[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 14.2.2007

SEC(2007) 173

COMMISSION STAFF WORKING DOCUMENT

Accompanying document to the Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL SETTING OUT THE REQUIREMENTS FOR ACCREDITATION AND MARKET SURVEILLANCE RELATING TO THE MARKETING OF PRODUCTS AND A DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL ON A COMMON FRAMEWORK FOR THE MARKETING OF PRODUCTS IMPACT ASSESSMENT {COM(2007) 37 final} {COM(2007) 53 final} {SEC(2007) 174}

TABLE OF CONTENTS

COMMISSION STAFF WORKING DOCUMENT Accompanying document to theProposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL SETTING OUT THE REQUIREMENTS FOR ACCREDITATION AND MARKET SURVEILLANCE RELATING TO THE MARKETING OF PRODUCTS IMPACT ASSESSMENT 6

Background 6

1. Introduction 7

1.1. Harmonisation of legislation plays a key role in realising the Single Market 7

1.2. The “New Approach” 8

1.2.1. Elements common to all harmonisation instruments 8

1.3. What characterises the New Approach? 9

1.3.1. How the New Approach has treated certain elements 10

1.4. The New Approach is a good example of Better Regulation 11

2. What are the problems to tackle? 12

2.1. Performance of notified bodies and weaknesses in the notification process 12

2.1.1. Uneven level of conformity assessment services provided by notified bodies 13

2.1.2. Lack of transparency and different approaches in the competence assessment and monitoring of notified bodies 15

2.1.3. Unnecessary burdensome requirements in the notification procedure 17

2.1.4. Current measures taken to tackle the problem 18

2.2. Weaknesses and difficulties in the enforcement of the directives 19

2.2.1. Deficiencies in the current organisation of market surveillance 20

2.2.2. Insufficient controls by actors in the distribution chain 22

2.2.3. Difficulties to trace products and economic operators 23

2.2.4. Inefficient safeguard clause mechanism 23

2.2.5. Effects of the problem 23

2.2.6. Current measures taken to tackle the problem 24

2.3. Misunderstanding of CE marking and lack of credibility 25

2.3.1. Misunderstanding of the CE marking 25

2.3.2. Lack of credibility of the CE marking 26

2.3.3. Current measures taken to tackle the problems 27

2.4. Inconsistencies and legal uncertainty in the current regulatory framework 27

2.4.1. What is the problem? 27

2.4.2. What are the effects of the problem? 28

2.4.3. Current measures taken to tackle the problem 29

2.5. Does the EU have the right to act? 29

3. Objectives 29

3.1. General objectives 29

3.2. Specific Objectives 30

3.2.1. Clear and consistent rules throughout the legal framework affecting products 30

3.2.2. Effective and efficient enforcement of the legislation 30

3.2.3. Notified bodies and notification procedure 30

3.2.4. A clear meaning and enhanced credibility for CE marking 31

4. Policy Options 31

4.1. Basic options 31

4.2. Options related to notified bodies 32

4.2.1. Option A1: Creating a network of notified bodies and a horizontal group of notified bodies 32

4.2.2. Option A2: Regulating the activities of notified bodies 32

4.2.3. Option A3: Centralising the competence assessment and monitoring of notified bodies at EU level (Commission or creation of a specific agency. 32

4.2.4. Option A4: Competence assessment and monitoring of notified bodies performed at national level based on a common EU legal framework and supported by a European infrastructure 33

4.2.5. Option A5: Electronic notification procedure 33

4.3. Options to improve the enforcement of directives 34

4.3.1. Option B1: Enhance co-operation of market surveillance authorities by extending the existing co-operation mechanisms 34

4.3.2. Option B2: Raising the awareness of economic operators as to their obligations 34

4.3.3. Option B3: More effective controls of the market place 35

4.3.4. Option B4: Common EU framework on market surveillance setting out minimum requirements 36

4.3.5. Option B5: Reinforcing traceability and the introduction of specific obligations for importers 36

4.4. Options to improve the understanding of the CE marking 37

4.4.1. Option C1: Information and awareness raising campaign on the meaning of the CE marking 37

4.4.2. Option C2: Abolition of CE marking 37

4.4.3. Option C3: Change the current meaning of the CE marking 38

4.4.4. Option C4: Strengthen the legal protection of the CE marking 38

4.5. Options to eliminate inconsistencies of terminology and procedures in the legal framework 38

4.5.1. Option D1: Immediate modification of the existing legal texts 38

4.5.2. Option D2: creation of a reference legal document 38

5. Analysis of impacts 40

5.1. Preliminary remarks 40

5.2. Identification of key impacts 40

5.2.1. Key impacts 40

5.2.2. Social impacts 41

5.2.3. Impacts on the environment 41

5.3. Notified Bodies 42

5.3.1. Impacts of the “no change” scenario 42

5.3.2. Impacts of option A1 (network of notified bodies) 43

5.3.3. Impacts of the creation of a EU legal framework on accreditation (A3 and A4) 43

5.3.4. Impacts of options A3 (Centralising accreditation at EU level – Creation of a European agency for accreditation) 44

5.3.5. Option A4 (Accreditation performed at national level underpinned by a European coordination infrastructure) 45

5.3.6. Impacts of option A6: Electronic notification system 46

5.4. Market surveillance 46

5.4.1. The no-change scenario 46

5.4.2. Impacts of option B1- enhancing the existing cooperation mechanisms 47

5.4.3. Impacts – More stringent pre-market controls (option B3) 48

5.4.4. Impacts - common framework on market surveillance+ obligations for operators + traceability (option B4) 48

5.4.4.1. Introduce an obligation to carry out border controls 49

5.4.5. Impacts – Traceability and obligations (B5) 49

5.5. Meaning and credibility of the CE marking 50

5.5.1. No change scenario 50

5.5.2. Impacts of Option C.1: Information campaign 51

5.5.3. Impacts of Option C3: Changing the meaning of the CE marking 51

5.5.4. Protection of the CE marking as a collective Community trademark 52

5.6. Inconsistency problem 52

5.6.1. The no-change scenario 52

5.6.2. Creation of a reference document setting out common definitions and procedures 52

6. Comparison of the Options 53

6.1. Notified Bodies 53

6.2. Market Surveillance 54

6.3. CE marking 54

6.4. Inconsistency problem 55

6.5. The choice of the legal instrument 55

6.5.1. Relationship to the existing legal framework 55

6.5.2. The choice of the legal form 56

7. Monitoring and Evaluation 60

ANNEX I The “New Approach” 61

ANNEX II List of New Approach directives 64

ANNEX III Information on Notifie 67

ANNEX IV Involvement of accreditation bodies in the notification process and their relationship with the notifying authorities 72

ANNEX V Evaluation of options for the organisation of accreditation at the EU level 75

COMMISSION STAFF WORKING DOCUMENT

Accompanying document to the Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL SETTING OUT THE REQUIREMENTS FOR ACCREDITATION AND MARKET SURVEILLANCE RELATING TO THE MARKETING OF PRODUCTS IMPACT ASSESSMENT

BACKGROUND

The proposal for a Regulation and for a complementary Decision for the marketing of products comes under item 2006/ENTR/001 of the Commission Legislative and Work Programme 2006. Stakeholders and other Commission Services concerned by the proposal have been closely involved in the preparatory process from an early stage.

In 2002, the Commission carried out an on-line consultation in order to identify elements of the New Approach which could be further improved[1]. The Commission used the results of this consultation for input to the Communication “Enhancing the Implementation of the New Approach Directives”[2] which was adopted in 2003. This Communication contained recommendations to improve the operational efficiency of the Internal Market, and therefore the competitiveness of European industry. The Communication was endorsed by the Council Resolution of 10 November 2003[3] which invited the Commission to come up with appropriate initiatives. At the Conference on the 20th Anniversary of the New Approach, in November 2005, the Commission confirmed its intention to present a proposal on the extension and review of the New Approach.

Between December 2004 and February 2006, 16 working documents covering in detail the recommendations included in the Communication, were been prepared for discussion with Member States’ experts represented in SOGS[4] (Senior Officials’ Group on Standardisation and Conformity Assessment Policy). These documents have also been published on the “New Approach” website of DG Enterprise[5] and were widely distributed to stakeholders. On the basis of the feedback received, a working document outlining the possible content of a proposal was published in May 2006 for public consultation period of 3 months.[6] This document discussed the elements for a horizontal legislative approach to technical harmonisation, and the feedback received[7] showed broad support for the measures envisaged under this initiative.

This document presents an impact assessment of the various policy options available for improving the functioning of the internal market for industrial products. The document has been prepared on the basis of data gathered from two internet consultations, four targeted questionnaires, an SME test panel[8], sector specific studies, individual case studies, literature reviews and ongoing consultations. The various problems with the functioning of the system are firstly identified, then the objectives are defined, the basic policy options are discussed with an impact analysis of each option and finally a comparison of options is made with recommendations for consideration.

Introduction

Harmonisation of legislation plays a key role in realising the Single Market

The realisation of the Single Market is a major driver for competitiveness and economic growth in the EU and hence constitutes a core activity of the European institutions. Since the foundation of the EU, impressive progress has been made in ensuring the free movement of goods throughout the Community. This has been achieved by different means: The jurisprudence of the Court of Justice on Article 28 EC and the mutual recognition principle, directive 98/34 preventing the introduction of new national laws which could constitute a barrier to trade and last but not least the harmonisation of technical regulation at EU level to address common legitimate environment, safety or health concerns.

The harmonisation activity has been a key priority for the Commission since the end of the 1960s which has led to the adoption of some 600 legislative texts for harmonisation covering industrial products. It is estimated that today approximately 80% of industrial production and approximately 74% of intra-EU manufacturing trade is covered by harmonisation legislation.

This process has proved to be the most effective way of eliminating technical barriers to trade, in spite of the lengthy decision making procedures. In the early days of the European Community unanimity in the Council of Ministers was necessary for decisions to be taken; however following the Single European Act in 1986, qualified majority voting was introduced which simplified things. Nevertheless, progress was perceived as being slow and so the Commission looked for other means to complete the internal market.

Inspired by the “Cassis de Dijon” judgement of the European Court of Justice, the Commission proposed a fundamentally revised new approach to harmonisation by reducing the content of legislation to cover only the essential protection requirements which the Court had indicated were the only valid reasons for a national authority to block a product from another Member State.

The “New Approach”

The New Approach is a flexible legislative technique.

Hence, the so called “New Approach” was born on 7 May 1985, which limited legislation to cover only essential health and safety requirements of products. This simplification was a step forward in the legislative provisions which allowed all the technical elements for product specification to be covered in harmonised European standards, not the legislation itself. Thus providing a flexible, technology neutral and non-prescriptive means of regulation. A manufacturer therefore has the flexibility in how to conform to the requirements and to demonstrate compliance. The final step being that the manufacturer applies the CE marking to identify that the product complies with the law.

Parallel to its legislative programme, the Community it also developed a policy to reinforce European standardisation, such that voluntary harmonised European standards could be developed, the conformity to which gives presumption of conformity to the legislation. Figure 1 shows the interaction between the legislation and its requirements, standards and conformity assessment and the CE marking. A full explanation of the “New Approach” system is given in Annex I.

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Figure 1: Schematic of New Approach concept.

Common elements covered in the legislation.

The New Approach is therefore a legislative technique used in the area of free movement of goods, particularly of industrial products. It moved away from the “Old Approach” of prescriptive detailed technical requirements written into the legislation, to providing only the essential public interest requirements to which products must comply. The result is a technology-neutral legal framework.

The New Approach was designed to be fully complementary to the old way of legislating and as such many common elements are covered but in a different way. Common elements include:

- Clear identification of scope;

- Use of common expressions, such as “placing on the market” or “manufacturer”;

- Requirements which products must comply with in order to achieve the objectives of the legislation, expressed in terms of essential requirements or in detailed technical specifications included in the legislation;

- Determination of the technical means and procedures for demonstrating conformity with these requirements;

- Specific requirements for the labelling or marking of products;

- A “free movement clause”, prohibiting any national measure to restrict the free movement of products which comply with the legislation, to ensure the free circulation of products throughout the EU;

- Very general market surveillance/enforcement requirements. These state Member States shall take appropriate measures to ensure that only conforming products are circulating on the market;

- A safeguard mechanism setting out the Community procedure in the case of the adoption of a national measure to restrict circulation.

What are the specificities of the New Approach?

As discussed above, instead of setting out detailed technical requirements in the legislation, New Approach directives limit themselves to defining essential requirements in relation to issues such as health, safety, consumer protection and the protection of the environment. The legislation fixes the level of safety which products must meet but does not pre-determine the technical solutions to achieve this level of safety. The choice of different solutions leading to the same result is therefore open to manufacturers.

Technical specifications, in the form of standards[9], coming under the framework of the New Approach directives, allow products to meet the essential requirements needed and are considered as an ‘easy’ way to meet compliance with the legislation (presumption of conformity). Use of standards guarantees the required level of safety of products, but use of harmonised standards is voluntary and a manufacturer may use any other technical solution which demonstrates that his product meets the essential requirements.

The directives also set out requirements for conformity assessment, which depending upon the product need to be done either by a third party testing, inspection or certification body or by the manufacturer himself. The different types of conformity assessment procedures were been identified by Decision 93/465/EEC and are set out in the form of “modules”. Each directive has chosen the modules which are considered to be appropriate for demonstrating conformity, taking into account the type of risk related to the particular product.

Certain modules require the intervention of third party conformity assessment bodies, known as notified bodies. These bodies are chosen (“designated”) by Member States on the basis of certain minimum criteria (competence, impartiality, integrity, etc) which are set out in the directives. They are then “notified” to the Commission, after which they are authorised to carry out conformity assessment activities according to the procedures set out in the directives.

In addition to this, the Commission has also supported the development at European level of a new evolution at national level: Accreditation. In the past, Member States public authorities approved products prior to them being placed on the market. However, national testing and certification resources were not always sufficient and the national authorities began to use the services of private conformity assessment bodies. In order to ensure that these private bodies were able to provide the correct level of service, they were submitted to the control of a national public authority body: the national accreditation body. This was devised in all Member States as a means to ensure an appropriate level of credibility for test results and product certification or inspection.

Last but not least the New Approach introduced a common marking of conformity, which has become its most visible and well known element. The CE marking is in effect a declaration by the manufacturer that the product conforms to all the essential requirements of the relevant legislation and that it has been subject to the applicable conformity assessment procedures. Since products bearing the CE marking are presumed to be in compliance with the applicable directives and hence benefit from free circulation, the CE marking operates as a “passport” to the whole EU market.

The New Approach is a good example of Better Regulation

Technical harmonisation has, in most cases, demonstrably achieved its objective of contributing to the effective completion the internal market. Today the New Approach is widely recognised as a good example of better regulation because due to its lighter and more flexible legislative technique it has, through the adoption of only 25 directives[10], succeeded in freeing the circulation of vast industrial sectors which would probably have needed several hundreds of directives under the more traditional old approach. Today, New Approach directives cover more than 20 industrial sectors, including machinery, radio/telecoms equipment, toys, medical devices, building materials and even railway transport. The products covered represent a large proportion of products marketed in the EU, with an estimated value of more than €1500 billion per year.

The asset of the New Approach is its flexibility. Keeping the directives free from detailed specifications has facilitated a flexible legal framework, which is technology-neutral and serves as a catalyst for innovation and growth. It has allowed keeping legislation slim and avoids the need for frequent adaptations to technical progress, an important factor in a business environment which is characterised by fast developing technologies. Manufacturers are given the freedom to choose any appropriate technical and innovative solution that meets the required safety level without being pressed in legal corset running behind technology evolutions. Leaving the technical details to the standardisers ensures standards can benefit from flexibility and state-of-the-art technical expertise to keep pace with technical progress, in a way which it is impossible to do in legislation. Moreover, extensive stakeholder involvement in the writing of standards makes the New Approach an early ‘co-regulatory’ model for the Commission's wider ‘better regulation’ drive.

It is for these advantages that enhanced recourse to the techniques of the New Approach is part of the Commission’s strategy to simplify the regulatory environment. The New Approach has already proved to work successfully over a broad range of industrial sectors, including sensitive products such as medical devices and machinery. There are no reasons why it should not be successfully implemented in other areas, like environmental or worker protection legislation.

Harmonisation legislation and the New Approach can still be improved

While technical harmonisation, and in particular the New Approach directives, have successfully contributed to eliminating some barriers to trade, there are still weaknesses in the legislative framework, which prevent consumers and enterprises from fully exploiting the benefits of the Internal Market.

The existing rules are often criticised as burdensome or for being uncertain or inconsistent. Also within the 25 “New Approach” directives confusion has arisen due to inconsistencies in the requirements for these various elements making it increasingly difficult for all market players and national authorities to comply. There are also problems with uniform enforcement of the legislation in Member States, the image and value of CE marking and stakeholders express an increasing lack of confidence in conformity assessment bodies.

This has resulted in a lack of credibility and confidence in the system which then leads to suspicion. As a result there have been a multiplication of demands for proof of safety or respect of the protection requirements, and hence to over-regulation and administrative burden.

The existing legal system thus needs to be revisited and strengthened in order to reinstall the confidence of stakeholders in internal market legislation for goods and ensure that it fully delivers the desired results.

WHAT ARE THE PROBLEMS TO TACKLE?

Experience with the implementation of Community legislation in the area of free movement of goods has highlighted certain weaknesses and shown that the effectiveness of the system can still be improved. In 2002, the Commission carried out a public consultation inviting stakeholders to comment on the functioning of the New Approach directives. On the basis of the feedback received, the Commission adopted a Communication in March 2003 entitled “Enhancing the implementation of the New Approach directives”, which sets out the main elements on which a review should concentrate:

1. Lack of confidence in notified bodies and in the whole notification process;

2. Weaknesses in market surveillance and efficient and consistent enforcement of the directives;

3. Inconsistencies between different directives;

4. Misunderstanding of the value and role of CE marking.

Most of these issues, in particular the inconsistency of the legal framework and the weaknesses in its enforcement, are not specific to the New Approach directives and also concern other harmonisation instruments. Consequently all these issues have been examined within a broader perspective going beyond simply the New Approach areas.

Performance of notified bodies and weaknesses in the notification process

Certain conformity assessment procedures require that a product is tested, inspected or certified by an independent third party, a “notified body”, before it is placed on the market. Notified bodies hence play an important role within the New Approach system to guarantee the safety of products on the market. Therefore, it is crucial to ensure that they have the necessary competence and capacity to carry out their tasks correctly. Furthermore, confidence in their competence is crucial to ensure EU wide recognition of certificates issued by these bodies.

Most notified bodies do a professional and complete job. However, sometimes certain notified bodies apply practices which can undermine the confidence of this type of work in the whole sector.

Uneven level of conformity assessment services provided by notified bodies

Feedback received from targeted surveys and studies[11] indicates that notified bodies often take different approaches in assessing the conformity of products with the legislation. Manufacturers have reported that the interpretation of safety requirements as well as procedural requirements vary significantly from body to body. Manufacturers can therefore shop around for the lowest price which is not always linked to the consistency of service.

Notified bodies provide their services as a commercial activity and are in competition with each other. This has, in principle, positive effects for their customers, i.e. the manufacturers. Manufacturers are free to choose which body they would like to employ on the basis of the one offering the best service at the most competitive price. However, there is also a negative side; as notified bodies are under continuous pressure to offer competitive services, some of them may resort to unfair practices in order to attract or to keep their customers.

Evidence of unfair competition is obviously difficult to obtain, and information relies mainly on feedback and complaints received from industry and other notified bodies. 55% of respondents replying to the questionnaire addressed to notified bodies have experienced cases of unfair competition for different reasons:

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The most frequently quoted reason for unfair competition is the less rigorous implementation of procedures by some notified bodies, see figure 2. For example, the elimination or reduction of on site controls[12] or relaxed requirements for frequency of periodic audits/inspections can reduce the costs of assessments quite considerably. This enables a notified body to issue certificates at significantly lower prices. Lower prices are not per se an indicator of lower quality of the conformity assessment undertaken, however, information received from stakeholders indicates that, in some case, prices for assessment of similar products vary so much that it is difficult to believe that the assessments have been carried out correctly. While a variation in price of up to 15% is usually considered as a standard competition situation, notified bodies reported cases of between 30% and 75% lower prices, whereas SMEs report a an average variation of 48%.[13] Where a normal price for conformity assessment was approximately €2500-3000, the same services were offered by other bodies at €500. Hence there are strong indications that “dumping rates” or unrealistically low prices for services offered are frequently linked to a less stringent approach applied during the assessment. This could apply to fewer inspections or controls, cases of lax or incomplete testing, acceptance of test results from the manufacturer himself or acceptance of test results from another third party which itself does not adequately apply conformity assessment procedures.

Information from the responses to the questionnaire also inform us that notified bodies frequently lose projects or clients due to such unfair practices. They are, therefore, put under market pressure to cut their costs. This results in a downward spiral in terms of both their turnover and their quality of service. Apart from the obvious economic loss, this situation has an overarching effect of damaging the general image of notified bodies and their work, and risks undermining the overall quality of conformity assessment services.[14]

Divergences in the application of conformity assessment by the notified bodies also have a distorting influence on competition within the manufacturing industry. This is to some extent due to differences in the fees, but much more important is the fact that different notified bodies interpret the applicable material and procedural requirements in vastly different ways. As already indicated, a less rigorous approach to the certification process can significantly reduce compliance costs for manufacturers giving them a competitive advantage vis-à-vis those manufacturers who undertake correct conformity assessment work.

To date, the negative impact of such procedures has been limited to economic effects for notified bodies and manufacturers alike and has not yet reached a level where the health and safety of consumers, workers or end-users is routinely endangered, although there have been cases. For example, there have been safeguard clause procedures related to products certified by a notified body in almost all industrial sectors, see Annex II table 3. In some cases this has led to accidents with products which have been certified by a notified body but which were nevertheless not in compliance with the applicable requirements.[15]

Problems experienced with Notified Bodies are also relevant in an environmental context, as a few directives address environmental aspects and foresee the intervention of notified bodies in the conformity assessment process. This mainly concerns the legislation related to the energy efficiency of energy using products and the maritime transport sector. The intervention of notified bodies in conformity assessment procedures under these directives constitutes an important element in ensuring that the products do not constitute a danger for the environment, in the same was as in New Approach directives for health and safety. Consequently, the downgrading of quality in the service delivered by notified bodies can seriously hamper the effective functioning of this control mechanism and result in products on the market which are harmful to the environment.

Lack of transparency and different approaches in the competence assessment and monitoring of notified bodies

Industry, public authorities and notified bodies themselves have expressed doubts that all notified bodies actually possess the required competence to carry out the tasks for which they are notified.[16] 60% of participants in the public consultation considered that notified bodies are not sufficiently monitored. For example, there are bodies which have been notified to the Commission, but which are not carrying out any conformity assessment activities for which they have been notified. It is highly questionable whether, after a certain period of inactivity, a notified body still has the necessary competence to carry out the tasks for which it has been notified. In some industrial sectors this has led to a proliferation of notified bodies, which does not correspond to the size of the market.[17]. Figure 3 shows the responses to the question asking if competence of notified bodies is the same in all Member States. Clearly there is a perception that it is not, which highlights a weakness in the system which undermines its credibility.

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Under the current legislation the assessment and monitoring of notified bodies is the responsibility of the Member States. Figure 4 shows the assessment chain, whereby it is the Member State that assesses Notified Bodies who in turn assess products/manufacturing sites on behalf of manufacturers. EU legislation has fixed the criteria for notification, but the Commission and other Member States receive no information on the details of the assessment process. The criteria vary and are not up-to date to developments on the market place in all directives (i.e. the respect of IPR rights or the sub-contracting of certain activities to bodies outside the EU or consultancy services provided by the bodies).[18]

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National authorities take divergent approaches in the interpretation and application of the criteria laid down in the directives. Most Member States use accreditation for evaluating the competence of a notified body and consider it as a useful qualification element[19] for granting notification. However, accreditation is not a pre-condition for notification in all Member States. Furthermore, since accreditation has been regulated up till now at national level, different approaches and differing systems exist throughout the Community causing an uneven level of rigour throughout Member States[20]. There are also different arrangements in the relationship between accreditation and the notification process: in some Member States the accreditation body is also the notifying authority for some New Approach directives (in one case even for all of them) or it takes part in a committee or a team deciding on notifications, whilst in other Member States no formal relationship exists between the notifying authority and the accreditation body.[21] In some Member States, especially where regional authorities take the first step in decisions leading to the notification, the notified bodies complained about a lack of co-ordination of those regional authorities and consequently differences in approach towards the bodies to be notified.

Divergences also exist in the ex-post evaluation (monitoring) of the notified bodies which is not carried out systematically or not with the same frequency in all Member States.

Due to different designation, accreditation and monitoring policies, notified bodies are operating under uneven conditions inside the EU. Bodies evaluated to stricter approaches bear additional costs in relation to their competitors, which are subject to less stringent criteria. For example, the fact that accreditation is a precondition for notification in some Member States, but not in others, or that in some countries the re-assessment of accreditation can be done at a 4-year interval, whilst in others an annual assessment is required. Hence, notified bodies are submitted to different level of rigour which undermines the aim of mutual recognition and equal conditions within the Internal Market.

Unnecessary burdensome requirements in the notification procedure

Until recently the notification procedure was a rather burdensome and time-consuming process, because notifications had to be sent from the notifying Member State via its Permanent Representation to the Commission and, at the same time, to the other Member States using a complicated bureaucratic paper process. This procedure has now been significantly simplified and accelerated due to the introduction of "NANDO-Input"[22], a web-based application designed for the direct notification of conformity assessment bodies, which has been operational since April 2006. Using the NANDO-Input tool, the act of notification now takes place electronically and enables the bodies to be notified much more quickly than before using the old paper-based system.

However, the current legal framework obliges the Commission to publish a list of notified bodies in the Official Journal of the European Communities, for information purposes. The lists were typically published once per year and, therefore, there could be a significant time period between the notification of a body and the publication of a new list. Almost as soon as the list was published it became out of date. Publication in the Official Journal was once the only way to make information available to the public, but with introduction of the internet it is time to modernise. Publication itself is not a condition for becoming an official notified body, although in terms of transparency it is important for manufacturers, market surveillance authorities and notified bodies themselves that this information is made publicly available.

Use of NANDO also allows the Commission to publish details of notified bodies on its web site, which is a much easier and quicker way to provide information which is always current and up to date. The list in the Official Journal has, therefore, become obsolete, however the current legal framework still obliges this publication; replacing the requirement for paper publication with electronic publication would reduce bureaucracy and provide a better service to the public.

When asked whether electronic publication of the list of notified bodies on the Commission website would be an improvement, 94% of notified bodies replying to the questionnaire indicated that, yes, they thought electronic notification was an improvement. Figure 4 shows the breakdown in reasoning.

Current measures taken to tackle the problem

There have been different attempts to tackle the problems using non-legislative measures. One example is exchange of information and co-ordination in sector specific notified body groups. There are 17 different groups, working mainly via internet, covering sectors where there is new approach legislation, for example the pressure group which covers both the pressure equipment directive and the simple pressure vessels directive. Notified bodies work together in these groups to co-ordinate information and discuss issues of implementation. However, these groups are purely voluntary and there is no obligation to participate, consequently not all notified bodies do.

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The evaluation of notified bodies and designation policy has been regularly discussed with national experts in SOGS[23]. A consensus document has been established laying out the general principles of accreditation and sector-related guidance documents have further specified the requirements for notification.

Member States co-ordinate their accreditation activities through the framework created by a pan-European organisation known as EA, the European co-operation for Accreditation[24]. EA has been operational since 1997 and is a network of nationally recognised accreditation bodies based in Europe. Its main objectives are to ensure transparency of operations (including assessments) and results of its members, to support and promote mutual recognition and acceptance of accredited conformity assessment services and results, and to manage a peer evaluation system intended to provide mutual confidence in the competence of its members.

The peer evaluation system managed by EA is currently the only tool at European level which allows a comparison of the performance of accreditation bodies. The EA is widely recognised as being beneficial in the establishment of common working methodologies for the evaluation of conformity assessment bodies.

However, the position and influence of EA is limited by its legal status and its recognition by public authorities varies from Member State to Member State, usually depending on the degree of co-operation between the accreditation body and the public authorities in charge of notification (see also Annex IV). The development of policies within EA (e.g. cross frontier policy on accreditation) is also limited by the fact that its members, i.e. the national accreditation bodies, are bound by different national legislation in the field of accreditation. The implementation of certain rules or decisions taken within EA can be supported by national laws and regulations in some Member States, whilst in others this is not the case and problems may be experienced. One example is the absence of reaction from some Member States in cases of negative EA evaluations.

Due to the existing lack of common legal basis and of regulation of accreditation at EU level, a harmonised accreditation policy cannot be completely and successfully developed and integrated into the European model. The only Community wide recognition is via a Memorandum of Understanding between the Commission and EA, but this is not sufficient to overcome the current difficulties.

Weaknesses and difficulties in the enforcement of the directives

Legislation will only achieve its objectives if it is effectively enforced.

It is generally noted that the enforcement of EU product legislation is unsatisfactory and a considerable number of non-compliant (and potentially dangerous) products reach the market. The share of non-compliant products can only be estimated and the situation differs very much from sector to sector and from Member State to Member State. Nevertheless, the available information[25] indicates that a significant proportion of the products on the market do not comply with the legal requirements. As many as In 2004, in Germany as many as 33% industrial products were found not to be in conformity with the legislation and the market surveillance authority were unable to identify the country of origin of 35% of these products.[26] Table 1 summarises responses from various sources.

Table1: Indications from stakeholders on the share of non-compliant products on the market.

Source | Share of non-complaint products on the market |

SME Test panel | The majority of SMEs could not provide figures. Where figures where given, they differed considerably from sector to sector as well as between Member States. The figures ranged from 4%-51%, the average being 24%. |

Enterprise questionnaire | Most respondents could not provide figures but indicated that the problem was important. However, below is an overview of the estimates provided: Electro-technical sector: 10-30% (up to 50 % in the luminaires sector) Mechanical sector: 5-7 % Medical devices: 10-30% Construction products: 10-30% |

Market surveillance authorities | Electro-technical 10-70 % Medical Devices 2-20 %, Construction products 2-30 % Recreational Craft 1 % |

Deficiencies in the current organisation of market surveillance

Currently, market surveillance does not operate effectively throughout the Community and 96% of respondents to the public consultation[27] considered that market surveillance is insufficiently rigorous.

Market surveillance is organised differently in Member States and can also vary from sector to sector, as demonstrated in a recent survey[28] of national market surveillance authorities. 94% of respondents felt that levels of market surveillance level differ significantly between Member States. The following areas were identified having the biggest differences: Number, frequency and efficiency of checks performed (82% of respondents), resources allocated (75%), degree of detail of checks (63%). In addition, 66% of respondents responded that the level of sanctions differ throughout the Community.

Member States were asked about the effectiveness of existing market surveillance systems and whether reinforcing certain elements would have an improvement on the situation. Figure 6 shows that in all areas, harmonisation of procedures, common requirements, enhanced controls, stronger traceability, co-ordinated actions, enhanced co-operation and better sanctions there is significant room for improvement.

These differences in national organisation of market surveillance cause problems when viewed in the framework of the European single market which no longer has internal borders where controls at national borders have practically disappeared. For this reason it can no longer be considered that a single Member State controls all products entering its market. To ensure that only compliant products circulate on the market, every Member State depends on the market surveillance of its neighbours. Consequently, weaknesses in the organisation of market surveillance in one single Member State can seriously undermine the efforts taken by other Member States to keep non-compliant from the market; this creates a weak link in the chain.

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This interdependence is reinforced by the fact that the competence of market surveillance authorities is limited to the national territory. Where action is needed beyond the border, authorities must rely on their colleagues in the other Member State. However, as there is not a sufficiently broad legal basis, cross-border co-operation in the EU does not currently work effectively. The results of the questionnaire show that only 34 % of respondents indicated that they have ever taken any action due to information provided by another Member State. An important step to improve cross-border cooperation has been achieved with the implementation of the General Product Safety Directive. However, outside the scope of this directive co-operation activities between enforcement authorities only take place in some sectors and between some Member States not all, for example toys, machinery, electrical equipment, personal protective equipment, pressure equipment, and only on a voluntary basis. This hampers the efficiency of market surveillance activities.

We should also remember that imports from third countries are growing faster than domestic production. The EU is faced with an increasing number of non-conforming products arriving from third countries. For example, in the electro-technical sector, the share of imported products in the total of non-compliant products detected by market surveillance authorities is between 70% and 99%. A recent survey on the safety of imported toys in new Member States[29] indicated that 55% of the sample of imported products were noncompliant, and of those 12% had no indication of origin. The absence of internal border controls reinforces the importance of controls at external borders. External borders are the best place to detect non-conforming products from third countries as they are the entry point for imported goods. However, resources are not always sufficient and have not kept pace with the increase in imports; therefore, external borders are not always sufficiently controlled. The differences in effectiveness of border controls between entry points once again creates a problem for the whole Community. Experience has shown that where a shipment of non-compliant products is detected and destroyed at one entry point, importers will often look for another entry point into the Community which has less stringent controls for import of his product.

Insufficient controls by actors in the distribution chain

Often, distributors do not sufficiently check the conformity of the products which they are supplying and rely on the fact that this, is in principle, the task of the manufacturer. This is a particular problem in relation to imports from third countries. Manufacturers outside the EU are often less aware of the European legal requirements than European manufacturers. Furthermore, products manufactured outside the EU may not necessarily be intended for the European market and hence need not comply with European regulations. Therefore, it cannot be assumed that conformity to European legislation has already been guaranteed during the manufacturing process. Consequently importers must ensure that the manufacturer has actually complied with the European legislation. Importers and distributors are not sufficiently aware of their obligations. Reasons for this include the complexity of the legal situation and the fact that New Approach directives only address the manufacturer or the authorised representative. There are also unscrupulous operators who benefit from the current weaknesses in market surveillance by introducing cheap non-compliant products on the market.

Difficulties to trace products and economic operators

Globalisation makes it difficult to determine how and by whom a product is manufactured or who has placed it on the market. For market surveillance to be efficient, collaboration with manufacturers is essential in order to rectify compliance, prevent the placing on the market, and, as a last resort, to withdraw non-compliant products. In practice market surveillance authorities often experience difficulties in identifying the person who has actually manufactured and/or supplied the products, in particular when the manufacturer is located outside the EU and has not appointed an authorised representative. They often cannot find a contact person who could provide them with the necessary information to evaluate the conformity of the product and who could help them to ensure that dangerous products are withdrawn from the market[30].

Currently traceability is not ensured throughout the whole supply distribution chain. The directives require only that the manufacturer is identified on the product, but there are currently no legal means to identify the other operators (such as importers and distributors) in the distribution chain. These operators are, however, important contact and information points for market surveillance authorities, in particular when the manufacturer is not established inside the EU.

Inefficient safeguard clause mechanism

The safeguard clause mechanism is not operating efficiently: the number of safeguard clause notifications received by the Commission in recent years is steadily increasing, see Annex II Table 3. The Commission procedure to establish whether a national measure is justified is lengthy.

There are various reasons for the current inefficiency of the procedure. Firstly the Commission does not have the necessary technical competence to evaluate the conformity of a product and must often use external expertise. Secondly, in a majority of cases notifications do not contain sufficient information to allow an immediate assessment of the case. In addition, the manufacturer has not always been contacted by the notifying Member State and has not had the possibility to submit further documentation. Gathering this information leads to considerable delays in the procedure.[31] In very complex cases it can take more than a year. Member States also have a tendency to notify every restrictive measure without a prior assessment as to whether the product really poses a risk to health and safety. This has lead to an increase of safeguard clauses making it more and more difficult for the Commission to manage these cases within a reasonable time period.

Effects of the problem

The inefficiency of the current enforcement mechanisms creates an unfair competitive advantage for operators not adhering to the rules, especially in price-sensitive areas. They can make significant savings on compliance costs by not doing all that is necessary and can consequently offer their products at lower prices than their competitors who respect the law.[32] In sectors where there is tough competition from imported low-price products European industry is disadvantaged. The situation “punishes” the law-abiding manufacturer, as compliance becomes a “competitive disadvantage”. It might even activate a downward spiral, since operators could be tempted to follow the negative example of their illegally behaving competitors.

This problem can ultimately undermine the objectives of Community legislation, no matter whether it aims at protecting the health and safety of citizens or the environment[33]. Although there is currently no general safety risk, non-compliant products coming to the market can endanger the health and safety of consumers, workers or users or cause damage to the environment. The number of consumer goods with serious non-compliances notified to the Commission through the RAPEX database[34] is increasing.

The situation undermines confidence in the CE marking and the credibility of EU legislation as an effective means to protect citizens or the environment.

Current measures taken to tackle the problem

Being the responsibility (and a prerogative) of Member States, enforcement has, until recently, only had an ancillary role in EU harmonisation legislation. The existing harmonisation legislation does not in general address market surveillance. Most instruments contain a very general clause obliging Member States to ensure that only products in compliance with the requirements of the directive are placed on the market. In the New Approach directives the safeguard clause procedure obliges national authorities to notify the Commission whenever they take a measure restricting the free circulation of a potentially dangerous product. The Commission has to issue an opinion whether the measure is justified or not.

In respect of consumer goods these general provisions in the sectoral directives are completed by the provisions of the General Product Safety Directive (2001/95/EC) (GPSD). The GPSD has created a horizontal framework ensuring the safety of consumer products. To this end it sets out a number of post-market obligations for manufacturers, importers and distributors as well as certain obligations for Member States as regards the organisation of market surveillance. Apart from that it established a co-operation network of competent authorities, which inter alia operates a European rapid alert system for dangerous non-food products system for exchange of information and rapid intervention (RAPEX). It ensures information about dangerous products identified in the Member States is quickly circulated between the Member States and the Commission. It applies in the harmonised sectors like toys, cosmetics, etc, in so far as the relevant harmonisation directives have themselves not provided for specific rules.

The GPSD and in particular the RAPEX system have brought considerable progress of cooperation in the area of consumer goods. Since the creation of RAPEX the number of notifications received has increased significantly allowing Member States to take rapid action on dangerous consumer products throughout the Community.

However, the mechanisms established by the GPSD are not sufficient to ensure a coherent level of enforcement of Community harmonisation legislation throughout the EU. While harmonisation legislation covers both consumer and non-consumer products, the GPSD focuses on consumer protection. Therefore, its mechanisms are not applicable to whole range of products covered by Community harmonisation legislation. Hence RAPEX does not include information on dangerous industrial products like machinery or lifts, which present a risk for workers or users. Furthermore only health and safety aspects are covered by this system, environmental risks are not taken into consideration.

While the GPSD contains an obligation for Member States to take part in the cooperation mechanism, the obligations it imposes on Member States to organise and perform market surveillance are rather general. For this reason differences in the various Member States still continue to persist, leading to a different level of protection and enforcement within the EU.

Misunderstanding of CE marking and lack of credibility

Misunderstanding of the CE marking

By affixing the CE marking to the product the manufacturer declares that the product is in conformity with all applicable directives. A product bearing CE marking, benefits from free circulation inside the Community.

The CE marking is well known in the marketplace but its meaning is often unclear. Studies have demonstrated that consumers in particular have a poor understanding of the role of CE marking.[35] It is often perceived as an indication of origin or another incorrect perception is that CE marked products have been tested and approved by some kind of authority.[36] Furthermore, consumers do not know which products should bear the CE marking and which should not and they do not seek it when making a purchasing decision.

There are different reasons for the confusion on the meaning of the CE marking:

The significance of CE marking is complicated and not clearly evident for consumers who are unfamiliar with the whole system supporting the affixing of the marking. Even amongst professionals and legislators the meaning is not always clear. The marking was introduced into European legislation in order to provide information for national authorities on the compliance of the product to guarantee its free movement within the Community. It was not designed to provide information to consumers. However, as it is increasingly used more and more on consumer products, its visibility for the public has increased giving rise to confused and erroneous interpretations as to its meaning.

Another reason behind this confusion is that products often bear a number of other legal and voluntary marks. In most cases the significance of these markings is equally unknown to consumers. Furthermore a number of these markings have a similar meaning, which makes the distinction of the CE marking even more difficult. Consumers are confused by the multitude of different markings and often do not use the informative value of the CE marking as a basis for their choice.

Consumers who do not know the value of CE marking do not verify whether products actually bear the CE marking or not and hence may buy non-compliant and potentially dangerous products. Those who have an incorrect perception of the CE marking might be misled in their product choice. They may purchase a product which they wrongfully presume to be manufactured in Europe or tested and approved by an independent third party or authority.

The limited knowledge amongst professionals in the distribution chain also has negative impacts on the safety of products offered to end-users and consumers.

Lack of credibility of the CE marking

CE marking is often criticised for its lack of credibility. Although CE marking is a visible declaration by the manufacturer that the product is in conformity with the requirements of all applicable legislation, sometimes products bearing the CE marking are not in compliance with the legislation. (see chapter 2.2). The results of the public consultation showed that the CE marking has a positive image in international trade, whilst internal confidence in the CE marking is significantly lower.

CE marking represents the whole system of product conformity under the New Approach, and therefore weaknesses in the functioning of the system undermine the confidence in the CE marking. The credibility of the CE marking is thus intrinsically linked to the lack of effective market surveillance as product compliance with legislation is not effectively policed, and as a result CE marking often appears on products which are not in compliance which undermines the credibility of the whole legislation. Lack of confidence in the CE marking also has negative repercussions on industry. Manufacturers need to have enhanced recourse to additional marking/testing to ensure the confidence of the market place in their products.

Finally, the CE marking is not protected by intellectual property rights, meaning that prosecution of its misuse must be based upon some other grounds. Market surveillance authorities base their actions regarding corrective measures, such as withdrawal of products etc. on the breach of product safety legislation. There is currently no effective means to proceed against the misuse of the CE marking as such, i.e. to take action based on the CE marking as a right in itself. In other words, when the CE marking is misused for e.g. commercial purposes on the web or in leaflets without being linked to a specific product, there is no case of non-compliance which could be prosecuted and neither Member States nor the Commission can take any action against this misuse. This commercial use further contributes to confusion amongst consumers.

Current measures taken to tackle the problems

The existing legal texts do not give a definition or explain the meaning of the CE marking. The meaning of the CE marking is explained in great detail in the Blue Guide.[37] However, the Blue Guide does not reach the broader public, although some Member States (e.g. Sweden[38], Denmark) have organised information campaigns and in 1995 an EU wide information campaign was carried out through the European Info Centre network.

Inconsistencies and legal uncertainty in the current regulatory framework

What is the problem?

The current legal framework contains a number of inconsistencies and legal uncertainties which cause problems in the interpretation and implementation of the directives. Products are very often subject to several legal instruments, which treat common elements, such as definitions or the procedures for demonstrating conformity, differently. This leads to incompatibilities, difficulties in practical application, legal uncertainty and unnecessary duplications.

Over the years the legislation applying to products has become more and more complex and voluminous, and the requirements to be considered in the production process are spread over a multitude of different legal instruments: This can be illustrated by the example of a manufacturer of an electrical product. Electrical products are (usually) covered by the Low Voltage Directive[39]. As his product will produce electromagnetic fields, he will also have to respect the requirements of the directive on electro magnetic compatibility[40]. The product must also comply with the environmental requirements set out in the “ROHS”[41] and “WEEE”[42] directives, and in addition energy labelling provisions[43] may also apply to the product. As you can see in this example the requirements for even a simple product can be complicated, and inconsistencies in terminology, requirements and procedures can prove very difficult and burdensome for manufactures to deal with to ensure legal compliance.

Problems are often experienced with simple expressions used in the legislation, such as “manufacturer” or “placing on the market”[44]. Numerous pieces of legislation use these terms without defining them, others contain definitions, but these definitions differ from one legal instrument to the other. The current discussions about the interpretation of “placing on the market” in the context of the Restrictions of Hazardous Substances (ROHS) or the recent phthalates directive[45] illustrate the importance of this issue. Moreover there have been evolutions in the marketplace and the economic reality has become more complex. The existing definitions and concepts do not always take account of these developments. Sometimes definitions or are not sufficiently precise and leave room for diverging interpretations.

Another issue to be tackled in this context is the discrepancy of conformity assessment procedures. For the New Approach directives, decision 93/465/EEC contains 8 different “modules” (conformity assessment procedures) which can be used for demonstrating compliance with the legal requirements. The individual directives have not always stuck to the text of the decision, and some have slightly modified these standard procedures by changing details or the inclusion of additional elements. Furthermore the directives do not all use the same modules or same combination of modules. A product may be covered by several different directives and therefore a manufacturer may have to apply several different procedures to demonstrate that his product is in compliance with the legislation.[46] This is confusing, burdensome and can be expensive for manufacturers. Differences also exist regarding the information which has to be contained in the declaration of conformity, adding to the confusion.

Other issues are also unclear in the legal texts, for example the procedure for the objection against a harmonised standard. The standard article used in the directives establishes a certain procedure which may lead to the “withdrawal” of the harmonised standard; however it is unclear as to whether this procedure also applies to standards which have not yet been published in the Official Journal, since the legal text only refers to a withdrawal but not to the non-publication.

What are the effects of the problem?

Legal uncertainty and inconsistencies negatively affect industry. As discussed above, the legal situation for enterprises is rather complex. Manufacturers have to ensure compliance not only with one piece of legislation, but often with a variety of legal instruments. Due to different wording and concepts it gets more and more difficult for companies to understand their legal obligations. They are increasingly forced to seek legal advice to help them to comply with the law.

In addition, these inconsistencies and legal uncertainties also make it difficult and more complicated for national authorities to properly implement and enforce the law. This leads to different interpretations by Member States which jeopardises the free movement of goods in the Community.

Incompatible conformity assessment procedures for one and the same product increase compliance and certification costs. In some cases manufactures are forced to go to two different notified bodies to have their products certified under the different directives. Even when they find a notified body which is notified under both directives, they may incur additional costs as the procedures may be different and they have to pay for two different certificates.

Current measures taken to tackle the problem

In various areas the Commission has issued guidance documents with the objective of interpreting the legal texts, for example the Blue Guide explains in detail the concept of placing on the market in addition to other terms. These explanations are completed by sector specific guidance documents, nevertheless these guidance documents do not provide solutions for every case and as they are not legal documents and therefore are non-binding there is no obligation for authorities or notified bodies to follow them.

Does the EU have the right to act?

Article 95 EC provides the legal basis for measures having as their objective the functioning of the internal market.

Subsidiarity test: Inconsistencies and weaknesses in the existing legislation can only be eliminated by Community legal action. As regards market surveillance and accreditation, it has become evident that measures taken at national level are not sufficient to solve the existing problems. The measures envisaged to tackle the problems will also be examined in the light of ensuring that intervention at EU level does not go beyond what is strictly necessary to achieve the objectives.

OBJECTIVES

General objectives

A functioning Internal Market is fundamental for fostering competitiveness, growth, economic and social progress within the EU. Harmonising the conditions for the marketing of products at EU level has played and will continue to play an essential role for realising the internal market for goods. To ensure that the internal market in goods fully operates to the benefit of all groups of society, two conditions must be met: First, harmonisation legislation must guarantee a high level of protection of the public interests at stake and second the legal framework must create favourable conditions to foster innovation and the competitiveness of European businesses.

This initiative conforms to the general objectives as set out in the Treaties[47] and in the Community Lisbon programme by tackling the problems identified in Chapter 2. To this end economic operators should be provided with a clear and consistent legal framework which ensures better overall coherence of EU legislation and thereby simplifies its implementation. At the same time the deficiencies in market surveillance and in the monitoring of notified bodies must be remedied in order to guarantee a high level of protection of public interests and a level playing field amongst economic operators.

In line with the Commission strategy for simplification of the regulatory environment[48], this initiative further aims to encourage use of the legislative concepts of the New Approach, since it is a proven example of Better Regulation. Filling the gaps and simplifying its implementation will reinforce its capacity to ensure a high level of protection and the free movement of goods throughout the EU within a flexible and innovation-friendly legal framework.

These general objectives shall be achieved by realising the following more specific and operational objectives:

Specific Objectives

Notified bodies and notification procedure

It is clear that notified bodies must deliver coherent and high quality conformity assessment services, regardless of where they are physically located in Europe. The rules relating to the operation of notified bodies must ensure equal conditions and avoid unfair competition which undermines the quality of conformity assessments.

E ffective and efficient enforcement of the legislation

The objective is to increase the effectiveness of enforcement of legislation and to reduce the number of non-compliant products circulating on the market in order to guarantee that all market players compete under equal conditions as well guaranteeing a high level of protection for the public.

The control of the market must be reinforced; Member States must have efficient, well functioning market surveillance systems in place and the necessary tools to allow to work effectively across national borders. To this end, co-operation and co-ordination between national authorities must be strengthened and systems must be in place to ensure product traceability throughout the whole Community market.

The roles and obligations of all operators intervening in the supply and distribution chain must also be clarified.

A clear meaning and enhanced credibility for CE marking

The meaning of the CE marking should give a clear message to all, not only to manufacturers, experts or market surveillance authorities but also to consumers, importers and distributors. Furthermore the credibility of the CE marking needs to be reinforced.

POLICY OPTIONS

Basic options

This chapter identifies and examines different ways to tackle the problems outlined in chapter 2 and to achieve the objectives defined in chapter 3.

There are three different options for consideration:

5. The first option (“the baseline-scenario”) consists of keeping the current situation unchanged;

6. The second option is to take non-regulatory measures which do not necessitate a change in existing legislation or the introduction of new legislation. There are however two limitations to the potential scope of this option:

7. Problems originating in the existing legal provisions can only be eliminated by a change in that legislation. Where the procedures are confusing, not efficient, inadequate or too burdensome, as is the case for the definitions, the safeguard clause procedures, certain conformity assessment procedures or the notification procedure, the legal texts need to be changed. Therefore, legal uncertainty created by the existing provisions cannot be addressed by non-regulatory measures. Guidance documents may serve as temporary instruments to overcome difficulties and differences in the interpretation and application but they cannot constitute long-term solutions to fill legal gaps or remedy deficiencies in legal drafting. Option 2 is therefore excluded for the problems outlined under section 2.4.

8. The Commission has already made extensive use of non-regulatory instruments, such as guidance papers, etc. While such instruments have been useful to some extent, they have so far been insufficient to effectively address the problems related to the uneven level of enforcement and to the evaluation and monitoring of notified bodies.

9. The third option comprises measures requiring the intervention of the Community legislator.

In the following sections these basic options are further developed into specific (regulatory and non-regulatory) policy options which could provide solutions for each problem area identified in Chapter 2. A summary table of the options is given at the end of the section. The effectiveness and efficiency of these measures is discussed resulting in a short list of the most promising options.

Options related to notified bodies

Option A1: Creating a network of notified bodies and a horizontal group of notified bodies

To improve the co-ordination of conformity assessment activities in the different directives all notified bodies could be interlinked through a formal network. The presidents of the sectoral notified body groups could also be grouped into a horizontal co-ordination group under the chairmanship of the Commission, to address horizontal issues to ensure coherence and a consistently high quality of conformity assessment activities across all directives.[49] The advantages of doing this are flexibility of approach, low cost and minimal resourcing needed for its implementation. There is, however, one important impediment to the effectiveness of this option. Participation in the notified body groups is, at present, not compulsory as a legal requirement, participation is purely voluntary. The idea would be to oblige participation of all notified bodies in their relative sector group (even in a ‘virtual’ way using web-based applications, to reduce costs for SMEs). For this reason, this option standing alone may not be sufficient to overcome the current problems.

Option A2: Regulating the activities of notified bodies

The current system of self-regulation could be replaced by a regulatory framework covering the activities of notified bodies, which would elaborate in more detail the tasks to be carried out in the context of the different conformity assessment procedures. On the one hand a legal framework would set clear rules thereby ensuring a more consistent approach to conformity assessment and it would make recourse to unfair practices more difficult. On the other hand, there are substantial arguments against this option. To achieve a discernable degree of consistency, the legal texts would need to give explicit technical details. Fixing technical details in the legislation would deprive the conformity assessment policy under the New Approach from its most important asset, its flexibility. The system would become rigid making application of flexible solutions adapted to specific situations, for example, small series production, SMEs, innovative products, etc, impossible or very difficult. Therefore, this option would result in more disadvantages than benefits and should be excluded from further consideration.

Option A3: Centralising the competence assessment and monitoring of notified bodies at EU level (Commission or creation of a specific agency.

One way of ensuring a coherent and transparent assessment and monitoring of notified bodies would be to centralise such activities at Community. In this scenario several sub-options could be envisaged:

10. competence assessment and monitoring carried out by the Commission itself;

11. creation of a specialised Community agency.

Option a) can be immediately excluded; the assessment of technical competence of notified bodies requires very specific knowledge and in depth expertise in technically complex areas, which does not exist inside the Commission. The Commission would have to outsource the tasks, which may lead to a problem of independence, or it would have to create a specific agency (option b). In order to cover the whole range of sectors in which notified bodies are active, the agency would have to be of considerable size.

This solution will need a critical examination from the subsidiarity point of view. Member States and accreditation bodies would completely lose their responsibilities and competencies in the field of accreditation, whilst the formal notification of the conformity assessment bodies would still remain the responsibility of the Member States. Another important aspect is the risk of incoherence between the harmonised and the voluntary/non-harmonised area that would most likely occur if a separate system for assessment and monitoring of notified bodies was created.

Option A4: Competence assessment and monitoring of notified bodies performed at national level based on a common EU legal framework and supported by a European infrastructure

This option would build upon the current system (decentralised competence assessment and monitoring carried out under the responsibility of each Member State) and complete it with a common legal framework for accreditation and a co-ordination infrastructure at Community level.

Regulation at EU level will bring the current diverging national systems closer and provide the necessary framework for a more coherent and uniform implementation of accreditation at national level and its use in support of notification. As the non-regulatory measures taken so far have been insufficient to overcome the national differences, it is indispensable to opt for the regulatory solution. A common legal framework would harmonise the general rules for accreditation, such as the principle of non-competition, the public authority nature of accreditation, the rules on cross-frontier accreditation policy and oblige co-operation between the different Member States’ accreditation bodies.

In order to ensure the coherent application of the accreditation framework, this option foresees a European infrastructure for accreditation that would steer and govern its implementation. This role could be taken over by the existing European Co-operation for Accreditation (EA). As indicated in 3.1.4?, EA operates at EU level, promotes mutual recognition and acceptance of accreditation certificates thus contributing to the free movement of goods. Its system of peer evaluation provides greater coherence between accreditation bodies’ practices and increases mutual confidence. The option would provide EA with public recognition and reinforce its structure and operation. As EA brings together representatives of national public authority organisations, it would therefore be in a position to guarantee the level of independence and technical capabilities required.

Option A5: Electronic notification procedure

This option foresees the introduction of a legal basis for electronic notification on the website which would replace the obligation to publish the list of notified bodies in the Official Journal. The logical conclusion of this is, therefore, to abolish the publication in the Official Journal as a web based publication is quicker and more easily updateable.

Options to improve the enforcement of directives

Option B1: Enhance co-operation of market surveillance authorities by extending the existing co-operation mechanisms

The existing co-operation mechanisms and information exchange tools could be extended without any need to change the existing framework. More than ten sectoral specific ADCO groups do presently exist, covering directives such as toys, personal protective equipment, machinery and construction products, etc. These groups provide a mechanism for Member States’ market surveillance enforcement authorities to come together to exchange information regarding surveillance for a particular sector. This concept could be extended to cover all directives and their organisation and the working methods could be improved to exploit the existing the opportunities more efficiently.

The Commission could also establish an overarching horizontal group, complementary to the sector specific groups. Such a group could ensure that there is better coherence, co-ordination and co-operation across directives. However, to avoid duplication such a group should limit its operation to cover only horizontal aspects related to market surveillance, exchange of best practice from sector to sector and the identification of priority actions and specific fields for inter-sectoral co-operation. There could also be opportunities to share resources.

The big advantage of these measures is that they can be implemented using the existing legal and operational framework, with limited additional resource costs. However, the success of these groups depends on the active involvement and support from all Member States based upon what is currently a voluntary system. Participation in these activities does require resource allocation from member States which does incur a cost for them. In sectors where there is currently little or no market surveillance, measures such as ADCOs will not be sufficient to overcome the general problem that the legislation is not enforced.

Option B2: Raising the awareness of economic operators as to their obligations

Given the multiple obligations (GPSD, national law, liability regime, etc) the existing guidance documents[50] do not contain very detailed explanations on the obligations of economic operators, and in particular of importers and distributors. Horizontal guidance developed with the full co-operation of national enforcement authorities could outline the existence of such obligations and certain minimum requirements that should be respected by these actors.

The legal situation varies significantly from Member State to Member State, as well as from sector to sector. It is difficult or even impossible to define common minimum obligations. This bottom line can by definition not reflect the full extent of the obligations economic operators will have to respect in a specific situation and there is a risk that it could even be misleading. In addition, a guidance document will not provide sufficient incentives for operators who intentionally exploit legal gaps or weaknesses in market surveillance in order to place non-compliant products on the EU market.

For these reasons this option has not been examined further.

Option B3: More effective controls of the market place

Within this option, there are two basic approaches which could achieve a better level of compliance. One is to tighten up the control requirements before a product is made available on the market (pre-market controls) and the second consists of more effective control of products, which are already on the market (post-market controls).

12. More stringent pre-market control:

A better level of compliance could be achieved by systematic or more stringent controls at the pre-market stage. Legislation could, for example, systematically require the intervention of a notified body in the conformity assessment process.

At first glance, this option appears to be quite effective as it requires every product to be tested by a third party before it is placed on the market which would therefore constitute an additional control on the manufacturer/manufacturing process. However, the main problem we are trying to solve is how to catch manufacturers who do not apply the rules and the introduction of strict pre-market controls will not solve this unless it is backed up by an efficient mechanism for post-market control; meaning that so post-market control would needed in addition.

13. More effective post-market control mechanism:

This option comprises of improving the organisation of market surveillance activities at the European level, to promote more coherency and efficiency of action. Reinforced co-operation and co-ordination mechanisms would be introduced, both at the national level and cross-border, in order for market surveillance to operate effectively throughout the whole Community.

In this context, the centralisation of certain activities or the setting up of an Agency could a priori be seen as options, given that there are already examples in certain sectors (eg. European Agency for Aviation Safety (EASA), European Maritime Safety Agency (EMSA), European Railway Agency (ERA) and the Food Veterinary office (FVO)). Whilst, there may be a case for a central organisation of market surveillance activities at the EU level in certain sectors, this option is unfeasible and unrealistic in the true horizontal context, due to the vast range of products to be covered and the organisation and vast expertise that would be necessary.

Similarly the complete harmonisation of market surveillance operation and requirements written into the legislation raises some questions with regard to subsidiarity, proportionality and the effectiveness point of view. Whilst such harmonisation would, without doubt, have a positive impact in aligning the level and rigour of market surveillance throughout the Community[51] it would also lead to difficulties in maintaining flexibility for sector specific problems, flexibility to cope with different Member States’ market structures and could, therefore, lead either to overkill of requirements or to gaps in the system. Furthermore, complete harmonisation would result in considerable costs for the adaptation of what are often well established and well functioning national structures and procedures.

Option B4: Common EU framework on market surveillance setting out minimum requirements

This option consists of the creation of an EU legal framework which would set out minimum requirements for the organisation and operation of the national market surveillance system, combined with co-ordination mechanisms (as proposed in option B1). The framework requires the establishment of an effective and efficient organisation for national market surveillance, including, for example, sufficient resources, necessary powers, effective communication between authorities, etc. It also sets out certain obligations including the withdrawal of non-compliant products from the market, requirements to perform checks on products, to follow up complaints, to monitor accidents, to co-operate with economic operators etc. [52] Furthermore, it establishes an obligation to participate in horizontal EU co-operation activities and to provide mutual assistance, when necessary.

This option would also create a legal basis for enhancing the existing co-operation and co-ordination mechanisms, to build upon and improve what we already have in place. This would, therefore, ensure exchange of information and best practices, common projects and the sharing of resources. It would also provide for a single electronic information exchange system by extending the use of the current RAPEX system[53] to products for professional use.

Under this option, the existing safeguard clause procedure would be rationalised. The idea is to split the safeguard procedure into an information exchange phase taking place at national level and a second phase taking place at Community level. In the first phase, Member States would inform each other of national measures taken to restricting the free movement of a product. The procedure would then be completed unless there were objections from other Member States. Only in the case of disagreement between Member States on the justification of the measure, would a decision be taken at the Community level.

Option B5: Reinforcing traceability and the introduction of specific obligations for importers

This option would ensure that that market surveillance authorities can identify a responsible person in the EU and obtain the necessary information. The legislation would be amended to ensure traceability of a product and its supplier throughout the whole supply and distribution chain. The legislation would also specify the obligation of importers and distributors in more detail.

Traceability could be ensured by:

- Introducing a general obligation to appoint an authorised representative for products imported from third countries;

- Establishment of a registration system for manufacturers and importers;

- An obligation to identify the manufacturer and the importer of a product and an obligation on them to identify products they purchased and supplied on (except supplies to final users/consumers).

Specific obligations for importers and distributors could be introduced in the legal framework, clarifying that these operators must check whether the manufacturer has fulfilled his obligations. These obligations would take account of the role of these operators and would be minimum obligations applying in addition to those arising from national law.[54]

Options to improve the understanding of the CE marking

Option C1: Information and awareness raising campaign on the meaning of the CE marking

A visible EU wide information campaign which reaches a large number of consumers across Europe will improve consumers’ understanding of the meaning of the CE marking and reduce the misperceptions which might mislead them in their purchasing decisions. Consumers would have a clearer picture of what CE marking does and does not stand. They would look for CE marked products and avoid those which are not CE marked but should be so.

An information campaign would have more visibility than changes in the legal text. In the survey, some respondents mentioned that an information campaign would be the most appropriate way to improve the knowledge of consumers on the CE marking. One impediment might however be the complex system behind the CE marking, which might make it difficult to communicate a clear and easily understandable message.

Option C2: Abolition of CE marking

Since the meaning of CE marking is very often not known or misunderstood and there is a lack of proper policing which affects its credibility the abolition of CE marking could be envisaged.[55] However, CE marking indicates conformity of a product and is the visible sign that the whole process including conformity assessment has been completed. It gives a clear indication for customs and market surveillance authorities that the product to which it is affixed complies with all the applicable requirements and may therefore circulate freely throughout the Community. Therefore, CE marking provides a first means for authorities to assess the compliance of products. Abandoning CE marking without substituting it by another mechanism, would deprive those authorities responsible for the release of products for free circulation and their monitoring, of a clear and visible indication of compliance. This could impair the free movement of products. For this reason, the vast majority of stakeholders objected to the abolition of the CE marking. Only a slight minority (less than 9 %) of stakeholders opted for abolition.

As the abolition of the CE marking would create more problems than it solves this option has not been examined further.

Option C3: Change the current meaning of the CE marking

The concept behind CE marking is undoubtedly very complicated; it is affixed to products which have been certified by an independent third party as well as to products which have not undergone such a procedure. One option to consider is to simplify the meaning of the CE marking itself and to reserve it for use only in cases where products have been assessed by a third party. Another option could be to keep the CE marking as it stands for products based on manufacturer’s declaration and in addition to create a different variant of CE marking (e.g. CE+) indicating that a third party has intervened in the conformity assessment process.

Option C4: Strengthen the legal protection of the CE marking

The CE marking could be registered and consequently protected as a Community collective trade mark. The regime governing its use would have to be clarified.

Options to eliminate inconsistencies of terminology and procedures in the legal framework

As already explained the only way to resolve the existing inconsistencies in the terminology as well as in the procedures is through a change in the legal texts, i.e. the various sector specific regulations and directives. In this respect, there are in principle only two options:

Option D1: Immediate modification of the existing legal texts

This option is the immediate modification of the existing legal texts. However, we must bear in mind that a considerable part of the internal market acquis is affected by this problem and therefore as such changes could have serious consequences, a detailed assessment of the impacts in every sector would be needed. Changes to each and every existing legal text are not really feasible in the context of this exercise.

Option D2: creation of a reference legal document

A better, more flexible solution is to establish a horizontal reference document containing standard terminology and procedures o which the individual legal instruments could be adapted in the future. Then, as sectoral texts are revised they can use this framework to include the harmonised elements appropriate for their sector.

Summary of Options

A: Options related to Notified Bodies |

A1 | Creating a network of notified bodies and a horizontal group of notified bodies |

A2 | Regulating the activities of notified bodies |

A3 | Centralising the competence assessment and monitoring of notified bodies at EU level (Commission or creation of a specific agency) |

A4 | Competence assessment and monitoring of notified bodies performed at national level based on a common EU legal framework and supported by a European infrastructure |

A5 | Electronic notification procedure |

B: Options to improve the enforcement of directives |

B1 | Enhance co-operation of market surveillance authorities by extending the existing co-operation mechanisms |

B2 | Raising the awareness of economic operators as to their obligations |

B3 | More effective controls of the market place |

(1) more stringent pre-market control |

(2) more effective post-market control mechanism |

B4 | Common EU framework on market surveillance setting out minimum requirements |

B5 | Reinforcing traceability and introduction of specific obligations for importers |

C: Options to improve the understanding of the CE marking |

C1 | Information and awareness raising campaign on the meaning of the CE marking |

C2 | Abolition of CE marking |

C3 | Change the current meaning of the CE marking |

C4 | Strengthen the legal protection of the CE marking |

D: Option eliminating inconsistencies of terminology and procedures in the legal framework |

D1 | Immediate modification of the existing legal texts |

D2 | Creation of a reference legal document |

ANALYSIS OF IMPACTS

Preliminary remarks

This initiative is a cross-cutting exercise, which affects directly or indirectly a vast range of industrial sectors with very different market conditions. The spectrum ranges from very homogenous product markets (e.g. lifts, cableways) to product groups with very heterogeneous market structures (toys, electrical products, machinery, personal protective equipment, etc). It should be born in mind that in the context of this exercise the impacts are assessed from a global, horizontal point of view and that the situation in certain sectors might be different from the global picture. Some of the problems generally experienced in a majority of sectors may not exist in particular sectors.[56]

Due to the cross-cutting scope of this initiative and the complexity of the issues treated, the description of the impacts will often remain qualitative, as it is practically impossible to quantify them across the whole range of sectors covered. In general relevant data, if available at all, is sector specific. Data exploring the global situation is rare. There is for example no general database on accidents with products caused by the non-compliance of the product concerned. For this reason recourse is made to sector-specific data which can be considered as representative for the general situation.

This analysis is based to a considerable extent on the feedback received from stakeholders. In order to back up existing indicators and to overcome the lack of data in certain areas, four different groups of stakeholders (enterprises and enterprise associations, public authorities, notified bodies and accreditation bodies) have been asked to provide certain information as well as to evaluate the possible impacts of the measures envisaged.

Identification of key impacts

This chapter examines the economic, social and environmental impacts to be expected from this initiative in order to identify key impacts which will be analysed in more detail in the following chapters.

Key impacts

This initiative will mainly have economic impacts. The issue of reinforcing controls on the market to ensure a better level of compliance is of major importance for the competitiveness of European manufacturing industry as well as for the functioning of the internal market . Ensuring a more coherent level of conformity assessment will equally contribute to this objective. A number of he measures will have significant impacts for public administrations . While the majority of measures aim at reducing the operating costs for business, some measures might be linked with additional costs which will be assessed in further detail in the following chapters.

Social impacts

The measures examined in this context are also relevant to a number of social concerns, namely public health and safety, health and safety at the workplace, as well as consumer protection (understanding of CE marking).

There is no specific data which would allow to make a link between the an inappropriate testing by a notified body and accidents occurred with the certified products

The exposure of consumers, workers and users to health and safety risks emanating from products is influenced by various factors, and the quality of notified bodies intervening in the conformity assessment process is just one aspect of a more encompassing set of policy measures aiming to reduce this risk. Accidents with products are often not due to a defect in the product but to incorrect use. Statistics in the health at work sector do usually not make the distinction between the different causes.

Impacts on the environment

Chapters 2.1 and 2.2 have outlined the link between environmental concerns and of efficient enforcement mechanisms and the notified bodies.

Due to the fact that causal relationships for environmental damage are in general very complex and that the role of notified bodies is just one element in a more comprehensive set of measures aimed to reduce such harm, it is not possible to quantify the damage resulting from the lack of competence of notified bodies or improper quality of their conformity assessment. The same applies to the lack of efficient market surveillance. Both, the control by a notified body or by a market surveillance authority, can however prevent environmental damage. The potential benefits and costs savings due to prevention become obvious when looking at the example of accidents in the maritime sector, which had disastrous consequences[57].

The measures examined in the context of this initiative will not have per se a direct influence on the environmental resources. They may have indirect impacts on the environment in so far as they improve the functioning of environmental legislation by reinforcing enforcement mechanisms and the control of notified bodies. Consequently the environmental benefits will depend on the general effectiveness of every option to improve the current situation.

Notified Bodies

Impacts of the “no change” scenario

Differences in Member States in the criteria and procedures relating to the assessment and the monitoring of competence of notified bodies distort competition between these bodies. Notified bodies submitted to stricter assessment and monitoring requirements are facing additional costs in comparison to competitors which do not have to comply with the same material or procedural aspects. However the majority of notified bodies could not quantify these additional costs. In Member States where accreditation is required for notification, notified bodies have to bear the accreditation fees. Prices for accreditation vary according to the size as well as to the activities of the notified body. The prices[58] indicated by the notified bodies range in general from €6,000 to €20,000. Fees for subsequent check-ups are generally lower. Due to the different review intervals (ranging in general between 1-4 years) these costs also vary. The major economic impact however results the investments needed to comply with the accreditation criteria.

Due to unfair practices, notified bodies incur losses in turnover and suffer from a damaging of their reputation. Put under pressure by the market they are forced to cut costs. This results in a downward spiral in terms of both their turnover as well as the quality of their service.

The distortion of competition between notified bodies has a spill-over effect on the competition between manufacturers. Differ