular among citizens. That while we are striving to provide high standards of public interest protection for health, for consumers, for the environment, we sometimes do not go about it in the best way. Or we do not recognise if it can be done sufficiently at the national, regional or local level. So, there is not a real commitment to the principle, which is a very important democratic principle, the principle of subsidiarity. Subsidiarity well understood – not against something, not against the European institutions, but in favour of more democracy.
The question is how to remedy that situation.
From the start, I understood that changing the course of a super-tanker which in the past was above all programmed to produce new legislation, was far from easy. But I was convinced that it had to be done, and increasingly sceptical perceptions of Europe in a number of countries only confirmed my concern. And I said a number of countries, because let's be clear: this is not something that only British public opinion is worried about, even if that is the most vocal and visible. I understood from the beginning that this concern was appearing also in other countries, not only in the UK. To make the EU stronger, we had to take action and remove some of the criticism and frictions in this field as well.
My comments in this sense, for those who remember where we were nine or ten years ago, initially met with a rather cold reception. Sometimes even I had to go through very sharp criticism. That was the case in the European Parliament, where some committees are naturally inclined towards more legislation, as they see it as a way to increase their influence. Once again, it is natural. People have good intentions, they want to show they are doing good things. So, if I tell them to do less, of course they are not happy. That is also often the case in certain sectoral Councils where it is not too seldom that a Minister in some specific policy field has a somewhat more friendly approach to regulation than his – or her – Head of Government. What happened to me several times, and I remember one case when one Head of Government, I will not say which government, told me 'Why are you coming now with this legislation?' And I told him 'It was your government who initiated it. it was your Minister who took the initiative of asking the Commission to come with this initiative in the Council'. And there were many cases like that one. Some of them will be for my memoirs, but I want to share already with you some of this experience. And it was also true in the Commission itself, that resistance, where when I discussed the first ideas about this in the Commission, one senior official, a very bright and a very committed European, with whom I had an early discussion on this told me, politely but bluntly, that this would put the Commission on 'chômage technique'. This was the common perception, the culture in the European institutions, the Commission, the Council, the Parliament ten years ago.
In different corners of European politics, in some of the informal structures, interest groups or non-governmental organisations around the European institutions, this was written off as an agenda for ‘less ambition for Europe’.
People say that less regulation means by definition less ambition.I beg to differ. That is the reason why in 2004, as I just said, I made Better Regulation a new genuine portfolio in the Commission, and why in 2007, I have decided to set up the Stoiber Group on administrative burden – and I would like to thank you once again, Dr. Stoiber, for the excellent and in many ways ground-breaking work that has been done. I am very happy that you could accept this challenge on a pro bono basis and you could give your very long experience as Head of Government and Member of Government in Bavaria to this agenda, because I thought from the beginning that someone coming from a regional government would be sensitive to the principle of subsidiarity. And that is why after creating that group chaired by Dr. Stoiber, I made sure the Commission followed up on its conclusions, launching several initiatives throughout the years to prevent, slim down or cut red tape.
Most Member State governments professed to like the idea, but often made the mistake of only thinking it applied to Europe, not to themselves. So, it seems bureaucracy is bad when it comes from Brussels, but is good when it comes if it is national bureaucracy. I do not agree with that. The successive British governments certainly made the case for a ‘less red tape’ agenda, but sometimes in a way that was not helpful. A way that was perceived as coming more from an anti-European angle.
There are some, in the political debate, that want to use this discussion about administrative burden reduction as a way of repatriation of competences. I don't think two are the same. We have Treaties and we should respect them. If not, we are not a union of law. So, if a country or a government wants to make a proposal for a repatriation of competences it has the right to do it, but it should propose a revision of the Treaties and then we can discuss it. But to make a revision of the Treaties by the administrative burden reduction agenda is not the right approach. By the way I think there should be no repatriation of powers. My position is this one. I think the overall balance is ok, and in fact for the euro area, this distinction is important, we need more powers at European level. If the countries want to keep a common currency, they have to accept more integration in the fiscal, economic and to some extent in the political field.
For me, however, it was always clear that a 'less red tape' agenda had to be a collective effort of all government levels, including but certainly not exclusively the European one. So, a real commitment at all levels to fight bureaucracy, to fight red tape, to fight administrative burdens that are a complication for the life of our businesses and for the life of our citizens. This is a real mission we have for Europe at all levels. This made it even more important that the EU institutions and the Commission took the initiative of reform, so as not to give the impression that the European Union was only reactive, and reluctant to take the point, or to avoid that it would play into the hands of Eurosceptics. And I think we have done it. So, it was possible that the agenda, since it was coming from the Commission itself and from the group created by the Commission, was not seen as an imposition from our side, but as something that we were, for positive reasons (subsidiarity, democracy, more modern administration), trying to pursue.
If we now have a solid foundation to evaluate and re-evaluate regulation and act upon our experience to make it better, it is in part due to the genuine engagement and leadership of the EU institutions but also because we have drawn in Member States and stakeholders in a spirit where different actors and levels work together, rather than against one another.
A lot has been done to include the wisdom of all involved to improve the quality and reduce the quantity of regulation.
For instance, we have insisted that all proposals coming on to the table of the Commission align with political priorities and were prepared according to smart regulation principles. The impact assessment system was central to this approach, integrating different exercises such as administrative burden estimates, subsidiarity and proportionality checks, a fundamental rights check, SME checks, a focus on sustainable development etcetera into one framework. Above all, it has led to a change in culture, to more ownership and the responsibility of all involved in the process of making legislation.
And the system works. We have carried out over 600 impact assessments since 2006, made the process more transparent and inclusive, and the European Court of Auditors has confirmed that our impact assessment framework matches the best practices to be found anywhere in the world.
There are some ideas of having an external body to control legislation effectiveness. I personally think that the Commission is a sufficiently independent institution and it is a strong institution. I think that if we create more and more institutions we are not going to add simplicity. There is a real risk that we add complexity to a system that is already too complicated. And, by the way, I think that if another institution is set up, there is a real temptation for that institution to be afterwards captured by different interests. The Commission with all its imperfections - and I am leaving the Presidency soon, so I am not a trade union for the Commission - with all its imperfections the Commission is a very strong institution and an independent one. So I would advise caution, that is all. It is not now for me to decide, it is for the new Commission, for the new Parliament, for the new Council. I would advise caution if it comes to the idea of creating new outside institutions to make the control of the others, because the European Commission is already a supranational institution that should have the credibility of the old system. Of course, the Commission is subject to the control of the European Parliament, which I am not sure a new institution could be. So my point is clear – caution if you want to create a new institution that controls the others. Once again, my advice is the following: do not create more bureaucracies to control the bureaucracies. If we now create parallel structures for everything I think we are only going to complicate a system that is already too complicated and difficult to read, so the principles of better regulation also apply to the very system of better regulation.
We also tackled the existing 'stock' of EU legislation. We launched the 2007-2012 Administrative Burden Reduction Programme, reducing red tape by 25% in 13 areas. We introduced an 'evaluate first' obligation and developed a new approach – fitness checks – to move to evaluation of areas of legislation rather than evaluations on a law by law basis. And at the end of 2012 we launched the Regulatory Fitness Programme (REFIT) to group all of these valuable initiatives - SMEs and the Top Ten, the Administrative Burden Reduction Programme, fitness checks and so on – into one programme.
The results are there. In the previous five years, nearly 6 000 pieces of legislation were repealed. And by cutting red tape we made savings of an estimated €33.4 billion for EU business. Now, we can say that this has become common wisdom in European circles. With our regulatory fitness and performance programme (REFIT), we took this to a new dimension. We constantly reconsider the administrative effects of what we do, make a priority of finding the best way to do it, and systematically screen existing legislation.
Taken together, we have changed the way European law is made.
Maybe most importantly, we have made it clear - which for some in the 'Brussels bubble' had been unthinkable until recently – that sometimes European laws should not be made.
We have clearly identified a set of negative priorities, initiatives we did not pursue or existing laws we proposed to undo.
For instance, we did not continue to push for a soil framework directive which in the legislative process had been going nowhere for the last 8 years. This was not, of course, a rejection of clean soils in the EU but recognition that there are different views on what interventions are required at European level necessitating a re-think.
Or take the example of the olive oil cans, which became quite popular. Not because we were blind on the public health eye, but because we considered this is an area which can best be addressed at national level and that regulating this issue at EU level would do more harm than good to the European project and idea.
The reality is that sometimes, because of the relatively small things that afterwards are subject of caricature – sometimes unfair, but nevertheless they exist – the sentiment against Europe increases. And I think we should also think about it, all those of us that care about the support to the European project.
Not every good cause in itself is doing our European project a favour. And this is a point that is important to understand. Not everything can be a priority for the EU. If everything is a priority nothing is a priority. We have to think very carefully where we should use up our time and spend our political energy more intelligently.
More than ever, Europe is focusing on where it can add most value, and reticent where it cannot. That is a major development, and not an easy one. Because there will always be people who want Europe to act in every conceivable area that affects people's lives. But we need to strike balance with decisions taken at the right level. We don't say that these issues are not important; we are just saying that probably some of them can be better dealt with by the national or regional governments, at local level. Why not?
I know very well that the Treaty requires that the EU applies a high level of protection of health, safety, environmental and consumer protection in a single market of 28 member states. Let us also not forget that often one set of single market rules replaces 28 sets of different national legislations and with this reduces a lot red tape for our companies. The criticism that some eurosceptics make, asking why we were coming with legislation in this or that area, is very often unfounded, because they tend to forget that that legislation replaces 28 different pieces of legislation at national level. However, when we legislate at European level, we must ensure that new proposals add value, do not add unnecessary burden and have a realistic chance of being agreed.
If you just legislate for the sake of legislation, what happens very often is that we have accumulation of ideas; we have a backlog of legislation that is there. Everybody is more or less content because they say the proposal is there, but it will not be adopted. So it's in fact only taking time and energy, when we should use the time and energy from the legislator to our right priorities.
I've been quoting Montesquieu several times, to show that better regulation is not just a British agenda. Montesquieu said "Les lois inutiles affaiblissent les lois nécessaires". Useless laws weaken necessary ones.
It's just a question of wisdom. It's a question of the attitude to legislation. As you can see, this is a very old principle in the great European political thinking, like Montesquieu has been demonstrating.
At this point in time we simply cannot afford a European framework that weakens its own capacity to act. Where more integration and more regulation are needed, we should never be afraid to take the lead. I just gave you an example with the banking union but I could give many examples. In fact, the Commission I have the honour to chair was the one who made the most extensive programme of legislation in terms of financial supervision. We are leading in the G20 because of that and I think it was fully justified. When we need it we have to do it, because we need to integrate markets at European level, we need a common legislation. It's absurd to just have national supervision, as it was the case before. This is a good example of how to be big on big things. But when less means more and simple is smarter, we should not hesitate, and have the courage, to say so.
Today, ladies and gentlemen, that lesson is well-known in Brussels and Strasbourg, and well-heeded throughout Europe.
I am pleased to see that even some of the European forces that did not support the agenda at the time are now making it almost a mantra to go for lighter, simpler, less costly regulation.
During the last European Parliament elections, it was quite interesting to see that almost all candidates for Commission President were very strongly in favour of this agenda. Frankly, this was not the case ten years ago. So we have a case of evolution in thinking about this matter.
A constructive and continuous debate on smart regulation has become almost self-evident and the idea of Europe being big on big things and small on smaller things is becoming part of the consensus.
At least in theory. We will have to be watchful as to what happens in practice in the years to come. In practice, however, often people are against bureaucracy in general but in favour of bureaucracy in their particular case. That reminds me the story of that writer, when he said he loved mankind in general but hated every individual in particular. With bureaucracy it's the opposite: everybody hates bureaucracy in general but tends to like his or her own piece of legislation. People tend to prioritise what they see important in their fields of professional or political activity.
We have come quite a long way in these ten years of moving ahead with smart regulation. We have now an agenda. We have now the results of the Stoiber Group, that I will look at with great attention. I'm sure the new Commission will look at it with even greater attention. Though I think today we dispose of strong foundations on which to build this agenda in the future.
Because I think it is an agenda that will endure, and one which has certainly made and will continue to make Europe stronger.
I thank you for your attention.