Better regulation and the internal market

19 April 2007

Arlene McCarthy MEP, Chair of the European Parliament’s Committee on the Internal Market and Consumer Protection (IMCP), began by welcoming the opportunity to share ideas and hear people’s concerns about the single market and better regulation.

Referring to the large number of documents produced and proposals made on better regulation and the single market, she said the issue now was to ensure that what had been agreed was properly implemented.

She acknowledged that some business people had lost confidence in the single market because of a perceived gap between the promise and the reality, with the downside outweighing the benefits. On the other side, many in the public service sector were disillusioned, feeling that some EU legislation - such as the Services Directive - was trampling on workers’ rights.

Despite all this, the latest Single Market Scoreboard shows the best results ever in terms of the transposition of EU legislation, although Ms McCarthy said there was still an excessive number of infringements in France, Italy and Spain, particularly in the public procurement field.

Better or less regulation?

Turning to better regulation, Ms McCarthy addressed the issue of whether this meant less regulation, or better quality regulation. While the EU could and should abolish ineffective laws, it must guard against abandoning legislation on social or environmental protection.

The best way to produce better quality regulation is through informed debate, and the EU institutions must not try to push through regulations without involving all the stakeholders, not least because of the need to retain the trust of European citizens.

Ms McCarthy said that as chairman of the IMPC Committee, she came under considerable pressure to agree legislation quickly, with every EU Presidency anxious to deliver as many successes as possible during its six months in charge. This was not necessarily conducive to producing high-quality legislation.

Single market review

Moving onto the review of the single market launched by the European Commission, Ms McCarthy said one of the main questions was how this review could lead to a more efficient internal market using the principles of better regulation.

The business community wanted to ensure that regulations made the market work more efficiently. Unfortunately this was not always the case, firstly, because all legislation involves political compromises, and secondly, because some Member States fail to implement it correctly.

The Parliament has asked the Commission to carry out more studies and hearings to find better ways to consult and inform stakeholders in the process of drawing up new regulations.

Among the important principles to bear in mind during this process were the need to respect subsidiarity, ensure that legislation is proportional and accept that, in some cases, derogations may be necessary, even though these could undermine enforcement. Single market legislation must also be consistent, transparent, accountable and well-targeted to ensure that it does the job required.

Role of the European Parliament

Ms McCarthy said the European Parliament was a powerful legislator and needed to be kept fully informed about all new proposals. This did not always happen and the Parliament has therefore suggested setting up a better regulation task force and an inter-institutional working group to share and benchmark best practices.

This would help avoid the problems that had arisen, for example, with the Consumer Credit directive: the Committee felt that this was fundamentally flawed as it had tried to take all Member States’ demands into account, and had required more than 120 amendments.

It also crucial to ensure proposals for new laws both open up the market and provide sufficient protection for consumers. An inter-institutional working group would help to muster resources and make sure the institutions are working in the same direction.

Enterprise and Industry Commissioner Günter Verheugen has presented three new proposals designed to move the internal market forward. These must strike the right balance between opening the market, improving the environment, reducing administrative burdens and boosting the European economy.

New regulations must also take account of all the developments in new technology, and new European standards have to be coordinated with what is happening internationally.

Ms McCarthy insisted that legislation must foster a competitive environment, but must also protect consumers and the environment, maximising the benefits and minimising the costs. This is what impact assessments are designed to ensure, by mapping out all the possible consequences. However, there were question marks over who should assess the potential impact of amendments made to proposed legislation during the decision-making process and this issue needs to be addressed more fully.

Ms McCarthy agreed that in some cases, self-regulation by industry could be just as effective as legislation in protecting consumers. However, this must be scrutinised to see how this worked, and sanctions must be available if it did not. If this failed, then this is when regulations would be needed.

Extensive consultation on new proposals is an essential part of better regulation and, in particular, the IMPC is encouraging the Commission to consult those bodies or stakeholders who would be involved in implementing the legislation.

Moving on to the question of the transposition and implementation of EU legislation in national law, Ms McCarthy said there were too many cases in which Member States failed to implement directives correctly. A fast-track procedure was therefore needed to identify and study problems and monitor governments’ compliance with EU law.

The system for taking up complaints also needs to be more cost-effective, and the Commission must ensure that adequate resources are available to do this, and to ensure that infringements are rectified.

Ms McCarthy summed up by saying that while there were many areas in which new initiatives had been launched, the focus must be on essential legislation that would improve the performance of the internal market. The Parliament wanted to be more involved with the Commission and the Council in doing this, acting as partners in the process and ensuring that consumer rights were protected.