Opinion of the Economic and Social Committee on "Simplifying rules in the single market (SMO)"

(2001/C 14/01)

On 29 April 1999 the Economic and Social Committee, acting under Rule 23(3) of its Rules of Procedure, decided to draw up an opinion on "Simplifying rules in the Single Market".

The Section for the Single Market, Production and Consumption, which was responsible for preparing the Committee's work on the matter, adopted its opinion on 19 July 2000. The rapporteur was Mr Vever.

At its 376th plenary session (meeting of 19 October 2000) the Economic and Social Committee adopted the following opinion with 86 votes in favour and one abstention.

1. Summary of the Committee's recommendations

1.1. The Committee stresses the urgent need to embark on a process of simplifying regulations in the single market, whilst also improving the quality of their provisions, their incorporation into national law and the freedoms and responsibilities of the civil society players.

1.2. To this end, the Committee calls on the Stockholm European Council in the spring of 2001 to adopt, on a proposal from the Commission, a multiannual simplification plan, setting out objectives, priorities and methods, and earmarking budgets and resources for monitoring and follow-up action. The implementation of this plan should be reassessed each year, at the spring European Council, on the basis of a Commission report.

1.3. The Committee proposes that this plan provide for the adoption of codes of conduct by the EU institutions, ensuring that they help to promote the simplification of rules rather than make them more complex. The Commission will have to set an example, by inculcating a culture of simplification within its own departments and by attaching the recently created simplification unit directly to the Secretariat and providing it with sufficient resources. The Member States and their administrations will also have to be encouraged to adopt codes of conduct and to help to disseminate best practice in this area.

1.4. The Committee stresses the need to improve the impact assessments which must accompany all draft legislation: these assessments must henceforth be carried out under conditions which fully guarantee their independence and quality, they must include a systematic examination of alternatives to regulatory measures (i.e. contractual agreements, self-regulation and co-regulation), together with a rigorous assessment of the contribution which the proposed legislation will make to simplification, and they should be made public.

1.5. The Committee recommends that the Commission re-assess its choice of the regulatory instruments to be employed; in addition to prior consideration as to whether alternatives exist to regulatory measures, the Commission should also (a) make more frequent use of Regulations in cases where this would appear to be necessary to achieve effective simplification; (b) create conditions for successfully extending mutual recognition; (c) reduce freedom for manoeuvre over the interpretation and implementation of Directives, and (d) consider introducing Directives which would entrust the socio-economic players, rather than merely the Member States, with a share of responsibility for specifying and implementing the fundamental requirements of the Directives.

1.6. The Committee, as the EU assembly representing the "users" of Community rules, asks the Commission to ensure that it is actively involved in the framing, implementation and annual review of this simplification process, prior to consultations with the Parliament and the Council.

1.7. In particular, the Committee wishes to be consulted by the Commission every year on key topics which merit coverage in SLIM projects and test panels.

1.8. In order to make an effective contribution to the simplification process, the Committee is adopting a code of conduct, according to which it will:

- keep an ongoing strict watching brief on what has to be done to achieve simplification and on the quality of the rules and their efficacy from the point of view of their "users";

- take the necessary steps, when organising its work, to enable it to respond in good time to early consultations in these fields;

- draft an annual report on the stage reached in the multiannual simplification plan;

- systematically examine the impact assessment for each draft;

- draw the attention of the EU institutions to the possible need to steer EU rules towards an approach based on contractual agreements, self-regulation and co-regulation;

- engage in dialogue with the European economic and social players to alert them to the need for them to meet their direct responsibilities - particularly their contractual responsibilities - in respect of EU rules;

- engage in dialogue with the Committee of the Regions regarding the regional aspects of simplification; and

- engage in dialogue with the economic and social councils in the Member States so as to enable them to play an analogous role at national level to the role which the Committee has set itself at European level, in order to contribute to the success of the simplification process.

2. Preliminary comments

2.1. Simplifying rules is now, more than ever, a matter of public concern in Europe for a number of reasons:

2.1.1. the steady increase in the number of national rules which is curbing the scope for freedom of action and private and collective initiatives in the Member States, whilst at the same time complicating mutual recognition between states at European level;

2.1.2. the recurring questions over the extent of intervention by the EU authorities and the complex nature of even the harmonisation provisions, which frequently involve inextricable overlaps between EU and national levels of intervention;

2.1.3. the continued existence of superfluous specific provisions - and even the addition of further such provisions by the Member States when they transpose EU provisions into national law - not to mention the delays and difficulties in transforming these provisions into national law.

2.2. This concern over the need to simplify rules is linked to the EU public's growing aspirations regarding the quality of goods, services, work, living conditions and the environment. The quality of laws and rules cannot be excluded from these overall expectations. The EU should be regarded in this field, as in others, as a guarantor of positive added value. The emergence of a "new" trading economy, built on a more interactive, transparent and decentralised relationship, also calls for the development of a corresponding "new administration" by citizens, based on a "new legislation" better adapted to the cultural changes in the behaviour and aspirations of 21st century Europeans. The objective set by Commission President Romano Prodi, namely to build an EU administration of excellence, can and must point the way towards the major shift which Europeans are now waiting for.

2.3. Studies have been carried out at EU level into simplification requirements, one example being the Molitor Report of 1995. These reports were backed up by similar reports drawn up by international bodies, such as the OECD. Several Member States have carried out appraisals and introduced measures to curb the excessive amount of new rules and simplify existing rules.

2.4. At EU level measures have been set in train in recent years with a view to (a) endeavouring to improve methods of intervention, for example by drawing up impact statements, and (b) correcting excessively complicated rules, mainly through the use of SLIM projects. However, neither professionals nor the EU public as a whole feel that really significant results have so far been achieved in this field. Indeed, the EU is frequently felt to complicate matters by imposing further "technocratic" restrictions on national rules, without fundamentally altering the complexity or the quantity of those rules.

2.5. The Single Market Observatory (SMO) has made a number of very clear observations, which back up the above analysis, on the basis of surveys and hearings which it has organised, in particular the hearing held on 17 May as part of the preparations for this report. Its findings are as follows:

2.5.1. EU rules are generally regarded as too complex vis-à-vis the expectations of users;

2.5.2. simplification of the rules is regarded as being really necessary for users; it is widely agreed that if such simplification is carried out properly it would not be prejudicial to the interests of civil society players but should rather directly promote their autonomy, consideration of their views and their interests;

2.5.3. however opinion is equally divided between those who see harmonisation, a priori, in terms of its contribution to simplification, and those who are concerned about the frequent overlap of European and national provisions, which is felt to result as much from over-intervention on the part of the EU as, conversely, from the maintenance or even introduction of superfluous national provisions when EU Directives are transposed into national law;

2.5.4. an extremely large majority consider that insufficient progress has been made on simplification at Community level, whilst there is unanimous emphasis on the fact that the simplification process needs to be speeded up considerably before enlargement;

2.5.5. there is also universal emphasis on the need for a parallel approach to simplification in the Member States if the process of simplification of EU rules is to succeed;

2.5.6. similarly, there is universal agreement on the need to develop contractual dialogue and self-regulatory measures, in preference to the exclusivity of traditional regulations, in areas which are particularly sensitive for the economic and social players, such as social affairs, environmental protection, consumer policy and e-commerce; and

2.5.7. there is a universal expectation that the Economic and Social Committee will actively press for simplification in the interests of "users", with particular emphasis on its natural role in ensuring the development of contractual and self-regulatory alternatives to traditional regulatory measures.

2.6. The Lisbon European Council, held on 23 and 24 March, provided a mandate for responding to this evident desire for a new approach to simplification by agreeing to set out, by 2001, a strategy for simplifying the regulatory environment. This would address the way in which the public administration operates, at both national and EU level, and would pinpoint the areas in which the Member States need to step up their work on transposing EU law. As part of its new targeted measures for the Single Market, the Commission plans to put forward proposals for achieving these objectives at the beginning of 2001.

2.7. The Economic and Social Committee - as the representative of the economic and social players who are the "users" of the rules in question - considers that improving the quality of regulations in the EU is vital for the following reasons:

2.7.1. it directly impacts on the smooth operation of the Single Market;

2.7.2. it is a determining factor in the EU public's support for the European venture;

2.7.3. it forms part and parcel of the general issue of better governance in Europe, an issue which will be the subject of a European Commission white paper to be issued by June 2001;

2.7.4. it is a matter of growing urgency in the light of the preparations being made for EU enlargement.

2.8. The Committee recognises that the successful simplification of rules is a complex matter; it is essential to avoid a number of pitfalls and to adopt the right approach. The aim is not drastic and simplistic deregulation which would jeopardise the quality of both products and services and the overall interest of all "users" - be they business people, workers or consumers. Both the economy and society need rules in order to enable them to operate effectively; a number of conditions do, however, need to be met:

2.8.1. rules must be drawn up and applied at the right level which, depending on the circumstances, may be international, EU, national, or regional or local. Globalisation is not so much generating a surplus of rules at international level but rather a shortage of such rules. This fact has been made abundantly clear by the problems being faced by the WTO at a time when there is a growing surplus of national rules and an overlapping - which needs clarification - between national and EU rules;

2.8.2. rules must be drawn up in a balanced way, avoiding the introduction of new constraints which are out of proportion to the objective being pursued and allowing the development of areas of freedom and contractual autonomy for civil society players, who should be directly involved in the elaboration and implementation of simplification policies; simplification will not succeed if it is the almost exclusive reserve of civil servants.

2.9. The EU level is the right level for addressing the simplification issue as:

2.9.1. it provides a fundamental basis which allows the Union, bolstered by an effective and coherent single market, to play its part in the vital process of drawing up rules at international level, in the context of globalisation;

2.9.2. one of the intrinsic aims of EU legislation is - and this needs always to be borne in mind - to simplify things, since it seeks to harmonise and unify 15 different sets of national rules in order to enable the single market to operate effectively, whilst not being above criticism as regards the areas and content of EU intervention;

2.9.3. national rules should not disregard the needs of an effective single market by applying EU rules too freely or by failing to recognise their vital role in simplifying the operation of this major market.

2.10. The purpose of the present own-initiative opinion is not to set out a new list of simplification measures in specific areas of intervention but rather to:

2.10.1. get to grips with the reasons behind what is generally regarded as a failure, by analysing why EU rules are so complex and making an appraisal of both the main positive points and also the real limitations of the simplification measures already set in train;

2.10.2. propose that a more coherent and more in-depth approach be adopted in order to bring about successful simplification; this means reviewing the responsibilities of the various European players under the simplification policy and introducing more effective methods and criteria for appraisal, consultation and follow-up action.

3. The reasons for the complex nature of EU rules

3.1. The main reason why EU rules are complex is linked to economic and social needs and the heightened political demand for action at EU level, when such action has to take account of national situations and cultures which often differ greatly. It is symptomatic that the call made at the Lisbon Summit in March 2000 for the early introduction of a European strategy to promote simplification coincided with the establishment, at the same Summit, of an unprecedented agenda of new economic and social measures to be carried out jointly by the EU institutions and national governments. This desire to simplify rules may at first glance appear to be like trying to square the circle bearing in mind the complex problems hampering harmonisation at EU level, such as the cumbersome decisionmaking procedures, the influence of forces opposed to administrative change and the pressure brought to bear by the various lobby groups in Brussels and Strasbourg.

3.2. The abovementioned factors are aggravated by a failure to carry out a systematic and reasoned appraisal of the cost of having such complex rules, since neither the EU institutions nor the national governments have so far established real ways of pursuing the EU regulatory process while also simplifying it; they have confined themselves to carrying out a number of ad hoc measures which are of limited effect in the absence of a general, coherent political framework for promoting simplification. Cost needs to be understood in a comprehensive way; in other words, equal account must be taken of issues such as the cost of the time unduly lost by members of the public as a result of excessive bureaucracy, the economic cost of the excessive burden imposed on enterprises, particularly SMEs, by the need to respond to complex rules, and the budgetary and therefore fiscal cost of an over-bureaucratic distribution of administrative expenditure, when this money could be better used for the public benefit.

3.3. Institutional procedures are partly to blame, even though in their case they impose constraints rather than giving rise to systematic obstacles to simplification. All too often, the only way to achieve agreement which enjoys majority (or better still unanimous) support - firstly from members of the Commission and subsequently at the Council and in the co-decision and conciliation procedure with the European Parliament - is by accepting a complex political compromise, in which the clear interest of users often goes by the board. The - in itself - praiseworthy desire of the half-yearly presidencies of the EU Council to adopt a good tally of decisions may also lead to sacrifices as regards the intrinsic quality of particular decisions.

3.4. The choice of legal instrument is frequently unsuitable. Some Regulations are unduly cumbersome and complex when, with a little more give and take, they could have been simplified without becoming any the less effective - indeed rather the opposite. Some Directives give Member States excessive room for manoeuvre without imposing any proper checks either on the level of complication which this leeway could cause to "users", or on the resulting level of harmonisation which will be inadequate to ensure proper operation of the Single Market. In some cases, the very freedom which Directives leave Member States to introduce or retain national provisions which go way beyond the common provisions may unduly complicate relations, when the use of a uniformly applied Regulation would have simplified them under terms that would have been acceptable for all the parties concerned. In still other cases, mutual recognition clauses cannot be applied because there is no legal follow-up or monitoring to enable them to operate properly in practice.

3.5. Attention is also drawn to the fact that virtually all EU rules derive exclusively from the close circle of EU institutions which have decision-making or co-decision-making powers, namely the European Commission, the European Parliament and the Council. Although there has been an extensive European debate on subsidiarity, it has hitherto focused too exclusively on the vertical aspects of the concept (i.e. the distribution of functions between European and national or regional level) and has largely neglected the horizontal aspects (i.e. the distribution of functions between rules and areas where contracts or codes of conduct can be applied). Consequently, although this horizontal dimension is firmly entrenched at national level in many Member States, it has not been extended or given rise to comparable measures at European level. With the notable exception of the European social dialogue (under which three inter-sectoral agreements - subsequently transformed into Directives on parental leave, part-time work and fixed-term work - have so far been concluded - thereby making it an instrument which remains under-utilised), together with a number of voluntary agreements and codes of conduct (e.g. on environmental conservation - under the European Auto Oil Programme - and the reduction of energy consumption), the socio-economic players directly concerned by the introduction of EU rules benefit from few areas of contractual freedom. This failure to establish a proper culture of partnership - based not only on consultation but also, where appropriate, on co-decision-making powers - with the socio-economic players, combined with the adoption of an essentially political and administrative approach to decision-making, makes it difficult for civil society representatives to play a responsible role in the simplification drive. Instead, this failure prompts them to intensify pressure of a highly corporatist nature - which is not conducive to simplification - on political and administrative decision-makers.

3.6. Consultative bodies, such as the Economic and Social Committee, which represent the full range of economic and social players, by no means always have sufficient institutional clout vis-à-vis the tripartite joint decision-making structure represented by the European Commission, the European Parliament and the Council. As it is consulted at a late stage, at the very moment when the co-decision making bodies take up the matter, the Committee faces real institutional problems in bringing sufficient influence to bear to enable EU rules to reflect the views of the "users" by moving more towards simplification. If the quality of EU rules is to be improved, consideration must also be given to upgrading the role played by consultative bodies.

3.7. There are frequently problems of alignment between EU rules and national rules. The increasing recourse to Directives, rather than Regulations, means that the provisions agreed at Brussels are often simply "tacked onto" national laws without changing them in a substantial way, let alone taking their place. Sometimes Member States also bolt on much more far-reaching national provisions when transposing EU Directives.

3.8. The lack of "euro-compatibility" of many national provisions also impedes the smooth operation of mutual recognition schemes, as was clearly shown in a report issued by the Commission in June 1999.

4. The consequences of having complex rules

4.1. From an economic and social standpoint, the existence of overly complex EU rules is damaging to economic competitiveness which, in the current extremely competitive international context, is, more than ever, a necessary, though not always sufficient, condition for job creation and growth. It penalises entrepreneurial spirit and creativeness and hampers the establishment of small businesses, including the types of start-up which are essential if the EU is to have a dynamic "new economy". On a more general level, complex rules impede the capacity to innovate and curb the ability to adapt to changing circumstances and carry out reform. The current situation represents a major handicap to a Europe which is in the throes of change and has to contend with the demands of globalisation and the need to find a new creative dynamism.

4.2. Complex rules also have a detrimental effect on the freedom and social life of the people by imposing time-consuming procedures and costs. They also increase inequality as not everyone is able to understand them, and they heighten, rather than reduce, the factors which cause social exclusion.

4.3. From a political standpoint, the complexity of EU rules, for which the Member States refuse to accept direct public responsibility, fuels the concerns, not to say the alienation, of a large part of public opinion vis-à-vis "eurocracy" at a time when the EU should rather be regarded as offering an additional guarantee of freedom, democracy and security. The lack of scope for contractual dialogue between the socio-economic partners directly concerned is also sapping the vitality of collective democracy at EU level at a time when major economic, technological and social challenges make it necessary to expand direct public participation in the EU.

4.4. The existence of complex rules in the internal market reduces the EU's ability effectively to remove barriers at a time when it needs a new dynamism to complete the essential tasks facing it in the run-up to enlargement. A number of simple legal instruments have yet to be introduced at EU level, such as a real European company statute, a reliable and inexpensive Community patent and a simplified EU VAT regime.

4.5. From the legal standpoint, having complex EU rules also serves to amplify the number of cases of failure to incorporate EU provisions into national law and the number of legal disputes with the Commission and the Court of Justice. One of the key goals of simplification should be to achieve a higher level of transcription of EU provisions into national law and a marked improvement in the enforcement of EU provisions.

4.6. This issue is of major importance in the light of the preparations for EU enlargement. The simplification of EU rules will help the applicant states to fulfil the heavy demand placed upon them of having to incorporate into national law the whole body of EU legislation, whilst also facilitating transposal in the existing 15 Member States, who have hardly shown the best example to the applicant states up to now. Simplification of the rules will also help to improve the operating conditions for the single market in an enlarged EU.

5. Appraisal of the simplification measures already carried out

5.1. During the 1980s, in the middle of the subsidiarity debate, the Commission agreed to draw up an impact assessment on all draft EU provisions, designed to justify EU action and analyse its cost-benefit ratio. These impact assessments follow a common pattern, comprising justification in the light of the subsidiarity principle, an assessment of the economic and social impact - including the consequences for SMEs - and an indication of the consultations which have been carried out. Whilst constituting a praiseworthy initiative, this measure has had limited impact in its current form since no strict guarantee can be given as to the independence of the assessment, it fails to include a prior examination of alternatives to EU rules, makes little or no effort to carry out a systematic verification of the real degree of simplification resulting from the proposed provision and, finally, since no external publicity is given to the impact assessment.

5.2. In the 1990s the European Commission paid considerable attention to drawing up (a) green papers, designed to stimulate public debate before a start was made on drafting EU provisions, (b) white papers, setting out an overall programme of rules for a particular field, and (c) communications, which identify problem areas and provide analyses in the run-up to the presentation of specific proposals. With technological backup provided by the Internet, which the European Commission now rightly utilises to a large extent, particularly through its "Europa" site, the abovementioned practices have made it possible to trigger an interactive public dialogue on proposed EU action. The impact which this extended prior consultation has on the simplification of rules is, however, bound to remain limited as long as the Commission confines itself to launching a debate on the proposed contents of EU provisions, rather than making a systematic appraisal of possible alternatives to EU rules, such as codes of conduct and forms of self-regulation.

5.3. In 1995, in response to a request from the European Council, a working party was set up under the chairmanship of Mr Molitor to consider ways of simplifying EU rules.

5.3.1. In addition to a number of proposals for the redrafting of several technical rules, the report set out 18 general recommendations. Many of these have since been largely put on the backburner and it is worth recapping them:

- to speed up the consolidation of rules at both EU and national level;

- to set in train a programme of simplification covering all existing EU laws and their incorporation into national law;

- to ask the European Commission to submit reports on the rules which should be retained, amended or withdrawn;

- to raise a number of questions prior to the introduction of draft rules (whether the proposals are appropriate, whether the subsidiarity principle has been respected, the cost-benefit ratio, alternatives to public action, proportionality, time restrictions);

- to ask the European Commission to carry out public investigations into the incorporation of EU measures into national law;

- to observe a series of criteria for the introduction of all new measures: the need for provisions to be readily understandable, to have well-defined objectives, be consistent with existing laws, the need to define the field of application, to set a realistic timetable, and to make provisions for review procedures;

- to publish prior studies;

- to consult interested parties (consumers, businesses, workers) in an effective and systematic way and in good time;

- to set out explanatory memoranda in respect of employment, competitiveness, costs and innovation;

- to make public the reasons why Member States support or oppose the proposed measure;

- to introduce systematic, public procedures for assessing the outcome of the measures;

- to pursue simplification at national and local levels, and also when transposing EU law into national law;

- to monitor enforcement of the provisions by the national authorities more closely;

- to fine Member States which drag their feet over the enforcement of EU rules;

- to make use of Regulations rather than Directives if this can further the goal of simplification;

- to apply mutual recognition wherever possible;

- to ask the European Commission to give advance notice of its proposals and to make increased use of green papers and white papers;

- to ask the Commission to present progress reports on simplification; this could involve giving one of the Commissioners responsibility for simplification and setting up a small central coordinating unit to provide backup.

5.3.2. Five years after its publication the Molitor report remains highly topical, particularly since its recommendations have achieved few really significant results. Two main reasons may be advanced for this:

5.3.2.1. firstly, the report could have been improved by taking its analysis and proposals still further: it could have highlighted more clearly the reasons behind the administrative complexity (e.g. a general culture amongst decision-makers and administrators which does little to encourage simplification) and consider how the situation could be remedied. The report concentrated on tackling the symptoms and effects of having complex rules; it was difficult to propose effective solutions since the necessary prerequisite was missing; moreover, the report failed to make explicit provision for the introduction of monitoring, audits and other budgeted measures to ensure simplification policy which was viable in the long-term and was constantly strengthened;

5.3.2.2. secondly, the Council which commissioned the Molitor report did not take practical action at the time since it was not able to use the report as a basis for adopting a genuine political programme on simplification, although the report explicitly recommended that it did so; for its part, the Commission has built on several of the report's recommendations, but mainly in ad hoc and partial initiatives.

5.4. Of the ad hoc initiatives introduced by the Commission, particular mention must be made of its Simplification of Legislation in the Internal Market (SLIM) programme, introduced in 1996. This initiative has already resulted in fourteen projects designed to simplify various rules adopted earlier by the EU. The SLIM working parties, comprising an equal number of experts representing national administrations and representatives of users, put forward proposals for simplifying EU rules adopted at least five years ago. These projects cover a very wide variety of fields (including ornamental plants, dangerous substances, prepackaging, construction materials, fertilisers, electromagnetic compatibility, banking services, insurance, company law, recognition of diplomas, social security provisions, VAT, intrastat statistics and external trade statistics). As the Commission pointed out in its most recent assessment report issued in March 2000, these projects have made good progress in formulating recommendations for simplification and have enabled it to present a large number of new simplified drafts. The outstanding problem remains the final adoption of these new proposals, very few of which have so far been adopted by the Council and the European Parliament (e.g. proposals dealing with ornamental plants, variables in intrastat statistics and combined nomenclature with regard to external trade). With a view to revitalising the SLIM initiative, in March 2000 the Commission presented 15 reform proposals aimed at increasing accountability and improving coordination between the various players.

5.5. In 1998 the Commission also launched a number of pilot projects involving European Business Panels; the aim was to make prior assessments, with a direct input from the business world, of the justification for and the cost of a number of proposed rules. This procedure has been used in three cases, concerning respectively the simplification of tax representation for VAT, the harmonisation of accounts and electrical and electronic equipment waste (in the latter case, reactions were sought from 1744 enterprises). However, this procedure remains entirely experimental, and the Commission does not yet have any plans for using it more widely or systematically.

5.6. In 1997 the Commission also set up the Business Environment Simplification Task Force (BEST) with the aid of representatives of socio-economic interest groups and universities. This task force submitted a report containing 19 recommendations in 1998. These focused on the business environments in the Member States in a wide variety of fields (administrative procedures, education and training systems, labour flexibility, finance and taxation and innovation). The Commission is due to present an appraisal report in the autumn of 2000 on the implementation of these recommendations.

5.7. An interinstitutional agreement on drafting quality was published in March 1999, following on from the Treaty of Amsterdam; this agreement is binding upon the Commission, the Council and the European Parliament. It is as yet too early to assess the impact of this agreement.

5.8. Each year the Commission now publishes a report on "better lawmaking" in which it reports on the contribution it has made to simplifying EU rules. The most recent report, published in November 1999, outlined the progress of a number of recent simplification measures and drew attention also to the work being carried out to codify, recast and consolidate EU rules, avoiding overlaps and deleting outdated provisions.

5.9. In addition, as part of the internal administrative reforms which it set in train in the autumn of 1999, the Commission established a unit for the simplification of regulations in its Enterprise DG. Though this is a welcome step forward, the action taken by this unit will remain limited until such time as it is directly attached to the General Secretariat since simplification has to become a requirement for all the DGs and other departments of the Commission.

5.10. For its part, the Internal Market Council of 25 May 2000 emphasised the need to coordinate the various existing simplification initiatives (SLIM, BEST, test panels, impact assessment) more effectively in the framework of a coherent strategy, which the Commission is to present to the European Council in the spring of 2001.

5.11. It is therefore clear:

5.11.1. firstly, that a large number of measures have been introduced in recent years with a view to taking Community action on simplification, but that, however commendable their aims and scope and the methods involved, they have not had a sufficient impact to dispel the general feeling that not enough has been achieved in this field;

5.11.2. secondly, that now that the Council has instructed the Commission to submit a simplification strategy for its meeting in spring 2001, the time has come to consider a new approach bearing in mind the lessons learnt from the abovementioned partial failures/partial successes.

6. The Committee's proposals for helping to build a new approach to the simplifying of rules

6.1. As was clearly brought home by the hearing organised by the Single Market Observatory (SMO), a change of approach is needed if progress is made more quickly and more effectively. The Committee therefore advocates a genuine "simplification process", comprising:

6.1.1. a multiannual simplification plan, which will enable the simplification process to be conducted in Europe within a coordinated framework;

6.1.2. codes of conduct for the EU players in the regulatory process; these codes of conduct should also apply to the Member States;

6.1.3. more effective use of the impact assessment which needs to be extended and made into an integral part of the regulatory process; and

6.1.4. active involvement of the economic and social partners and all the various civil society players, without whose assistance no simplification policy can succeed.

6.2. The ESC above all urges the Council to act upon its Lisbon mandate by adopting, at its meeting in spring 2001, a genuine multiannual plan for the simplification of rules. This plan, which should be based on the detailed draft which the Council asked the Commission to submit to it at the beginning of that year, should set out priorities and a timetable for action and should be backed up by innovatory methods, budgetary funding and effective means of appraisal. The Committee recommends that the plan be conceived in such a way as to ensure that the major changes in this domain are completed by 2005 at the latest, as this is the year in which the current terms of office of members of the European Parliament and the Commission come to an end. The plan should make provision for:

6.2.1. remedial measures to correct the major shortcomings in the existing rules as regards the need for simplification;

6.2.2. preventive measures to ensure that draft Community rules currently in the pipeline and future rules pursue a new approach to simplification;

6.2.3. back-up measures in the Member States.

6.3. The plan should trigger a genuine process of simplifying European rules, which will complement and amplify the impact of the energising of the economy, the internal market and employment already initiated at Luxembourg, Cardiff and Cologne. It has been agreed to hold a special European Summit each spring to review the progress made on the economic and social initiatives decided at Lisbon, and this annual review should include an assessment of progress on simplification, based on a Commission report containing scoreboards.

6.4. Turning to the contents of proposed new rules, the Committee would draw the attention of the EU's institutions to the need to avoid jeopardising the added value of such proposals through excessive compromise which, when added to specific national features, would be detrimental to the interests of users. Directives should also not contain too many options regarding implementation at national level since that would undermine the whole purpose of harmonisation. All legal instruments, whether Regulations, Directives or mutual recognition schemes, must contribute to simplification. The Committee also stresses the need to continue work on (a) consolidating rules in order to avoid overlapping provisions and (b) ensuring that the language used is readily comprehensible and straightforward in accordance with the inter-institutional agreement of December 1998.

6.5. The Committee underlines the need for Member States to show greater discipline in transposing EU rules, since the latest Commission scoreboard showed that 13 % of single market directives which had reached their deadline, i.e. 194 out of a total of 1489, had still not been transposed by all Member States. This is a clear deterioration of the situation and makes it increasingly unlikely that the target figure of 1,5 % will be achieved by the end of the year 2000.

6.6. The Committee would also draw attention to the question of the duration of validity of EU rules; it urges that in all cases, and particularly in areas undergoing major change, new rules have a limited lifespan with deadlines being set for the compulsory review of the text in question or, should this condition not be met, the repeal of the measures.

6.7. The Committee wishes to draw very special attention to the direct role to be played by the economic and social partners in bringing about a successful simplification policy in the EU. This means:

6.7.1. taking advantage of the areas of contractual freedom made available to them under EU legislation, in particular in the social field;

6.7.2. pressing for the introduction of new areas of contractual freedom, self-regulation or co-regulation and areas which may be covered by codes of conduct at European level, particularly in the fields of environmental protection, consumer interests, e-commerce and the information society;

6.7.3. signalling their readiness to participate directly, as partners, in the implementation of a new type of Directive, under which it would be their direct responsibility, rather than that of the Member States, to enact a number of fundamental requirements through agreements and the use of labels and certification and self-regulation procedures;

6.7.4. playing an active part in SLIM projects for which they are in a position to make an equal contribution to that of experts appointed by the administrations;

6.7.5. facilitating the development of test panels comprising representatives of the players directly involved, namely enterprises, trade unions and consumer associations.

6.8. The Committee urges that this multiannual simplification plan be backed by the introduction of codes of conduct for the EU institutions and the Member States, which should commit themselves to:

6.8.1. adopting a general pro-simplification culture, thereby supporting the expectations of socio-economic users and representatives of civil society;

6.8.2. playing an active part in the simplification process as well as in the regulatory process by adopting new methods for preparing rules, defining their contents and implementing them;

6.8.3. ensuring that national laws are compatible with EU laws and regulations.

6.9. The Committee highlights the key role to be played by the Commission in ensuring the success of simplification policy. With this aim in view, the Committee makes a number of recommendations:

6.9.1. The Committee considers that the Commission should draft an ambitious and innovative simplification plan for the Stockholm European Council in the spring of 2001, covering the Commission's current term of office, namely the period 2001 to 2005. This plan should enable the European Council to initiate a comprehensive process for simplifying the rules, as recommended by the Committee in this opinion. The Committee also considers that the Commission should submit an annual report to subsequent spring European Councils, reviewing the progress made, together with scoreboards, and outlining proposals for new initiatives or for reorienting existing initiatives to respect the 2001-2005 multi-year timetable.

6.9.2. The Committee considers that the Commission should place particular emphasis on the need to simplify rules in connection with its own internal reform aimed at creating an administration that excels; priority should be given to the central simplification unit which should be provided with all the requisite resources in view of the priority to be given to its role, and attached directly to the General Secretariat of the Commission since the need for simplification concerns all of the Commission's departments, irrespective of the fields in which they operate.

6.9.3. The Committee considers it vital that budgets be allocated for the simplification plan to give it sufficient resources to succeed, and that representatives of civil society also be involved, in order to provide a more reasoned and well-founded response to the issues raised in the impact assessment.

6.9.4. The Committee highlights the importance of the impact assessment, which must remain a prerequisite for all new draft rules. The Committee calls for this assessment to be strengthened by introducing the four innovations set out below:

6.9.4.1. The Committee draws attention to the need to make the impact assessments more independent and to enhance their quality by ensuring adequate funding, use of the right methodologies and effective consultation of the socio-economic players directly concerned. One good approach would be for the Commission to entrust the impact assessments to an external body having the requisite qualifications and meeting the necessary criteria of independence.

6.9.4.2. The Committee proposes that the preliminary monitoring of respect for the subsidiarity principle be backed up by a further test to determine whether there are alternative courses of action: this implies that, rather than simply seeking to justify the case for action at EU level, checks should also be made to determine whether the desired goal can be achieved by other means than the adoption of new rules by the EU institutions. The possible alternatives could be codes of conduct for enterprises or socio-economic interest groups, contractual approaches as used in the social dialogue (in fields such as the environment, consumer protection and e-commerce). Where appropriate, these alternatives could also take the form of measures which are neither regulatory nor contractual, such as training measures, more systematic use of legal procedures or the provision of support to civil society associations which could help to achieve a given objective.

6.9.4.3. The Committee proposes that the impact assessment should in future include an explicit analysis of how the proposed new rules will improve simplification, including in terms of the cost or time saved by the public. The assessment should cover the aim and contents of the proposed measure and also its implementation; this would justify attaching considerable importance to the way in which the measure is actually implemented.

6.9.4.4. Lastly, the Committee proposes that the impact assessments be made public and that they should accompany draft provisions throughout the legislative process so that at each stage the joint decision-makers can assess the extent to which the amended draft conforms to the impact assessment criteria. Publicising the impact assessment will also help to evaluate, on a regular basis, whether a given draft provision has become obsolete and no longer actually meets the criteria which originally justified its adoption.

6.9.5. The SLIM projects should be continued and extended, ensuring - as the Commission has expressed its intention to do - that draft rules which are revised in the light of these projects are submitted no later than six months after the publication of recommendations in a SLIM report.

6.9.6. Greater use should be made of "test panels" which should also involve, depending upon the subject matter, representatives of the social partners and consumers; steps should be taken to ensure that the panels receive all the logistic support they need to work properly.

6.9.7. The Commission must promote a general environment which encourages a culture of simplification by (a) alerting elected representatives to this requirement, (b) training officials (primarily in its own departments), (c) organising seminars in this field, (d) encouraging benchmarking of national best practice (and publishing the results on the Internet), (e) developing cooperation with other international bodies, such as the OECD, and (f) supporting initiatives by civil society, foundations and think tanks which may help to instil this new culture of simplification at EU level and national level.

6.10. As the only assembly which represents the full range of "users" of EU rules, the Committee recognises the important role which it is called upon to play in a new European policy on simplification; from the standpoint of the "users", the Committee certainly has a key role to play here.

6.10.1. With a view to enabling it to exercise this role satisfactorily, the Committee asks the Commission:

6.10.1.1. to consult it, wherever possible, at an earlier stage in the procedure so that the added value provided by the Committee's advice on simplification is not seriously compromised by the fact that the co-decision making institutions are consulted at the same time;

6.10.1.2. in particular, to consult it each year, on the occasion of the presentation of the Commission's annual indicative programme of referrals to the Committee, on the preparation of the report for the spring European Council on progress with simplification; this will enable the Commission to involve the Committee in the definition of new priority initiatives, such as the scope of new SLIM projects or issues that merit the use of test panels;

6.10.1.3. to directly involve it in discussions on improving and strengthening the impact assessment.

6.10.2. With a view to making an effective contribution to the simplification policy, the Committee is ready to play its full part in the codes of conduct which it is proposing that the EU institutions adopt. To this end the Committee signals its readiness to follow the guidelines set out in the conclusion to this opinion.

6.11. Turning to the role to be played by the co-decision-making bodies in the simplification policy, the Committee calls on the European Parliament and the Council to:

6.11.1. support its demand to be consulted at an earlier stage, thereby enabling these two bodies to benefit from its opinion at the beginning of the co-decision-making stage;

6.11.2. to entrust it, where appropriate, with exploratory consultations in areas linked to the simplification of rules; this could include asking the Committee for its views on complete or partial alternatives to the introduction of rules which are currently in the pipeline and its views on the prospects for involving economic and social players in the implementation of a particular Directive;

6.11.3. to authorise funding to enable the Commission to formulate analyses and methods which could further the success of a simplification policy;

6.11.4. to undertake to reach a decision no later than 12 months after the submission by the Commission of revised draft rules under the SLIM programme;

6.11.5. to verify, throughout the conciliation procedure, that their endorsement of draft legislation respects the criteria set out in the impact statement i.e. that it meets the expectations of users; and

6.11.6. to speed up, prior to EU enlargement, the adoption of a number of simplified measures not yet provided for the users of the single market, such as an EU patent, an operational statute for a European company, a straightforward VAT system for intra-community trade, the removal of double taxation within the single market, and the introduction of Directives to facilitate mergers and the restructuring of enterprises at European level.

6.12. The Committee also highlights the role to be played by the legal authorities at both EU and national level and also by the Ombudsman, in helping to promote simplification by:

6.12.1. helping to bring pressure to bear on the EU institutions, governments and parliaments to take steps to properly clarify the legal provisions and rules which they have the task of interpreting and enforcing; and

6.12.2. contributing to the debate on the increased consolidation of texts with a view to achieving greater simplification for the benefit of courts, legal practitioners and all other "users" of the rules.

6.13. The Member States have a key role to play in ensuring the success of a simplification policy. To this end the Committee calls upon them to:

6.13.1. adopt codes of conduct for the simplification of the operation of the single market and that they ensure that national provisions are "euro-compatible";

6.13.2. adopt a more disciplined approach over the time taken to incorporate EU provisions into national law, recognising that they now have a duty to show a clear example to the applicant states;

6.13.3. create more propitious conditions for the proper functioning of mutual recognition;

6.13.4. accept direct responsibility for facilitating the operation of the single market, following on from the initiatives already taken in the 15 Member States to set up coordination centres for the internal market. The Committee calls upon the Member States to engage in a joint management of the single market in partnership with the Commission and other Member States; to this end, harmonised administrative procedures, certified by the European Union, should be followed in the following fields: the removal of technical barriers; more effective mutual recognition schemes; product safety; the environment; anti-corruption measures; and customs cooperation; and

6.13.5. formulate national measures to help further simplification policies, including the development of their own central simplification units, and to notify best practice to the Commission to enable it to introduce and disseminate permanent benchmarking.

7. ESC code of conduct designed to make a contribution to the simplification process

In order to make an immediate contribution both to the simplification process and to the codes of conduct which it is recommending to the EU institutions, the Committee has adopted the following code of conduct:

7.1. First and foremost, the Committee undertakes to keep a watching brief on what has to be done to achieve simplification, and on the quality and efficacy for users of the draft regulations referred to it.

7.2. The Committee undertakes to take the necessary steps, when organising its work, to enable it to respond in good time to any early consultations by the Commission, the European Parliament or the Council, when the latter wish in this way to take greater account of the Committee's opinions on questions relating to simplification of the rules.

7.3. The Committee decides to draft an annual information report on the progress of the multiannual simplification plan, to contribute to the Commission's annual assessment for the Spring European Council.

7.4. The Committee agrees to introduce systematic monitoring of the impact assessment for each piece of draft legislation.

7.5. The Committee agrees to draw the attention of the EU institutions to the possible need to steer EU rules towards an approach based on contractual agreements, self-regulation and co-regulation, under the supervision of the European legislator, with the onus being on the socio-economic partners in the fields and sectors concerned to take appropriate steps to respond to this expectation within a reasonable period of time.

7.6. The Committee agrees to establish a dialogue with the European economic and social players to encourage them to take on the kinds of responsibilities - particularly contractual responsibilities - that will enable them to make a direct contribution to Community provisions.

7.7. The Committee agrees to establish a dialogue with the Committee of the Regions in order to establish ongoing cooperation in this field, particularly with respect to the regional aspects of simplification.

7.8. The Committee agrees to establish a dialogue with the economic and social councils in the Member States so as to enable them to play an analogous role at national level to the role which the Committee has set itself at European level, in order to contribute to the success of the simplification process.

Brussels, 19 October 2000.

The President

of the Economic and Social Committee

Göke Frerichs