Table of Contents

1........... PROCEDURE. 3

1.1........ Identification. 3

1.2........ Organisation and timing. 3

1.3........ Public consultation, opinions of stakeholders and external expertise. 3

1.4........ Scrutiny by the Commission Impact Assessment Board. 5

2........... POLICY CONTEXT, PROBLEM DEFINITION AND SUBSIDIARITY.. 6

2.1........ Policy context 6

2.2........ Organisational and institutional context 8

2.3........ Economic context 9

2.4........ Problem definition - Unsafe consumer and other non-compliant products on the single market 11

2.5........ EU right to act 24

3........... OBJECTIVES. 26

3.1........ General objectives. 26

3.2........ Specific objectives. 26

3.3........ Operational objectives. 26

4........... POLICY OPTIONS. 27

4.1........ Policy objective 1: Consolidation and reinforcement of EU product safety rules. 27

4.2........ Policy objective 2: Better coordination and increased effectiveness of market surveillance activities on the single EU market for goods. 30

5........... ANALYSIS OF IMPACTS. 35

5.1........ Analysis of impacts of policy options under objective 1 (Consolidation and reinforcement of EU product safety rules) 35

5.2........ Analysis of impacts of policy options under objective 2 (Better coordination and increased effectiveness of market surveillance activities on the single EU market for goods) 40

5.3........ Impacts on the EU budget 47

5.4........ Other impacts. 47

6........... COMPARING THE OPTIONS. 48

6.1........ Comparison of policy options under objective 1 (Consolidation and reinforcement of EU product safety rules) 48

6.2........ Comparison of policy options under objective 2 (Better coordination and increased effectiveness of market surveillance activities on the single EU market for goods) 50

6.3........ Overview of preferred options in the light of the objectives. 55

6.4........ Form of the legislative instrument 55

7........... MONITORING AND EVALUATION.. 57

1. PROCEDURE

1.1. Identification

Lead DGs: DG SANCO and DG ENTR - Agenda Planning/WP Reference: 2010/SANCO/031 + 2012/SANCO/019

1.2. Organisation and timing

Work on the Impact Assessment started in September 2009. An Impact Assessment Steering Group chaired by DG SANCO, in cooperation with DG ENTR, was set up and met five times:, on 28 September 2009, 21 January 2010, 21 December 2011, 21 June 2012, and 5 July 2012. SG, SJ, DG ECFIN, MOVE, ENV, MARKT, TAXUD were invited to the meetings, and representatives of SG, DG TAXUD and MARKT attended and contributed to the discussions. The minutes of the last IASG meeting were submitted to the IAB together with the draft IA report.

Annex 1 contains a glossary of the main specialised terms used.

1.3. Public consultation, opinions of stakeholders and external expertise

The impact assessment builds on a very wide and long public consultation of stakeholders:

· The first round of public consultation was organised by the Commission from September 2009 to January 2010. The aim of this consultation was to define - on the basis of the Report on the implementation of the General Product Safety Directive[1] - the scope of the problems on which the revision of the Directive should focus.

· Following the definition of the scope of the impact assessment, the Commission proceeded with the second round of public consultation which took place from May to December 2010. Within the framework of this second round the Commission held between 18 May 2010 and 20 August 2010 (12 weeks) an internet public consultation. The invitation to participate in this online public consultation was published on the "Your Voice in Europe" website of the Commission on 18 May 2010 and on the website of DG Health & Consumers. In this online public consultation the Commission sought feedback through four consultation papers and nine online questionnaires targeting various groups of stakeholders. The public consultation was divided into four topics, namely (i) pre-standardisation procedures under the General Product Safety Directive, (ii) harmonisation of safety evaluations of consumer products, (iii) market surveillance framework in the product safety area and (iv) the alignment with the 2008 Free Movement of Goods Package. Within each of these four areas stakeholders were consulted about the scope and magnitude of the identified problems and about various options proposed to remedy these problems.

· This second round of public consultation was concluded through a Workshop on the revision of the General Product Safety Directive organised on 1 December 2010 within the framework of the International Product Safety Week. The aim of this workshop was to receive feedback from the stakeholders on the process and key conclusions of the online public consultation. The principal message delivered by the stakeholders was a call for a uniform market surveillance framework in the non-food product safety area, simplification of the existing legal framework and more coherence in the enforcement of product safety rules throughout the EU. The summary of the online public consultation is set out in Annex 2.

· Simultaneous to the online public consultation, the Commission received position papers from 16 stakeholders, including consumer organisations, business associations, Member States, and individual economic operators etc. The summary of opinions of these stakeholders is set out in Annex 3.

· The third round of public consultation took place from January to March 2011. It took the form of four targeted stakeholder meetings on the issues of, (i) market surveillance coordination (28 January 2011), (ii) obligations of economic operators with respect to non-food consumer products, in particular traceability and technical file requirements (18 February 2011), (iii) pre-standardisation procedures under the General Product Safety Directive (17 March 2011), and (iv) legislative architecture of general and specific legislative rules (31 March 2011) with the participation of experts for the relevant areas. The conclusions of these targeted stakeholder meetings are set out in Annex 4.

· Stakeholders' views were also discussed in several bilateral meetings that took place continuously between May 2010 and June 2012.

· Furthermore, special consultations aimed at small and medium-sized enterprises (SMEs) and at microenterprises were carried out. The summary of these consultations is contained in Annex 5.

· The European Parliament prepared its own initiative report on the revision of the General Product Safety Directive and market surveillance (the "Schaldemose Report")[2]. This report was adopted on 8 March 2011 in the form of a Resolution on the General Product Safety Directive revision and market surveillance[3]. The Report contained a number of recommendations, for example, to enhance the coherence of EU product safety legislation, to provide more consistency in coordination of market surveillance and customs authorities, to deploy adequate resources for market surveillance activities, including joint market surveillance actions, to put in place mechanisms allowing for the sharing of market surveillance information between the Member States etc.

· The Commission has sought the views of national market surveillance authorities of the Member States on possible improvement to the current situation through its expert working group "Senior Official for Standardisation and Conformity assessment - Market surveillance" (SOGS-MSG) and the Committee established under the General Product Safety Directive.

Regarding external expertise, a study on the future of market surveillance[4] was prepared for the purposes of the impact assessment, with the objective of assessing the challenges of product safety market surveillance posed by future development of manufacturing and distribution patterns of non-food products[5]. In addition to this study a number of other existing studies and surveys directly concerning the area of non-food product safety were used as reference documents. These other studies included, for example, a report evaluating business safety measures in the toy supply chain, a feasibility study for a post-manufacturing traceability system between the People's Republic of China and the EU, etc. A list of all studies is provided in Annex 6.

1.4. Scrutiny by the Commission Impact Assessment Board

The Impact Assessment Board of the European Commission assessed a draft version of the present impact assessment and issued its opinion on 19 September 2012. The Impact Assessment Board approved the Impact Assessment Report and suggested certain improvements and modifications.

The Impact Assessment report was amended in line with these suggestions. In particular, the source of the inconsistencies in and ineffectiveness of existing legislation on product safety and market surveillance was explained in more detail and in a more concrete and structured way. The final report better described the content of measures under each identified options and clarified which problem drivers and objectives they are supposed to address. It highlighted what was going to change compared to the status quo and substantiated the expected impacts.

2. POLICY CONTEXT, PROBLEM DEFINITION AND SUBSIDIARITY

2.1. Policy context

The free movement of safe and compliant products is one of the cornerstones of the European Union. This principle constitutes an important pillar of the single market and allows consumers and enterprises to purchase or sell products in another Member State.[6]

The overall architecture of Union product safety and compliance rules which serve as a basis for the proper functioning of the single EU market can be summarised in the following way:

Table 1: Overall architecture of Union product safety and compliance rules

Products[7] || Consumer || Professional

Harmonised || Sector specific Directives and Regulations and the General Product Safety Directive || Sector specific Directives and Regulations

Non-harmonised || General Product Safety Directive || National product safety rules under the 'Mutual Recognition Regulation' Article 34-36 TFEU

The two legal instruments, the General Product Safety Directive 2001/95/EC (the "General Product Safety Directive") and Regulation (EC) 765/2008 setting out the requirements for accreditation and market surveillance relating to the marketing of products guarantee an EU legal basis for market surveillance of all consumer products (harmonised or not) and for all harmonised products (consumers and professional). However, fragmentation of market surveillance rules among various pieces of Union legislation (the Regulation, the General Product Safety Directive and many sector-specific Union harmonisation Directives), as described in the following table, may lead to confusion on the part of both operators and national authorities.[8]

Table 2: Overview of the existing EU regulatory framework in the area of non-food product safety

Overview of the existing EU regulatory framework in the area of non-food product safety ||

Products Areas || Non- Harmonised || Harmonised ||

Non-consumer || Consumer || Non-consumer ||

Obligations of economic operators || National product safety rules under Article 34 – 36 TFEU || GPSD || Sector specific Union harmonisation legislation (GPSD as a safety net) || Sector specific Union harmonisation legislation ||

Market surveillance on the internal market* || Regulation 764/2008 || GPSD (only those dangerous to health and safety of consumers) || Sector specific Union harmonisation legislation + Regulation 765/2008 + GPSD || Sector specific Union harmonisation legislation + Regulation 765/2008 ||

||

RAPEX* || Regulation 765/2008 referring to GPSD || Regulation 765/2008 referring to GPSD ||

Controls on products imported to the EU* || Regulation 765/2008 ||

The complexity of the EU legislative framework in the area of non-food product safety is due to a fast adoption of Regulation (EC) No 765/2008 and Decision (No) 768/2008/EC necessitated by the events of the "summer of recalls" in 2007.[9] The fast adoption did not allow for proper definition of the relationship between the General Product Safety Directive on the one hand, and Regulation (EC) No 765/2008 and sector specific provisions of New Approach Directives (in the wording of reference provisions of Annex 1 of Decision (No) 768/2008/EC), on the other hand. The relationship between these instruments was defined only in very general terms, such as "mutatis mutandis" use of certain of the provisions on RAPEX system[10] laid down in the General Product Safety Directive for the purpose of Regulation (EC) No. 765/2008 or "lex specialis" application[11] of market surveillance provisions of the General Product Safety Directive in relation to the market surveillance provisions of Regulation (EC) No. 765/2008.[12]

The Commission tried to clarify the complex issue of which of the aforementioned pieces of EU product safety legislation should apply in which situations by way of interpretation Guidelines,[13] however this was considered to be insufficient.[14]

Regulation (EC) No 765/2008 requires the Commission to submit a report analysing the consistency of EU rules on market surveillance contained in this Regulation, the General Product Safety Directive and any other relevant Union instrument addressing market surveillance issues and, if appropriate to amend and/or consolidate the instruments concerned, in the interests of better regulation and simplification.[15]

Along with a series of other actions, the Single Market Act II[16] identified the Product Safety and Market Surveillance Package as priority initiative that would contribute to boosting growth and creating jobs. The Europe 2020 Strategy for smart, sustainable and inclusive growth should ensure that innovative ideas can be turned into new products and services that create growth by exploiting EU-scale networks and by reinforcing the competitive advantages of our businesses, particularly in manufacturing and within our SMEs.[17]

Finally, this initiative is also in one of the important actions of the European Consumer Agenda adopted by the Commission in May 2012.[18]

2.2. Organisational and institutional context

Market surveillance is a crucial tool to protect both consumers and other users from unsafe and non-compliant products, by ensuring that all economic actors stick to the rules. On the one hand, the organisation of market surveillance is determined by Member States, on the other hand, the General Product Safety Directive and Regulation (EC) No 765/2008 set out certain minimum requirements that the market surveillance structures in Member States should fulfil, such as the obligation to have powers and resources to perform enforcement activities, a minimum set of measures that authorities shall take against dangerous products, an obligation to have a single RAPEX contact point etc. The configuration of market surveillance authorities in Member States differs from one Member State to another: in certain Member States market surveillance is centralised whereas in other Member States it is performed on the regional or even on the local level with central authorities performing coordination role only.[19]

At the EU level, the basic market surveillance infrastructures are composed of (i) the RAPEX system through which Member States notify to the Commission (which disseminates them to other Member States) measures taken against products posing serious risks and (ii) the general information support system intended to collect other information about market surveillance activities performed by Member States. In addition, in the area of harmonised products, the so-called 'New Approach directives' include a form of safeguard clause[20] which obliges Member States to restrict or forbid the placing on the market and the putting into service of dangerous – or, according to some directives, otherwise non-compliant – products, or to have them withdrawn from the market.[21]

2.3. Economic context

The internal market for products is enormous. As far as consumer products are concerned (regardless of whether harmonised or not) in between 2008 and 2010 the volume of intra-EU trade amounted to almost EUR 1 trillion. The value of harmonised sectors (including both consumer and professional goods) in the EU-27 is estimated to be no less than € 2 100 billion. [22] The world economy is characterised by globalisation and changing trade patterns to which EU market surveillance and customs authorities will need to adapt. In terms of value, international trade returned to pre-recession levels by mid-year 2010[23], and is expected to continue growing. Growth has also been seen in the numbers of consignments and customs declarations since bottoming out in the first half of 2009. This trend can be expected to continue.[24] Since January 2010 customs and market surveillance authorities are due to cooperate to stop dangerous goods at the border of the EU and important progress has been made in this area. Nevertheless, a significant amount of work is still needed to train customs officials and to improve cooperation between customs and market surveillance authorities at a national and EU level.

Figure 1: Development of the number of customs declarations

Although there are no statistics that allow the estimation of the number or percentage of non-food dangerous products present on the EU market, there are strong indications that there are still unsafe consumer products being put on the single market. The first indication is the number of notifications sent through RAPEX, the EU rapid alert system that facilitates the rapid exchange of information between Member States and the Commission.[25] In 2009, 1 993 notifications were sent to the Commission, including 1 699 notifications of measures taken against products presenting a serious risk. In 2010, the number of measures notified rose to 2 244, including 1 963 notifications of measures taken against products presenting a serious risk. In 2011, this number decreased to 1 803 with 1 556 serious risk notifications.[26] The relative temporary decline in the RAPEX notifications in 2011 can be attributable to the application of the revised RAPEX Guidelines, including revised risk assessment guidelines, and to the effect of cuts in national budgets for market surveillance reported by a number of Member States. According to the statistics for the first three quarters of 2012, an increase in the number of notifications is expected again in this year.[27]

Figure 2: RAPEX notifications (2003-2011) – consumer products

Another source of information about the safety of non-food products on the market are the "Enforcement Indicators" collected yearly by the Commission. According to this data, throughout 2008 and 2009, national authorities in the EU have taken at least 15,000 measures[28] against products presenting a risk to health and safety of consumers or not complying with the applicable legislation.[29] Complementary information on product safety can be drawn the European Injury Database (IDB).[30] Finally, some rough indications on the share of non-compliant products on the market were provided by stakeholders in the course of a public consultation in the field of harmonised products as shown in Annex 9.[31]

2.4. Problem definition - Unsafe consumer and other non-compliant products on the single market

The very existence of unsafe and non-compliant products circulating on the internal market indicates a failure in the functioning of the framework within which the internal market operates. For an unsafe product, there is no free movement on the single market. Unsafe and non-compliant products should never have entered this market. Free circulation of safe products should be promoted whereas unsafe products must be effectively tracked down and removed from the single EU market.[32]

In reality, however, product safety requirements determining whether a product is safe and can circulate on the Union market are not always clear and consistent.[33] Moreover, unsafe products not fulfilling product safety requirements penetrate, in a number of cases, the EU market from third countries due to insufficient coordination of activities by the market surveillance authorities in individual Member States. As a result, compliant economic operators face increased compliance costs. They have to accommodate diverging application of product safety requirements in different Member States while they face an unlawful competition from rogue operators who – due to insufficient coordination of market surveillance authorities from different Member States – manage to market products not respecting applicable product safety requirements, and thus, gain competitive advantage over the compliant economic operators.

At the same time, interests of consumers and other users, in particular their health and safety, are put in danger. If, due to the incorrect safety assessment of a product resulting from the ambiguity of applicable safety requirements, economic operators put on the Union market unsafe or non-compliant products, they not only generate an immediate threat to the safety of consumers but they also undermine consumer confidence.[34] If consumers should have confidence in products available on the EU market, these products must be safe, irrespective of where they are produced.[35] The latest Eurobarometer data indicate a decrease in confidence of consumers in the safety of products sold in the EU (25% in 2011 compared to 20% in 2010 think that a significant number of products are unsafe, 12% in 2011 compared to 16% in 2010 think that essentially all products are safe).[36] The problem of unsafe and non-compliant products is also evidenced by the data from joint market surveillance actions[37] performed by the European Commission and market surveillance authorities of Member States within PROSAFE.[38] Similarly, the data from the study of the Consumer and Industrial Products Committee of IFIA[39] on electrical products for household use performed in 2012 show a significant number of non-compliances and safety issues of products imported from the outside of the EU which circulate on the internal EU market.[40]

2.4.1. Problem 1: Difficult compliance with EU product safety requirements

Compliance with the EU product safety requirements is often difficult for economic operators since; in general, EU product safety requirements in the area of so-called non-harmonised products are not consistent with those in the harmonised area. Furthermore, the EU product safety requirements in the non-harmonised area are often ambiguous and detailed benchmarks for safety evaluation are missing, whereas in the harmonised area different and overlapping layers of product safety undermine legal certainty.

2.4.1.1. Lack of consistency of EU product safety requirements (for harmonised and non-harmonised products)

In the area of non-harmonised consumer products, economic operators face difficulties in determining which product safety requirements they should apply, in particular due to the lack of consistency between non-harmonised consumer product safety requirements and the harmonised product safety requirements, as shown in Annex 8 (section 8.3).[41] The problems caused by differences in requirements between non-harmonised and harmonised consumer products as well as the differences in the distribution of obligations on different agents in the supply chain generate sometimes non-negligible costs which are however difficult to be quantified even by economic operators themselves.[42]

These problems were demonstrated in the case C-132/08[43] where a Member State unsuccessfully tried to impose obligations of manufacturers under the Radio and Telecommunication Terminal Equipment Directive[44] and the General Product Safety Directive on a distributor thus restricting the free movement of products on the internal market in a way that was not compatible with the aforementioned Union legislation and the Treaty.

2.4.1.2. Ambiguity of product safety requirements and lack of specific benchmarks (for non-harmonised consumer products)

Differences in the implementation of certain consumer product safety requirements can also be perceived with respect to the implementation of the obligation to identify the producer under the General Product Safety Directive. This disparity of national rules regarding the identification of the product and the producer in respect of consumer products - although coming within the limits of the General product Safety Directive - causes confusion both for the economic operators as well as for consumers.[45]

Furthermore, in the non-harmonised area, there are a number of European standards published by European Standardisation Organisations. However, the presumption of conformity to the general safety requirement is provided only by few of them despite the fact that a European standard is deemed to be a useful element when it provides for the aforementioned presumptions of conformity, i.e. when it can legally ensure the free movement of product throughout the EU internal market. The scarcity of European standards providing for presumption of conformity with the general safety requirement for consumer products complying with such standards in the non-harmonised area compared to harmonised area deprive all stakeholders of an efficient tool for ensuring the safety of products on the market.

Last but not least, under the current rules, unsafe products on the market or new or emerging risks are not addressed in an efficient and timely fashion. The average timeframe from the initial discussions to establish the safety requirements until the publication of the reference of the standard in the OJEU can be estimated at about six years. Of these, on average, three years (or more) are needed to draft the standard (a process run by the European Standardisation Organisations, independent from the Commission) and the remainder of the time can be ascribed to the current procedures.

2.4.1.3. Complexity of different layers of EU product safety rules (for harmonised consumer products)

Unlike in the area of non-harmonised consumer products, for harmonised consumer products the applicable safety requirements are more clearly spelt out in the sector specific EU product safety legislation. However, with respect to these products there may be some confusion due to the overlap of various layers of legislation.[46] In order to understand exactly which requirements apply to a given non-food product, in particular if it is subject to both consumer product safety requirements as well as to harmonised product safety requirements, a time consuming research or legal advice will often be necessary. The complexity of applicable requirements resulting from the overlapping legislation increases compliance costs for economic operators willing to follow the rules, as they will often request legal advice or engage in time consuming research. Those costs, which are proportionally higher for SMEs, may overall discourage compliance.

Apart from posing risks to consumers and users, unsafe and non-compliant products have important economic consequences: they lead to unfair competition. Operators not adhering to the rules can make significant savings on compliance costs. They can consequently offer their products at lower prices than their competitors who respect the law. In sectors where there is tough competition from imported low-price products, European industry is disadvantaged.[47] The situation “punishes” the law-abiding manufacturer, as compliance becomes a “competitive disadvantage.” 87% of economic operators responding to an earlier public consultation on the New Legislative Framework performed in 2006 consider that they suffer from unfair competition due to this situation; during that public consultation, economic operators provided estimates of the size of their losses in terms of their annual turnover, reproduced below:

Figure 3: Perceived losses in % of annual turnover

2.4.2. Problem 2: Fragmentation of market surveillance in the single EU market

A major reason for the considerable number of non-compliant products on the market is that market surveillance does not operate effectively in the European Union.[48] The principal causes of ineffective and inefficient market surveillance on the single EU market are (i) weak coordination between product safety market surveillance authorities in different Member States, (ii) sub-optimal functioning of EU procedures for exchange of information on product risks and (iii) inconsistent enforcement of EU-wide product safety action.[49]

2.4.2.1. Weak coordination of product safety market surveillance authorities of different Member States

Despite the widespread harmonisation of safety standards and other requirements for products (e.g. environmental) across the Union and the fact that many products are regularly marketed in more than one Member State, the Single Market is policed through 27 separate systems of enforcement. Although the consistency in coordination of enforcement activities of different national authorities at the EU level is crucial for proper functioning of the EU single market, the coordination of national market surveillance activities is rudimentary.[50]

The lack of coordination of market surveillance actions of authorities of different Member States can be demonstrated by the number of reactions to notifications received under the RAPEX system. In theory, on a perfectly integrated internal market both in terms of circulation of products[51] and market surveillance,[52] one RAPEX notification of a dangerous product sent by a Member State should trigger reaction about the presence of the notified dangerous product on the market in other 29 Member States. In reality, however, in 2010 a total of only 2 100 reactions was distributed through RAPEX in respect of 1 556 notification received through the system.[53] This shows that one RAPEX notification triggered on average only 1.35 reactions compared to the maximum possible number of 29 reactions. Although in practice, it would rarely happen than one RAPEX notification would trigger 29 reactions from all 29 EEA Member States, the fact that one RAPEX notification triggers a reaction of only one or two Member States points to a clear lack of coordination of the market surveillance authorities of different Member States.

Another aspect of the problem of weak coordination of market surveillance authorities is that most of the information relevant for market surveillance remains within national borders and does not benefit market surveillance authorities in other Member States. Results of investigation, risk-assessment as well as results of product testing are collected to a higher or lesser extent by all Member States. However, this information is used only nationally. Although over the last years the flow of cross-border information on market surveillance has improved[54] thanks to use of IT systems, such as REIS[55] and currently GRAS-RAPEX,[56] and to other forms of information exchange, such as ICSMS[57]. Yet lots of information is not systematically shared with the Commission and/or other Member States and used in the perspective of the functioning EU internal market. Consequently, due to the lack of sharing and comparability of basic investigation/risk-assessment information, no intelligence-led coordination of market surveillance efforts at the EU level can be performed. This can result in unnecessary doubling of checks of compliant products or economic operators or the fact that testing and risk-assessment of a product determined as dangerous in one Member States has to be re-done in all other Member States.[58] Thus, significant resources are wasted and important synergies are lost.

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 products from the market; this creates a weak link in the chain.[59] However, in contrast to other areas where economic interests of consumers and other users are principally protected, for example, by the Consumer Protection Cooperation Regulation[60] or Services Directive[61] in the area of product safety where health and safety of consumers and other users are at stake, market surveillance authorities do not benefit from the procedures for effective cross-border enforcement.[62]

2.4.2.2. Sub-optimal functioning of EU procedures for exchange of information on product risks

The current EU product safety legislation foresees two procedures for the exchange of information at EU level: the first for the exchange of rapid alert information about risks (the RAPEX procedure) and the second for the purposes of ensuring the proper functioning of the EU internal market (the safeguard procedure).

Both under the General Product Safety Directive and Regulation (EC) No 765/2008 Member States have an obligation to notify measures taken against non-food products which pose a risk (to health and safety of consumers and other users, environment and public security), including a serious risk, to the Commission[63] and to follow up the notification received.[64] This includes an obligation to notify both measures taken by the public authorities (so-called compulsory measures)[65] as well as measures taken by economic operators themselves (so-called voluntary measures).[66]

The experience of the Commission as well as the results of the public consultation show that many Member States still have difficulties complying fully with their obligations under the RAPEX system; in particular, they have problems with notifying the Commission of preventive and restrictive measures and ensuring follow-up action to notifications distributed through the RAPEX system. Only 44% of Member States indicate that they fully comply with the aforementioned obligation under the General Product Safety Directive and Regulation (EC) No 765/2008 to notify all measures taken which pose risk. 28% of Member States notify between 75 to 99% of measures taken to the Commission, 5% between 50 and 75% and 14% notify less than 50% of measures taken that they should have notified.[67] When asked about the main obstacles preventing them from fulfilling their notification obligation under EU law a number of reasons were advanced without any being significantly prevailing): ambiguity of the notification criteria,[68] too complex notification procedure, absence of sufficient information in the RAPEX notification allowing identification of the product on its national market or lack of human or financial resources to send the notifications to the Commission or to follow-up the RAPEX notifications of other Member States.[69] Specifically, on the problem of ambiguity of the notification criteria, authorities indicated an equal level of problems with all of the existing criteria of risk assessment, existence of cross-border effect and the categories of measures to be notified, without any reasons being prevailing.

Similarly to the RAPEX procedure, also the practical implementation of the safeguard clause procedure, as it currently stands, presents some shortcomings. Due to the absence of articulation with the RAPEX procedure, the current framework obliges Member States to send to the Commission parallel notifications with similar information under the RAPEX procedure and safeguard clause procedure. This creates an additional administrative burden for the authorities of Member States without any added value. The "double notification" obligation leads to the general ineffectiveness of both notification mechanisms since Member States see little sense notifying one measure twice through different notification procedures. As a result, the control of the functioning of the EU internal market is weakened.

If, in theory, all compulsory measures taken against products posing risk, including serious risk, subject to Union harmonisation legislation (so-called harmonised products) should be notified to the Commission under the safeguard clause procedure,[70] the data regarding the number of safeguard clause notifications circulated provide a different picture. The greatest number of safeguard clause notification concern electric and electronic products falling within the Low Voltage Directive.[71]

These problems with the effectiveness and efficiency of the RAPEX procedure are attributable, inter alia, to legal rules which shape the functioning of RAPEX, in particular the notification criteria which are seen as too complex and the absence of an effective follow-up obligation.[72] Similar to the RAPEX procedure, the safeguard clause procedure – as it currently stands – lacks in effectiveness and efficiency. The "double notification" obligation leads to the general ineffectiveness of both notification mechanisms since Member States see little sense notifying one measure twice through different notification procedures. As a result, the control of the functioning of the EU internal market is weakened which, in turn, makes it easier to erect barriers to the free movement of safe products on the EU internal market.

2.4.2.3. Inconsistent enforcement of EU-wide product safety action

If the Commission becomes aware of the existence of a serious risk caused by a product on the internal market, it may - under Article 13 of the General Product Safety Directive - adopt a formal decision – a so-called EU product safety measure - requiring all Member States to restrict or prevent the marketing of such a product.[73] This measure is valid for a maximum period of one year, unless it is renewed for additional periods, none of which shall exceed one year.[74]

Experience with EU product safety measures has shown that the validity of these measures for up to one year is not enough to prepare a permanent solution at the EU level. As a consequence, usually the EU product safety measures have to be repeatedly renewed. For example, the Novelty and Child Resistant Lighters Decision has already been renewed six times.[75] This creates legal uncertainty and considerable confusion for economic operators who are faced with a question of whether or they should make long-term investments to adapt their products to the new product safety requirements or not.

Both national market surveillance authorities and economic operators experienced problems with the application of EU-wide product safety measures.[76] For national market surveillance authorities difficulties were seen in the short time period for national implementation of an EU-wide product safety measure.[77] Respondents considered it important that the EU-wide product safety measures be very clearly described, including technical details, such as test methods, in order to ensure even implementation by all authorities in all Member States. Economic operators viewed inconsistent application of EU product safety measures by Member States as a problem,[78] despite the fact that related compliance costs with the diverging national implementing measures were assessed as "non-negligible" by some of the operators, although none of them were able to quantify these costs. [79]

Finally, the lack of traceability of non-harmonised consumer products to the responsible manufacturer or importer[80], has an important impact on the effectiveness and efficiency of market surveillance.[81] 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.[82] This reduces the scope of market surveillance authorities' action. In addition, if the proper traceability is not ensured, the market surveillance authorities have to spend non-negligible time and resources for uncovering often very complex supply chains in order to be able to impose effective corrective measures.[83]

2.4.3. Who is affected by the problem?

· Final users of the products: consumers, workers and professional users. For them, there would be a risk of accidents and injury from unsafe and non-compliant products, as well as economic damage from unsafe and non-compliant products.

· National market surveillance authorities: they suffer from higher administrative costs as a consequence of cross-border inefficiencies, ineffective testing and investigation costs if the operator cannot be found.[84]

· Economic operators: manufacturers, importers, authorised representatives, distributors suffer from uncertainty and higher costs caused by the complexity and ambiguity of the EU legislation as well as from an unfair competition from "rogue operators" not observing the EU product safety rules

· Member States: they have to bear increased costs resulting from reimbursement of health treatment of injuries caused by unsafe products

2.4.4. Foreseen evolution of the problem

2.4.5. Problem 1: Unsafe consumer and other non-compliant products in the single market

The market for non-food consumer products has changed over the last decades. One of the main characteristics of the new environment is the dynamic presence on the EU market of products manufactured in third countries. More developing countries are expected to join the market as producers, while trans-national cooperation will steadily grow, offering a great variety of products. E-commerce will further facilitate cross-border transactions. Consequently, many products marketed in European countries will be manufactured in third countries and then imported in EU. Customs and market surveillance authorities will gradually develop cooperation on the basis of the existing provisions of Regulation (EC) No. 765/2008.

2.4.6. Problem 2: The fragmentation of market surveillance in the single EU market

To respond to the developments of globalisation and e-commerce, market surveillance authorities have an increasingly challenging role to play in the field of product safety. New production technologies demand efficient and updated testing methods. On-the-spot checks at business premises require substantial funds and usually yield lower returns on investment, the more so, the further down the supply chain these checks are carried out. The current economic recession and the consequent lack of resources for market surveillance authorities at Member State level could have a negative impact on the efficiency of market surveillance activities carried out by national authorities.

2.4.7. Action taken by the Commission (baseline scenario)

Under the baseline scenario the existing differences between consumer product safety requirements and harmonised product safety requirements would continue to exist. Maintaining the current specific regime for non-harmonised consumer products would mean that the existing lengthy and burdensome preliminary procedures leading to the adoption of mandates for development of European standards would continue to exist. This approach would also require the creation of parallel pre-standardisation procedures for non-harmonised consumer products in relation to the general rules on standardisation laid down in Regulation (EU) No 1025/2012.[85]

Except for certain minimum coordination requirements introduced by Regulation (EC) No 765/2008 for the area of harmonised products, Member States would continue to undertake pro-active and reactive market surveillance mostly along national lines. Besides the various legal instruments which partly regulate market surveillance for products, the Commission would contribute to market surveillance activities through the following activities:

· Various joint market surveillance actions are financed by the 'Consumer Programme'[86], including horizontal programmes, such as the EMARS I and II, or sector specific programmes, such as helmets, sunbeds or toys. The list of these market surveillance actions is in Annex 14.[87]

· Controls of products at external borders are facilitated by EU financing under the 'Customs Programme'[88]. In order to facilitate the implementation of Regulation (EC) No 765/2008 the Commission, together with the Member States, has drafted the Guidelines for imports controls in the area of product safety and compliance.[89] The Guidelines are intended as an instrument to assist customs and market surveillance authorities in improving cooperation methods and good administrative practice. At the same time, the Guidelines focus on the practical questions customs are faced with when performing controls related to product safety and compliance.[90] The responsible authorities for market surveillance dispose of GRAS and ICSMS tools to exchange information and coordinate their activities at European level in various contexts:

(a) GPSD Committee: The committee assists the European Commission in several tasks related to the implementation of the GPSD. In particular, when the Commission takes decisions requiring the Member States to urgently introduce temporary measures restricting the placing on the market of products or requiring the withdrawal of products posing serious risks.

(b) Consumer Safety Network: A network foreseen under Article 10 of the General Product Safety Directive where the Commission and Member States prepare joint market surveillance actions, discuss new emerging product risks and other market surveillance issues.

(c) Senior Official Group – Market Surveillance Group: A group of Commission and Member States' experts that discuss market surveillance, accreditation and conformity assessment issues.

(d) RAPEX Contact Points Group: Meeting forum of the Commission and persons responsible for managing RAPEX Contact Points in Member States which discusses and solves problems relating to notifications to RAPEX.

(e) PROSAFE: non-profit association of market surveillance officers of Member States ensuring realisation of joint actions and putting in practice cooperation among Member States in the market surveillance area.

(f) Rapid Advice Forum – another communication platform for authorities run by PROSAFE

Regarding the notification procedures the baseline would maintain the current status quo consisting in keeping the parallel obligations for Member States to notify the Commission under the RAPEX procedure and the safeguard procedure. With respect to the EU-wide product safety action the current situation where EU-wide product safety measures are implemented by Member States in a disparate manner due to their indirect applicability and time limitation would be maintained. The scope of EU-wide product safety measures would be limited to consumer products. Issuing guidelines or producing explanatory documents would not be a solution since none of them could provide for a direct applicability of the EU product safety measures or extend the time-limits of their validity.

2.5. EU right to act

The single market for products is a key achievement of the European Union. Yet, the elimination of national barriers for consumer and other products offered plenty of opportunities to less scrupulous traders who do not apply the consumer safety rules or refuse to implement the EU legislation on products. The EU has therefore the right to act on the basis of Article 114 TFEU, in order to ensure the proper functioning of the single market for consumer products and to increase the efficiency of cross-border market surveillance. Article 168 (1) and Article 169 (1) of TFEU complements this right to act. The first stipulates that a high level of human health protection shall be ensured in the definition and implementation of all Union policies and activities, the latter provides that in order to promote the interests of consumers and to ensure a high level of consumer protection, the Union shall, amongst others, contribute to protecting the health, safety and economic interests of consumers.

The differences in national organisation of market surveillance causes problems when viewed in the framework of the European single market which no longer has internal borders and where controls at national borders have practically disappeared. 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 products from the market; this creates a weak link in the chain. 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 other Member States.

Despite the existence of the single EU market, the enforcement of product safety requirements is the Member States' competence. The way in which market surveillance is performed and organised significantly varies from one Member State to another. The proper implementation of the principle of subsidiarity therefore requires that the procedures and actions against concrete products posing risks are carried out by Member States. The proportionality of the policy options will be subsequently assessed in this report.

3. OBJECTIVES

3.1. General objectives

The general objective of this initiative is to improve the functioning of the single market and to achieve a high level of consumer protection through the reduction of the number of unsafe or non-compliant products on the single EU market.

3.2. Specific objectives

The specific objectives of this initiative are:

· Consolidation and reinforcement of EU product safety requirements

· Better coordination and increased effectiveness of market surveillance activities on the single EU market for goods

· Simplification of the EU legislative framework

3.3. Operational objectives

The operational objectives to be accomplished by this initiative are the following:

· Ensuring consistency of EU product safety requirements

· Reducing ambiguity of product safety requirements for non-harmonised consumer products

· Reinforcing EU cooperation mechanisms

· Making EU product safety procedures more coherent

· More effective EU-wide product safety action

4. POLICY OPTIONS

The presented policy options were established by the Commission in close cooperation with all groups of stakeholders. The Commission proposed a number of policy options and asked all groups of stakeholders to add other possible options and express their opinion on the existing ones within the framework of the general public consultation and targeted stakeholder meetings.[91]

On the basis of those consultations, certain policy options were, however, discarded at an early stage, including (i) the issue of regulation of safety of services, (ii) imposing product safety requirements for non-harmonised professional products, i.e. those which circulate only among professionals and are never used by consumers, such as industrial machines, raw materials and semi-finished products, etc., (iii) regulating the safety of products marketed via the internet, and (iv) the abolition of the general requirement that all consumer products must be safe. A detailed description of discarded options as well as of the reasons for their rejection is presented in more detail in Annex 12.

The remaining policy options, which all contribute to the general policy aim of reduction of unsafe and non-compliant product on the EU internal market, are presented under two broad policy objectives, each accompanied by simplification.

4.1. Policy objective 1: Consolidation and reinforcement of EU product safety rules

The options in the following sub-sections present solutions to the problem of inconsistency of EU product safety requirements.

4.1.1. Ensuring consistency of EU product safety requirements

4.1.1.1. Option 1.A – Baseline scenario: Keeping differences between consumer product safety requirements and harmonised product safety requirements

See above Sections 2.4.1.1 and 2.4.4.

4.1.1.2. Option 1.B – Aligning consumer product safety requirements with harmonised product safety requirements

Under option 1.B consumer product safety requirements would be aligned as much as possible with certain harmonised product safety requirements (with the exception of conformity assessment procedures and CE-marking) as described in the following table. Differences between these two sets of rules described above in Section 2.4.1.1, would be eliminated. For all consumer products, whether harmonised or non-harmonised, a single set of general product safety requirements would apply.[92]

4.1.1.3. Option 1.C – Consumer product safety requirements to be defined less strictly than harmonised product safety requirements

Under option 1.C consumer product safety requirements would provide for a lighter regime than that which is foreseen under the harmonised product safety rules. This would mean, for example, that the identification of the product and its producer for non-harmonised consumer products would be prohibited.

4.1.1.4. Option 1.D – Consumer product safety requirements to be defined more strictly than harmonised product safety requirements

Under Option 1.D consumer product safety requirements would be made stricter than harmonised product safety rules with respect to certain products or group of products. This would mean that the manufacturer or importer of a consumer product would have to comply with additional product safety requirements than those in harmonised product safety rules. Such additional safety requirements could, for example, consist of the obligation to (i) put on the product a unique identification sign, such as a numeric barcode, radio frequency identifier, or (ii) to indicate on the product, its packaging or accompanying documentation of further information like place or date of manufacturing of the product, address of the company in charge of collecting clients' claims etc.

4.1.2. Reducing ambiguity of product safety requirements for non-harmonised consumer products

4.1.2.1. Option 2.A – Baseline scenario: Necessity of creation parallel pre-standardisation procedures for non-harmonised consumer products

See above Sections 2.4.1.2. and 2.4.4.

4.1.2.2. Option 2.B – Direct applicability of ad-hoc safety requirements

The ad-hoc safety requirements which set the basis for establishment of mandates for the development of European standards for non-harmonised consumer products by the European Standardisation Organisations would become directly applicable. European standards adopted on their basis and published in the Official Journal would provide for presumption of conformity with the safety requirements set out in these directly applicable measures.

4.1.2.3. Option 2.C – Abolition of double adoption of the non-binding ad-hoc safety requirements

This approach would align the regime for developing European standards for consumer non-harmonised products with the reformed general standardisation procedures applicable to the harmonised area under Regulation (EU) No 1025/2012. This alignment would entail abolition of the current double adoption of specific safety requirements for products in the regulatory committees. Abolition of the double adoption of safety requirements would however not mean the abolition of these requirements as such. These safety requirements which provide the basis for the establishment of mandates for the development of European standards by the European Standardisation Organisations would continue to be established, but in a less formal procedure within the framework of the preparation of mandates in an expert discussion within the relevant committee. These mandates for developing European standards would then be formally adopted in the same way as they are for harmonised products. Once developed by the European Standardisation Organisations, the fulfilment of criteria of high consumer safety would be assessed vis-à-vis the general safety requirement.

4.1.2.4. Option 2.D –Fast-track procedure for adopting already existing European standards without mandates

Option 2.D builds on the previous option by providing for a fast-track procedure for adopting already existing European standards developed by the respective European Standardisation Organisation, even if those European standards were not adopted on the basis of previous mandates granted to European Standardisation Organisations by the Commission.

This procedure would allow for referencing existing European standards under the general product safety legislation to provide for the presumption of conformity under this Directive even if they were adopted outside a Commission mandate. In the case of an existing European standard which in the view of the Commission and the Member States satisfies the general safety requirement, the Commission would not have to do complicated "re-engineering" of requests for development of standards which already exist.

4.2. Policy objective 2: Better coordination and increased effectiveness of market surveillance activities on the single EU market for goods

The options in the following sub-sections present solutions for the problem of fragmentation of market surveillance activities on the single EU market. Due to the fact that market surveillance is the responsibility of the Member States (subsidiary principle), the European Commission does not have the power to decide the overall amount of national resources for market surveillance activities. The following options therefore focus on possible means to increase the impact of market surveillance efforts for a given level of resources at the EU level; additional resources for national markets surveillance authorities have to be funded from national budgets of Member States.

4.2.1. Reinforcing EU cooperation mechanisms

Despite the existence of an internal EU market, the intensity of coordination of market surveillance activities of Member States in the non-food product safety area lags significantly behind the level of coordination achieved in other areas, such as in the area of enforcement of economic interests of consumers or in the food safety area. The different options set out below represent different levels of potential coordination of market surveillance in the non-food product safety area: Option 3.B would advance the coordination of market surveillance to the level reached in the areas covered by the Consumer Protection Cooperation Regulation; Option 3.C is a middle step where the intensity of coordination is above the levels of the Consumer Protection Cooperation Regulation, but below the level of coordination in the food safety area; finally Option 3.D describes the most developed level of coordination reflecting that reached in under the EU Food Regulations.[93]

4.2.1.1. Option 3.A – Baseline scenario: keep status quo based mostly on voluntary market surveillance coordination

See above Sections 2.4.2.1. and 2.4.4.

4.2.1.2. Option 3.B – Coordination of cross-border enforcement of measures resulting from "in the-field" market surveillance

This option would define procedures for effective cross-border enforcement of measures resulting from "in the-field" market surveillance. Such procedures would consist of (i) a procedure triggered by a request for information, i.e. a process where authorities of one Member State would be able to ask other authorities for information on dangerous products or economic operators, and (ii) a procedure triggered by a request for action, i.e. process under which authorities of one Member State could call on authorities in another Member State to perform simultaneous inspections on economic operators based in the respective Member States.

Providing national market surveillance authorities with tools for coordination of concrete reactive action would help these authorities to cope with the growing globalisation of product supply chains. Thus, these authorities would be able to 'reach out' over national borders by effectively relying on assistance of market surveillance authorities from other Member States.

4.2.1.3. Option 3.C – Overall rationalisation of coordination of market surveillance activities

Option 3.C adds to Option 3.B the possibility of rationalisation of the currently dispersed pre-planned market surveillance activities. Indeed, an intelligence-led market surveillance supporting the proper functioning of the EU internal market needs to be based on the widest possible sharing of information relevant for the interception of unsafe products among the market surveillance authorities of Member States.

In particular, to ensure proper execution and continuation of joint EU market surveillance actions, their coordination would be put on a more permanent footing. This would be achieved by two means: by the implementation of the Multiannual Market Surveillance Plan[94] and through the establishment of a coordination network (referred to as European Market Surveillance Forum) ensuring cooperation of Member States’ authorities which would set EU-wide enforcement priorities in close cooperation with the Commission, coordinate the relationship with customs at an EU level, facilitate data exchange between the Member States, develop best practices (e.g. on risk assessment), etc. Similarly, the coordination activities at EU level would be streamlined: the current plethora of coordination groups and committees would become sub-groups of the European Single Market Surveillance Forum of market surveillance officials so that coherence and consistency of messages about the direction of market surveillance at a national level could be ensured.

Elements that would facilitate the coordination of market surveillance would be the discussion of national market surveillance plans[95] and the introduction of common reporting requirements[96] on the market surveillance activities performed, including self-assessment of their effectiveness.[97]

4.2.1.4. Option 3.D – Centralisation of EU market surveillance in the area of non-food products (EU Market surveillance agency)

Under this Option the intensity of market surveillance and the level of coordination between national market surveillance authorities of Member States would be brought to a similar level as in the food area. This Option 3.D would entail substantial investments into the non-food product safety market surveillance in order to establish the framework existing already in the food area consisting of a general auditing system[98] and a market surveillance agency.[99]

The general auditing system would relate to the checking of the quality of controls, inspections, samplings, testing of products and risk assessment performed. The auditing system would also assess the national market surveillance framework in terms of effectiveness of coordination between the relevant market surveillance services (i.e. coordination of regional, national, sector-specific bodies, including the RAPEX Contact Points), customs authorities, market surveillance authorities of other Member States and with the European Commission.

Furthermore, the market surveillance agency for non-food products would review the measures preventing and/or restricting free movement of products taken by national market surveillance authorities. It would assist national authorities in organising simultaneous market surveillance actions in more than one Member State. It would also elaborate harmonised inspection protocols, methods of risk assessment of products and economic operators and develop a harmonised approach to risk assessment and risk management.

4.2.2. Making EU product safety procedures more coherent

4.2.2.1. Option 4.A – Baseline scenario: Keeping the parallel notifications under RAPEX procedure and safeguard procedure

See above Sections 2.4.2.2. and 2.4.4.

4.2.2.2. Option 4.B – Simplification of the RAPEX procedure

The RAPEX procedure would be simplified. The requirements conditioning the sending of information on dangerous products to the Commission and other Member States would be made less onerous in order to enable easier and more cost-effective identification of dangerous products in other Member States on the basis of RAPEX notifications. The safeguard procedure, including its parallel notification obligations, would continue to function next to the simplified RAPEX procedure.

4.2.2.3. Option 4.C – Simplification of the RAPEX procedure and streamlining of that procedure with the safeguard procedure

The RAPEX procedure and the safeguard procedure could be streamlined so that only one notification for both procedures would be necessary. Once received and treated under the RAPEX procedure, other Member States or the Commission would have the possibility to raise an objection to such measure notified, in particular in the case of a difficult risk assessment, and thus trigger the Union safeguard procedure at the end of which the Commission will decide whether the adoption of the notified measure was justified or not.

4.2.3. More effective EU-wide product safety action

4.2.3.1. Option 5.A - Baseline scenario: Keeping EU-wide product safety measure indirectly applicable for a period of one year only

See above Sections 2.4.2.3. and 2.4.4.

4.2.3.2. Option 5.B - Extension of the scope of EU-wide product safety measures to harmonised non-consumer products

Extension of the application of EU-wide product safety measures to other non-consumer products is a natural consequence of the creation of a single market surveillance framework. If these measures remained limited only to consumer products, they would become a source of inconsistencies creating barriers to the single EU market.

4.2.3.3. Option 5.C - Making EU-wide product safety measures directly applicable

To avoid significant delays in implementation and differing dates of entry into force of EU-wide product safety measures in Member States as well as to achieve their uniform implementation, the Commission would make these EU product safety measures directly applicable to economic operators as of a pre-determined date.

4.2.4. Option 5.D – Removal of the limited validity of EU-wide product safety measures

To eliminate the confusion caused by repeated renewal of EU-wide product safety measures, the period of validity of the EU-wide product safety measures would be extended: the duration would be specified in the implementing act (either as limited or unlimited) taking into account the gravity of the situation, its urgency and other relevant circumstances.

4.2.4.1. Option 5.E – Combination of options 5.B, 5.C and 5.D

Last option 5.E consists of the cumulative combination of options 5.B, 5.C and 5.D. Under this option EU-wide product safety measures would not only be extended to harmonised non-consumer products and made directly applicable, but also their period of validity would be determined on a case-by-case basis.

5. ANALYSIS OF IMPACTS

5.1. Analysis of impacts of policy options under objective 1 (Consolidation and reinforcement of EU product safety rules)

The impacts of the different baseline scenarios under options 1.A, 2.A, 3.A, 4.A and 5.A are assessed in Sections 2.4.2., 2.4.4. and 2.4.5.

5.1.1. Ensuring consistency of EU product safety requirements

5.1.1.1. Option 1.B – Aligning consumer product safety requirements with harmonised product safety requirements

Decision (No) 768/2008/EC aligned the general non-risk related product safety requirements in the various pieces of harmonised product safety legislation. The same, however, did not happen with respect to consumer product safety requirements. In consequence, similar products in terms of its characteristics and safety properties, for example, toys and childcare articles, are subject to differing sets of rules.[100]

Also, the public consultation showed that 94% of national market surveillance authorities, 65% of other stakeholders consulted, including consumer and business associations, confirmed that the safety of consumers would be better ensured if the harmonised product safety requirements were also applied to non-harmonised products.[101] Thus, from the perspective of health and safety of consumers, aligning of consumer product safety requirements with harmonised product safety requirements would best achieve the objective of ensuring that only safe product circulate on the internal market.

For economic operators, an alignment of the consumer product safety requirements with harmonised product safety requirements would lower information-research costs and costs of legal advice. Economic operators would no longer have to spend additional time or costs on determining whether either the consumer product safety requirements or harmonised product safety requirements apply to the product in question. A reduction of costs of identification of applicable product safety rules could reduce the size of the category of economic operators who are willing to observe the rules, but unable to fully do so, and increase the number of those who are both willing and able to fully respect all product safety requirements. In sum, making consumer product safety requirements compatible with harmonised EU product safety requirements would thus provide the desired clarity and legal certainty since it would eliminate the existing overlap between inconsistent requirements under consumer product safety requirements and harmonised product safety requirements.

For market surveillance authorities, the alignment of consumer product safety requirements with harmonised product safety requirements would also have a positive effect on the effectiveness and efficiency of market surveillance. The effectiveness of market surveillance actions would be increased thanks to the alignment of the requirements. In particular, the requirements concerning the identification of the manufacturer and/or the importer authorities would enable enforcement measures directly at the source of the risk which represents the most effective and the least discriminatory enforcement approach. This option would also contribute to the non-discriminatory treatment of economic operators by market surveillance authorities of different Member States while allowing market surveillance authorities to track down non-compliant economic operators more quickly and at a lesser cost. Where the manufacturer and/or the importer are not identified, the restrictive or preventive measure against the dangerous product is usually addressed to the distributor. This is a less effective approach both from the safety and internal market surveillance perspective: containing the product at the point of sale will always stop a lesser number of products from circulating on the internal market than if stopped directly "at the source", that is at the point where the product is manufactured or imported to the EU as well as it being targeted to the person primarily responsible for the dissemination of the risky product, i.e. the rogue manufacturer or importers to the detriment of final distributors placed in the EU.

If the positive impact of the alignment of general non-risk related consumer product safety requirement and harmonised product safety requirements on the principal stakeholders can be estimated without serious difficulties, the same cannot be affirmed with respect to possible negative cost impacts. On the basis of discussion with relevant stakeholders in the framework of the targeted stakeholder meeting within the process of public consultation, it appears that producers do not structure their product lines or marketing practices according to whether a product is harmonised or not. This means that there are no separate production lines and marketing approaches for harmonised products on the one hand, and non-harmonised products on the other[102]. Thus, once a producer produces a harmonised product, it will extend the application of the harmonised product safety requirements also to non-harmonised product if he produces them simultaneously[103]. At the same time if the product is likely to be used by consumers, thus increasing the risk of liability for the producer, the producer will apply higher standards of care going beyond the requirement prescribed by the legislation. Therefore, it will not be unusual for producers of consumer products to apply certain additional safety requirements and precautionary measures for consumer products even if not prescribed by the legislation.

These statements seem to be confirmed by responses to the public consultation with respect to the general application of two elements of harmonised product safety requirements. With respect to the first example of a harmonised product safety requirement consisting of establishing technical documentation for products, most of the manufacturers appear to establish such documentation even in the non-harmonised area, i.e. in the area where they are not obliged to do so by the harmonised EU product safety requirements. In the public consultation 25% of responding economic operators indicated that they establish technical documentation for non-harmonised products because of the requirements of national law, 55% of responding operators establish technical documentation even without the existence of any rule obliging them to do so[104]. Furthermore, 30% of responding economic operators to the public consultation stated that they would expect a cost reduction if technical documentation would have to be established in the same way for all the products; 15% would expect a negligible cost increase, 10% a non-negligible cost increase while the remaining 45% was not able to indicate whether this requirement would lead to a cost increase or cost reduction.

Regarding the second example of a harmonised product safety requirement consisting in the identification of the manufacturer and of the product, according to the answers given in the public consultation, all the economic operators were ensuring traceability of products in one way or another: the most widely used means of ensuring traceability of products was the indication (on the product, its packaging or in the accompanying documents) of the identity of the manufacturer (77% of manufacturers responding), followed by the indication of identification of the product (46%), indication of the contact address and keeping the list of component suppliers (both 38,5%) and finally keeping the list of distributors (31%)[105].

On the basis of the above, it can be concluded that this option will have a positive impact on consumers and other users, economic operators other than manufacturers of non-harmonised product who manufacture and sell their products within a single EU Member State, and market surveillance authorities. Although there is a certain probability of the occurrence of negative impacts of the alignment in terms of a very small cost increase for a limited group of producers[106], this increase can be expected to be extremely marginal and would represent a hardly perceptible fraction of operating costs.

5.1.1.2. Option 1.C – Defining consumer product safety requirements less strictly than harmonised product safety requirements

This option will have a positive impact on manufacturers of non-harmonised products only. Given the fact that according to the aforementioned data from the RAPEX system there is no substantial difference between the number of notifications of measures taken against dangerous harmonised consumer products and dangerous non-harmonised consumer products, from the perspective of protection of health and safety of consumers, there seems to be no justification for defining consumer product safety requirements less strictly than harmonised product safety requirements. A concrete example is the electrical equipment covered by the Low Voltage Directive which is applicable to equipment designed to operate with a voltage rating exceeding 50 volts. This option would constitute a risk for the health and safety of consumers if a similar product, designed to operate with a voltage rating not exceeding 50 volts, would be subjected by the EU to less stringent safety requirements.

If consumer product safety requirements were defined less strictly than harmonised product safety requirements, the economic operators would face two sets of differing and product safety requirements – consumer product safety requirements and harmonised product safety requirements[107]. The costs of information research and/or the legal advice as to the applicable product safety requirements cases would not be reduced, since economic operators - when ascertaining which sets of requirements apply to their products - would still have to deal with two differing sets of legal requirements[108].

Moreover, keeping two differing sets of product safety requirements would not increase either the effectiveness or the efficiency of market surveillance. As indicated above, the public consultation showed that 94% of national market surveillance authorities, 65 % of other stakeholders consulted, including consumer and business associations, confirmed that the safety of consumers would be better ensured if the harmonised product safety requirements were also applied to non-harmonised products[109].

5.1.1.3. Option 1.D – Defining consumer product safety requirements more strictly than the harmonised product safety requirements

From the safety perspective, there do not seem to be any reasons to define consumer product safety requirements more strictly than harmonised product safety requirements on a permanent basis since the number of dangerous non-harmonised consumer products reported under the RAPEX procedure is not higher than the number of reported dangerous harmonised consumer products.[110] For the electrical equipment covered by the Low Voltage Directive, for example, it would lead to fairly absurd results: this Directive is applicable to equipment designed to operate with a voltage rating exceeding 50 volts but, under this option, a similar product designed to operate with a voltage rating not exceeding 50 volts, would be subject to more stringent safety requirements. This option will have a positive impact on consumers and other users.

For economic operators, the inclusion of additional or stricter requirements for consumer product safety requirements in comparison to the harmonised product safety requirements would not have any positive impact on the problem of legal uncertainty caused by the application of two differing sets of requirements for harmonised consumer products. If this option were retained, economic operators whose products would be subject to harmonised product safety requirements would have to check whether or not additional or stricter consumer product safety requirements do not apply on top of the harmonised product safety requirements. Clearly, this would not bring any reduction of related information research or legal costs to any category of economic operators.

Beyond that, if consumer product safety requirements were to include on a permanent basis additional or stricter requirements in comparison to the harmonised product safety requirements, it appears that this would bring no further added value either in terms of effectiveness or efficiency of market surveillance. For market surveillance authorities the minimum requirements of identification of the manufacturer and/or importer and the product appear to be sufficient for taking a speedy and effective action against dangerous products "at source", i.e. against the producer who put the dangerous product in question on the EU market, not against the distributor at the end of the supply chain.

5.1.2. Reducing ambiguity of product safety requirements for non-harmonised consumer products

5.1.2.1. Option 2.B – Direct applicability of ad-hoc safety requirements

One approach to the simplification of pre-standardisation procedures under the General Product Safety Regulation could consist in reinforcement of the ad-hoc safety requirements by making them directly applicable. On the one hand, making ad-hoc safety requirements directly applicable would make them stronger and more predictable, on the other hand, it would not contribute to the coherence of preliminary EU procedures for requesting standards. If ad-hoc safety requirements were to be reinforced, this would very likely require a heavier procedure in terms of costs both for the Commission and the Member States: as a result, the objective of a more efficient procedure would not be attained which would, in turn, prevent the EU from providing stakeholders with more European standards which ensure a uniform application of product safety rules throughout the internal market.

5.1.2.2. Option 2.C – Abolition of double adoption of the non-binding ad-hoc safety requirements

If the procedure leading to the formal adoption of non-binding ad-hoc safety requirements was simplified by the abolition of double adoption, the length of the period of the preliminary procedure leading to the establishment of mandates for developing EU standards would be substantially reduced. Thus, the Commission could - with the necessary input from the Member States – ask for inclusion of requests for developing European standards under the General Product Safety Regulation into the general standardisation working programme: the length of procedure leading to the establishment of mandates for developing EU standards under the General Product Safety Directive would become equal to the one under the New Approach Directives. At the same time, this approach would preserve the general character of the new Standardisation Regulation and thus contribute to the clarity of procedures leading to the establishment of mandates for developing European Standards.

5.1.2.3. Option 2.D – Fast-track procedure for adopting already existing European standards without mandates

The possibility of fast-track procedure for granting presumption of conformity to existing European standards would make it unnecessary to prepare and adopt mandates to the European Standardisation Organisations asking them for development of a European standard which already exists. In other words, where a European standard under the General Product Safety Regulation was developed already by European Standardisation Organisations outside of a mandate, it would not be necessary to "re-create" such a mandate, but to simply decide that such a standard does or does not comply with the general safety requirement. The artificial "reverse engineering" of mandates for European standards would be eliminated. Thus, allowing granting a presumption of safety for already existing European standard developed by the European Standardisation Organisation outside a mandate would further reduce the unnecessary administrative burden hindering faster development of usable European standards under the General Product Safety Regulation.

5.2. Analysis of impacts of policy options under objective 2 (Better coordination and increased effectiveness of market surveillance activities on the single EU market for goods)

Further improvement of market surveillance for products in the EU through an enhanced effectiveness of the efforts by market surveillance authorities would have a deterrent effect on rogue traders and would increase the detection of unsafe and/or non-compliant products. Consequently, this, would lead to less unsafe and/or non-compliant products becoming or remaining available on the market and to a general positive impact on society (human health, environment, social protection). Yet, these effects would necessarily be indirect so that it is impossible to estimate them precisely.[111]

5.2.1. Reinforcing EU cooperation mechanisms

5.2.1.1. Option 3.B – Coordination of cross-border enforcement of measures resulting from "in the-field" market surveillance

Providing national market surveillance authorities with tools for coordination of concrete reactive action would help these authorities to cope with the growing globalisation of product supply chains. Thus, these authorities would be able to 'reach out' over national borders by effectively relying on assistance of market surveillance authorities from other Member States. For example, being able to perform simultaneous checks on economic operators active in different Member States would increase the effectiveness and coherence of market surveillance action on the single EU market. This would in turn positively influence the consistency of protection of consumers and other users within the Union. Therefore, this option will have a positive impact on consumers and other users in the EU.

At the same time this option will improve coherence of market surveillance practices across the Member State and provide a more level playing field for compliant economic operators. As a matter of fact, in the public consultation, 93% of national market surveillance authorities and 81% of economic operators consulted agreed that more intensive information sharing and cooperation between Member States would ensure more equal treatment of economic operators by national market surveillance authorities throughout the EU with respect to similar products[112]. This improvement could be considered a concrete positive impact on economic operators, although not quantifiable[113].

This option will also have a positive impact on compliant economic operators because an improvement of the effectiveness of market surveillance will necessarily reduce the unfair competition by non-compliant economic operators[114]. Conversely, the option would have a negative impact on those who, once the marketing of their dangerous product has been stopped in one Member State, try to sell it to consumers in other Member States where at that moment it would not yet have been prohibited. A negative impact of non-compliant economic operators would, also, have a positive impact for consumers and other users due to the increased level of safety as well as on compliant economic operators thanks to the limitations of unfair competition from non-compliant economic operators. It can be reasonably expected that the consequence of a more coordinated market surveillance framework at EU level would reduce the size of the category of economic operators "unwilling to respect the product safety rules" since certain gaps in the EU market surveillance through which these unscrupulous economic operators can currently escape would be closed.

The costs of market surveillance authorities might increase slightly due to the need to answer the request for assistance (e.g. contact a specific economic operator based in the national territory) by colleagues in other Member States, but the increase is expected to be more than offset by the advantage of benefitting from this assistance.

5.2.1.2. Option 3.C – Overall rationalisation of coordination of market surveillance activities

Option 3.C represents a more ambitious development of Option 3.B: under Option 3.C not only reactive, but also proactive market surveillance would be performed within a coordinated EU framework. This is expected to further improve the overall performance of market surveillance with respect to the previous option.

During the public consultation, 86% of national market surveillance authorities and 96% of other stakeholders, including consumer and business associations agreed that more intensive information sharing and cooperation between Member States would further enhance the safety of consumers throughout the EU[115]. In particular, the coordination of market surveillance activities of the authorities of different Member States was appreciated, since it brings tangible benefits for the enforcement activities at EU level: sharing of expertise with other market surveillance organisations was quoted by the national market surveillance authorities as the most visible benefit of these actions (95%), followed by advice on interpretation issues (60%), joint press activities (49%) and lower costs for surveillance activities, such as sharing of testing costs (46%). The joint market surveillance actions caught the attention of 62% of economic operators consulted, although a large majority of these operators (91%) were not able to give opinions as to whether these actions brought concrete benefits also to businesses[116].

The experience with the functioning of the systematic coordination of pro-active market surveillance activities of Member States has shown that it cannot be effective and work efficiently if it is performed on an ad-hoc basis lacking long-term perspective and planning tools. Consequently, if systematic coordination is to produce tangible added-value with impacts in concrete situations, it needs to be based on an EU defined framework, the functioning of which would be supervised by the Commission. While this systematic coordination has so far mainly focused on assisting the Member States with the administrative activities for joint surveillance actions, experience with horizontal projects[117] has also shown that these projects are beneficial for raising the quality of market surveillance and minimising differences between the Member States.[118] In particular, systematic coordination of different market surveillance fora[119] could help resolve problems of differing safety evaluation of identical products since more coherent approaches could be reached at the EU level.

The new elements which would be introduced to the pro-active market surveillance framework (establishment of a coordination network, the streamlining of coordination groups and committees, introduction of common reporting requirements, establishment of common enforcement priorities at the EU level, including the joint market surveillance actions) would bring benefits for a better organisation of the coordination of the market surveillance framework at EU level compared to the baseline scenario of the current situation.[120]

This option would have an important positive impact on consumers and other users in the EU, as well as on compliant economic operators for the same reasons explained under the previous Option 2.B. However, since the intensity of coordination would be stronger than under the previous option, the size of the impacts is also expected to be higher. Similarly, a further reduction of the number of rogue operators could be foreseen.

Under of this option, market surveillance authorities are not expected to bear more costs than under the previous one as most coordination efforts will take place by using EU tools (exchange of information tools, experts' groups meetings).

5.2.1.3. Option 3.D - Centralisation of EU market surveillance in the area of non-food products (creation of EU Market Surveillance Agency)

The centralisation of EU market surveillance in the area of non-food products by the establishment of an EU Market Surveillance Agency could be the next level of the integration of the single EU market. This Option represents a higher degree of market surveillance coordination integrating previous Options 2.B and 2.C so as to bring the intensity of market surveillance and its coordination in the EU to the level achieved in the food area.

On the one hand, the establishment of a general auditing system regularly verifying the fulfilment of pre-established common performance indicators and a European Market Surveillance Agency in the non-food area would constitute a major leap forward in the establishment of a common Union market surveillance framework for the internal market of goods.

On the other hand, the establishment of such a highly advanced coordination framework, including the creation of an EU Market Surveillance Agency in the area of non-food products, would entail very significant costs due to the need for construction of coordination infrastructures and capacity which currently do not exist at EU level. These costs would entail the building and maintenance of the necessary infrastructure, such as (i) establishment of a new EU Agency, (ii) hiring EU market surveillance inspectors able to review the activities of national market surveillance authorities and perform their peer assessment, (iii) providing the new Agency with facilities necessary for performance of their activities etc. A precise estimate of these costs is not possible. However, the order of magnitude can be imagined by reference to existing agencies that carry out similar tasks, in particular the European Food Safety Agency (EFSA) – performing pre-marketing approvals as well as market surveillance functions - and the European Commission's Health and Consumers Directorate-General directorate known as the Food and Veterinary Office (FVO) performing market surveillance functions only (system inspection activities). The annual budget of EFSA is estimated around 75 million EUR, which is mainly allocated for carrying out risk assessment activities, including scientific opinions and advice to provide support for policy making at EU level, as well as to support the EU Member States in taking effective and timely risk management decisions. The budget of FVO is estimated at around 30 million EUR annually. In this respect, it can be reasonably envisaged that the total annual budget needed for an EU Agency responsible for risk assessment and market surveillance of non-food products could be estimated to something slightly less than the sum of the budget of the aforementioned too institutions, i.e. slightly below EUR 100 million.[121]

Any EU Agency for market surveillance could not replace the national systems who would certainly maintain a core advantage in carrying out enforcement work in their own countries due to their specific language and market knowledge, proximity and the fact that all individual enforcement decisions are taken under national competences and procedures. Moreover, from a financial point of view, national authorities already spend over 100 million EUR[122] on enforcement activities related to product safety. In spite of this, a reduced capacity to tackle the overwhelming inflows of new products sold in the EU every year is a recognised fact.

The creation of an EU Agency for market surveillance would add a second layer of checks, potentially improving the effectiveness of enforcement, but there are no guarantees and not even reasonable indications that, from a financial point of view, the investment in such a body would be justified and cost efficient in finding the unsafe products among all the products that economic operators bring to the market where there are no mandatory pre-marketing controls.

In the public consultation, the option of the creation of an EU Market Surveillance Agency in the non-food product safety area received only half-hearted support from market surveillance authorities, consumer and business organisations. When asked about how the cooperation between market surveillance authorities could be improved, both national market surveillance authorities and consumer and business organisations, including consumer and business associations, indicated in the first place the option of the increase of financial support for joint market surveillance actions (81% and 78% respectively), and in the second place the possibility of providing more financial support for exchanges and training of the officials (56% and 71% respectively). However, there was also support for the option of establishing a coordination body ensuring cooperation at EU level between national authorities (71%) and for the option of establishing more detailed rules for cooperation at EU level (69%). With the national market surveillance authorities consulted, this coordination body option ranked as third with the support of 54% of the authorities consulted followed by the establishment of more detailed rules for cooperation at EU level (42%).

In contrast, economic operators indicated in the first place the establishment of a coordination body ensuring cooperation at EU level between national authorities, although with relatively lower support (40%) followed by obligatory participation of national market surveillance authorities in joint actions and other possibilities (both 14%).[123]

In the public consultation 74% of national market surveillance authorities consulted indicated that in the case of divergent safety evaluations in different Member States in respect to identical products, a repeat test in an additional laboratory would resolve the problem of divergent safety evaluations. However, as far as economic operators consulted were concerned 65% were unsure whether an additional test in such a situation would bring the desired solution.

This option could be expected to have a positive impact on consumers and other users in the EU, as well as on compliant economic operators. At the same time it would significantly improve coherence of market surveillance practices across the Member State and enhance the possibilities of spreading know-how and best market surveillance practices. Similarly to the previous option, it would have a negative impact on non-compliant economic operators who, once the marketing of their dangerous product was stopped in one Member State, try to sell it to consumers in other Member States where at that moment it has not yet been prohibited.

The costs of market surveillance authorities will definitely increase as working under the supervision of the EU Agency would imply a reorganisation of current working methods and procedures.

5.2.2. Making EU product safety procedures more coherent

In order to ensure rapid dissemination of information on risky products throughout the EU, it has to be ensured that the RAPEX system is used and applied in each Member State in the same way and that it provides accurate, up-to-date and usable information for market surveillance authorities of other Member States.

On the one hand, the costs of administration of the various notifications provided by Member States to the Commission should be limited as much as possible so that resources can be used for the on-the-field market surveillance enforcement. On the other hand, the simplification of procedures and of the IT systems could trigger an increase in their use (and potential higher costs for Member States), but that would depend on each authority's own willingness to make use of these facilities (beyond the unchanged legal requirements) and their degree of involvement at that particular point in time. [124]

5.2.2.1. Option 4.B – Simplification of the RAPEX procedure

Main stakeholders overwhelmingly see the positive role of the RAPEX system in the product safety area and consider that it contributes to better protecting the consumers throughout the EU.[125] The notification criteria could be simplified and a clearer obligation to have an effective follow-up could be put in place. According to respondents, changes limited to the RAPEX notification criteria, or making them more precise, would not make the notification process easier.[126]

5.2.2.2. Option 4.C – Simplification of the RAPEX procedure and streamlining of that procedure with the safeguard procedure

The RAPEX procedure and the safeguard procedure could be streamlined so that only one notification for both procedures would be necessary. Once received and treated under the RAPEX procedure, other Member States would have the possibility to raise an objection to such measure notified, in particular