[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 25.1.2008

SEC(2008) 38

COMMISSION STAFF WORKING DOCUMENT Accompanying document to the Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directive 88/378/EEC on the safety of toys

IMPACT ASSESSMENT {COM(2008) 9 final} {SEC(2008) 39}

TABLE OF CONTENTS

1. INTRODUCTION 6

2. FOLLOW-UP OF THE RECOMMANDATIONS OF THE IMPACT ASSESSMENT BOARD 7

3. PROCEDURAL ISSUES AND CONSULTATION OF THE INTERESTED PARTIES 8

3.1. Organisation and timing 8

3.2. Consultation and Expertise 8

4. PROBLEM DEFINITION 9

4.1. Directive 88/378/EEC and its functioning 9

4.1.1. Context 9

4.1.2. Analysis of the achievement of the objectives of the Directive 10

4.2. Problems identified 10

4.2.1. Safety requirements 11

4.2.1.1. Introduction 11

4.2.1.2. Outdated safety requirements 12

4.2.1.3. Lack of safety requirements for recently identified hazards 12

4.2.1.4. Lack of clarity in the general requirement of safety 14

4.2.1.5. Lack of complete warning requirements 14

4.2.2. Enforcement 14

4.2.3. Scope and concepts 15

4.3. Treaty base and subsidiarity 16

4.4. Proportionality 16

5. OBJECTIVES 17

5.1. Overall objective 17

5.2. Specific objectives 18

5.2.1. Strengthening, modernising, completing and clarifying the safety requirements for toys 19

5.2.2. Improving the implementation and enforcement of the Directive with regard to market surveillance obligations of Member States and conformity assessment 20

5.2.3. Clarifying and updating the scope, concepts and definitions of the Directive 20

5.2.4. Ensuring consistency with the general framework for marketing of products 20

6. POLICY OPTIONS 21

6.1. The main policy options 21

6.2. The sub-options for the main issues of the revision 22

6.2.1. Chemical requirements 23

6.2.2. Warnings 24

6.2.3. Choking risk 24

6.2.4. Suffocation 25

6.2.5. Scope of the general safety requirement 25

6.2.6. Toys in food 26

6.2.7. Information on chemicals in the technical file 26

6.2.8. Affixing of the CE-marking 27

6.2.9. Conformity assessment procedures 28

6.3. Consistency of the objectives with other EU policies and horizontal objectives, such as better regulation and Lisbon strategy or respect for fundamental rights 28

7. ANALYSIS OF THE IMPACTS 29

7.1. Identifying impacts 29

7.1.1. General economic impact 29

7.1.2. Indirect costs, Impact on trade and competitiveness 30

7.1.3. Social impacts 31

7.1.4. Environmental impacts 32

7.2. Analysis of the impacts of the main issues at stake 32

7.2.1. The method followed in the analysis 32

7.2.2. Main issues 33

7.2.3. Chemical requirements 33

7.2.4. Warnings 43

7.2.5. Choking risk 45

7.2.6. Suffocation risk 48

7.2.7. Scope of the general safety requirement 49

7.2.8. Toys in food 50

7.2.9. Information on chemicals in the technical file 53

7.2.10. Affixing of the CE-marking 54

7.2.11. Conformity assessment procedures 58

7.2.12. Administrative costs 62

8. THE OVERALL IMPACT AND CONCLUSIONS 63

8.1. Costs 64

8.2. Benefits 67

9. MONITORING AND EVALUATION 69

ANNEX (1): Overview of the toys industry 70

ANNEX (2): Characteristics of the case study companies 77

INTRODUCTION

The object of this Impact Assessment is the revision of Council Directive 88/378/EEC of 3 May 1988 on the approximation of laws of the Member States concerning the safety of toys.

The Toys Safety Directive (TSD) was the first major EC Directive applying the method of the so-called New Approach. The New Approach was introduced in the 1980s to remove technical barriers to trade in the Internal Market through the encouragement of a system of European Standards. The Directive includes mandatory essential safety requirements, conformity assessment procedures, provisions on the CE marking[1] and foresees an obligation of Member States to take all appropriate enforcement measures that non-conforming toys are withdrawn from the market. Specific technical requirements for toys are not enshrined in the Directive but laid down in harmonised standards (EN 71).

The revision aims at strengthening the essential safety requirements for toys as well as the enforcement of the Directive whilst ensuring the proper function of the internal market for toys. It also aims at clarifying the scope of the existing Directive and at simplifying the legal rules in line with the Commission’s Simplification Programme. The revision of the TSD is linked to the revision of the general legislative framework on products, i.e. the Commission’s proposals for a regulation on accreditation and market surveillance and for a decision on a common framework for the marketing of goods that are under consideration by Council and the European Parliament[2].

The Impact Assessment provides an analysis of the problems that have been identified in the functioning of the current provisions. It identifies the objectives to respond to these problems, and most importantly the policy options that have been considered to translate these objectives into new legislative measures. Whenever this proves relevant, the IA accounts for the reasons that support a conclusion in favour of no policy changes. For those elements that have been selected for new regulatory measures (or significant alterations to the existing ones) a comprehensive explanation is provided of the underlying reasons.

The Impact Assessment comes to the conclusion that over its almost twenty years of operation the TSD has in general worked well to achieve its objectives i.e. to ensure the free circulation of toys which comply with essential safety requirements as laid down in the Directive. On the one hand the Directive has improved access to the EU market. On the other hand the overall safety of toys in the internal market could be significantly improved. Whilst the regulatory approach chosen in 1988 is considered to remain valid and appropriate, several areas of application have been identified where the overall objectives of the Directive have not been fully achieved. These concern i) the safety of toys due to the development of new products and improvements in scientific knowledge, ii) the efficient enforcement of the Directive, and iii) changes in view to definitions and concepts. The core of the proposal lies in addressing the safety requirements for chemicals in toys. Others relate to toy conception, to the need to lay down more stringent warnings, and to the necessity of a hazard/risk analysis prior to the marketing, in line with the overall objective to ensure that toys circulating freely in the EU do not pose any risk of damaging children’s health.

This Impact Assessment report uses the analysis conducted in three impact assessment studies (a general one and two focusing on the use of chemicals in toys). While every effort has been undertaken to base the proposed areas for a revision of reported deficiencies and on sound proof, one has to recognize that some data – namely with regard to both the number of accidents due to unsafe toys and concrete, measurable benefits for children’s health - is not available.

The characteristics and the economic importance of the toys sector are described in an annex to the Impact Assessment.

FOLLOW-UP OF THE RECOMMENDATIONS OF THE IMPACT ASSESSMENT BOARD

Following the recommendations of the Impact Assessment Board of 22 October and 7 December 2007 the Impact Assessment Report has been modified substantially in a number of key areas.

The section concerning the identified problems (safety requirements, enforcement, scope and concepts) and the – overall and specific - objectives of the revision have been re-drafted with a view to present a more focused problem definition (namely with regard to the use of CMR in toys and their health implications) and a clear set of objectives that correspond with the problems identified. Where possible, indicators for the definition of objectives have been added. In the options-section, the sub-options have been presented in a more systematic way in line with the objectives to be achieved.

The analysis of compliance costs has been deepened in view to the new provisions on the chemical requirements in the Directive. These new provisions are the main elements of the revision with regard to both; considerable costs implications for industry, as well as with regard to potential benefits for children. Under point 7.2.3 costs due to new rules for chemicals are explained more explicitly. The revised Impact Assessment Report gives indications on the manufacturing- and the distribution costs. It explains that the cost estimates are subject to a number of uncertainties due a possible overestimation by stakeholders concerned and thus to be regarded as the Commission’s best judgment available. The same applies for the estimations on possible benefits that are supposed to occur due to the new provisions. Safety benefits have been set out more explicitly. A comprehensive table on the benefits attributable to the different approaches on the basis of Disability Adjusted Life Years (DALYs) has been inserted in the report. The revised report states that there are also a number of uncertainties surrounding the analysis of the health benefits due to the lack of statistics that would allow for a more thorough assessment and because the estimations are likely to represent an underestimate of the true benefits since the general reduction in the burden of health systems could not been calculated as well as a potential productivity loss due to children falling ill due to the use of dangerous chemicals in toys.

The revised Impact Assessment replies to the recommendation of the Board to elaborate on the links to the REACH legislation in terms of timing and costs in general. It explains why the costs estimates for the revision of the TSD are not directly comparable with those of the REACH Impact Assessment and why the revision does not follow the approach to base the use of chemicals in toys on the general chemicals legislation.

The revised Impact Assessment contains a new section (7.2.12) on administrative costs based on the Standard Cost Model with regard to those new provisions that will lead to an obligation of industry to provide more information compared with the current legal situation. In addition sections 7.2.3 and 7.2.9 concerning chemicals in toys have been rendered more explicit with regard to administrative costs. Uncertainties in the analysis due to data that are not available from industry have been flagged.

Following the recommendations of the Impact Assessment Board, chapters 7.1.2 and 8 contain an enhanced description and analysis of the overall economic impacts, including the impacts on competitiveness and trade. Statistics with regard to the considerable number of toy imports from non-EU countries have been added. A summary table of all costs and benefits that are expected by the proposals has, however, not been added because of the risk being misinterpreted and/or giving a misleading picture. The considerable number of uncertainties surrounding some of the calculations and some non-quantifiable costs and benefits would have not been adequately reflected in such a table.

Concerning the specific issue of “toys in food” (section 7.2.8), the reasoning for the option chosen has been strengthened by applying the Precautionary Principle from the 2000 Commission Communication (COM (2000)1).

PROCEDURAL ISSUES AND CONSULTATION OF THE INTERESTED PARTIES

Organisation and timing

The revision of Directive 88/378/EEC on the safety of toys is part of the Commission’s 2006 work programme (2006/ENTR/004). It has been postponed to take into account the proposals on the marketing of products the Commission adopted in February 2007 (see 3.2.4 ) and is included as priority initiative in the CLWP 2007.

Consultation and Expertise

The revision has been discussed thoroughly with the Member States’ authorities, the stakeholders (industry and consumer organisations), and standardisation organisations within the framework of the Expert Group on Toys Safety. The discussions in the Group started in 2001. Several meetings per year have been organised, which has permitted to deeply explore the need of revision and the areas to be revised. Since 2003 concrete drafts in the form of a Commission’s proposal for a revised Directive have been discussed in the Expert Group.

A general impact assessment study was carried out in 2004 by an independent consultant to assess different possible modifications to the Directive. The results of this study can be found at http://ec.europa.eu/enterprise/toys/index_en.htm.

A specific study on certain chemicals used in toys was carried out in 2006 to provide certain elements for the revision of the chemicals requirements of the Directive. The objective was to update the limits of bioavailability of chemical substances in the Annex of the Directive and to explore possibilities of setting specific requirements for toys for children under 36 months and for other toys intended to be put in the mouth. The results of the study are published at http://ec.europa.eu/enterprise/toys/index_en.htm.

At the beginning of 2007, the Commission services launched a specific study aimed at complementing the general impact assessment study as regards the chemical requirements in order to explore in depth the impacts of this essential and sensible area of the revision. The results of this study are published at http://ec.europa.eu/enterprise/toys/index_en.htm.

The different studies that have provided the basis for the impact assessment have been followed by inter-service steering groups: The general impact assessment study was followed by a steering group with the participation of DG ENTR and DG SANCO. The study on certain chemicals used in toys was supervised by an inter-service group with the participation of DG ENTR Chemicals Unit and of DG SANCO.

A public consultation was organised in May and June 2007 to invite all interested parties to send their observations on those questions which have been identified as potential objects for changes in the Expert Group discussions. The results of the public consultation are published at http://ec.europa.eu/enterprise/toys/public_consultation.htm

The public consultation drew 1531 replies. 138 replies were submitted from Member States or organisations, such as industry, consumer or standardisations organisations. Although the vast majority of the feedback came from individuals, because of the nature and or the focus of the comments it could be assumed that a part of these individual replies originates from individuals who are to various degrees involved in the toys business (distributors, retailers, company managers, etc.).

PROBLEM DEFINITION

Directive 88/378/EEC and its functioning

Context

Directive 88/378/EEC on the safety of toys was adopted in the context of the achievement of the internal market. The proliferation of different safety provisions across the Member States had led to barriers to trade and marketing. This went hand in hand with the recognition that a proliferation of different national safety regimes across the EU did not necessarily afford consumers in the EU, especially children, with effective protection against hazards arising from toys.

The TSD was, therefore, adopted in 1988 to harmonise the safety levels throughout the Member States as well as to remove the obstacles to trade and to prevent market fragmentation. This Directive is one of the 25 Directives in force that apply the principles and method of the so-called New Approach[3]. It only sets the essential safety (and other) requirements, while technical details are set out by specialised technical bodies, such as the standardisation organisations CEN and CENELEC.

The TSD was amended in 1993 by the CE Marking Directive 93/68/EC which imposed uniform standards on all New Approach directives implemented prior to 1993. Besides, toys are subject of a number of other EC-Directives and Regulations[4].

Analysis of the achievement of the objectives of the Directive

The directive on the safety of toys has achieved over its almost 20 years of existence a considerable number of its objectives, particularly in bringing down market barriers and in ensuring harmonised safety standards across the EU. This is supported by a study[5], which is based on extensive stakeholder consultation. It concluded that the Directive has succeeded in leading to:

- enhanced market access and a free circulation of toys within the Internal Market;

- better manufacturer awareness of requirements for toy safety;

- reductions in the level of non-conformity of toys on the EU market and

- reduction in the number of toy-related accidents.

Problems identified

Following the extensive consultation, the analysis carried out by the consultants and the discussions in the framework of the Expert Group on Toys Safety three areas have been identified where the existing Directive does not fully meet its objective to allow for a smooth functioning of the Internal Market for toys while ensuring an adequate level of safety for children. These specific problems relate to:

1. Safety requirements (Section 4.2.1);

2. Enforcement (Section 4.2.2) and

3. Scope and concepts (Section 4.2.3).

Safety requirements

Introduction

Children are a particularly vulnerable group of consumers who lack the ability to take informed decisions on their own. It is their parents who have to take those decisions on their behalf. Although a certain degree of supervision from parents can reasonably be expected, parents are often not in a position to judge themselves how safe a toy is, particularly regarding substances that are not visible from the outset, namely chemicals and their harmfulness, noise emission levels or the dangers of laser components. In addition, children are also particularly vulnerable as they may be more susceptible to adverse health consequences due to their young age.

The TSD contains an obligation for Member States to ensure that only safe toys are placed on the market This obligation is based on the respect of essential safety requirements which foresee that toys must not present any health hazards or risk of injury. Technical details for the application of the general safety requirements can and have been enshrined in harmonised technical standards covering in detail the hazards in question. However, due to the particular vulnerability of children the TSD itself as the legal basis needs to set the core of the safety requirements and to cover all hazards that toys may present. All essential safety aspects should be foreseen in the Directive since the application of the standards remains voluntary and other technical solutions are possible as long as the production is in conformity with the essential safety requirements. Furthermore, the essential safety requirements are the basis for the future development of standardisation and therefore should be as complete as possible.

A couple of deficiencies in the application of the safety requirements of the TSD have been identified that would not allow to reach its objective which aims to ensure that only safe toys are put on the market in a sufficient manner : The existing essential safety requirements of the TSD do not always correspond to the technical progress and are thus outdated (4.2.1.2). They do not respond fully to recently identified hazards (4.2.1.3). There is a need to clarify the general safety requirement (4.2.1.4). There is a lack of adequate warning requirements (4.2.1.5).

These deficiencies have emerged from the experiences the national experts of toys safety have made and from the reports received from Member States authorities and stakeholders within the framework of the three impact assessment studies. Some of the issues have been raised due to accidents or incidents that have occurred in the Member States. It is, however, important to note that data available on toy related accidents do not allow for fully fledged quantified evidence, in the way that the number of accidents concerning a particular type of hazard would require immediate legal action for this kind of hazard. No consistent EU wide statistics on toy related accidents exist. The data that is available in some Member States (only three Member States have injury systems with potential ability to provide useful data) present several handicaps. In particular, the exact cause of accidents is not available from sources of accident data. The toy is normally only cited as a factor in the accident which required admission to some form of hospitalisation. This does not necessarily imply that the responsibility for the accident lies with either the toy or its manufacturer or that the cause of the accident would be such that it could be prevented by legislative action. Also several products included in statistics are not toys within the meaning of the toys directive. Accidents and incidents not involving hospital visits or consultation of a medical doctor are not reported and do not figure in the statistics.

Outdated safety requirements

Firstly, according to the evidence gathered in the study and by the Expert Group, certain essential safety requirements included in Annex II of Directive 88/378/EEC are not up to date anymore. This is the case, in particular with the requirements on electrical properties which do not take into account the technical progress made since the adoption of the Directive. Also some requirements in the physical and mechanical field are not up to date any more, such as the requirements on suffocation and choking hazard, as they do not cover adequately certain types of products which have become popular recently, i.e. toys with suction caps. Suffocation accidents due to suction caps have been reported in several Member States.

Lack of safety requirements for recently identified hazards

Essential safety requirements for recently identified hazards are lacking. In particular, there is a need for enhanced requirements on chemicals, noise, laser, activity toys and for speed limit for ride on toys as well as specific requirements for toys in food. As regards magnets, a specific problem has emerged. After discussion with the stakeholders and the national authorities in 2006 an ad hoc mandate was given to the European Committee for Standardisation, which is working on an amendment of the existing standard.

As a main element of discussion with all stakeholders emerged the need to devote specific attention to safety requirements with regard to chemical substances used in the production of toys . When the Directive was originally adopted there was limited knowledge of the relevance of chemicals to toys. Since then the awareness of the hazards and risks associated with the use of chemicals in (consumer) products has been risen constantly. A comprehensive new regulatory system was introduced by Regulation 1907/2006 and Directive 2006/121/EC (REACH), and the Directive 76/768/ECC on cosmetics has been amended seven times. Permanent restrictions on the use of phthalates in toys were introduced in 2005 (Directive 2005/84/EC). Market surveillance surveys carried out in the Member States[6], have highlighted the presence of dangerous chemicals in toys some of which are not regulated at Community level, such as allergens and nitrosamines. The increasing awareness of the potential (dangerous) consequences in using chemicals for the production of sensitive products requires an in-depth assessment of the regime that would be appropriate for the use of chemicals in toys, in the light of both, the general principles of the chemicals legislation and the peculiar safety issues that arise in respect of toys destined for children.

As regards the potential negative health effects from exposure to chemicals from toys among other sources, children need special protection. They are a particularly sensitive group of consumers because they eat and breathe more than adults by weight and have also different behaviour patterns (hand/mouth). Children are undergoing rapid growth and development, and their developmental processes are easily disrupted. (see, for instance, WHO report 2007 “ Principles for Evaluating Health Risks in Children Associated with Exposure to Chemicals”[7]). While traditionally the main threats to children’s health were infectious diseases, the current threats appear to come increasingly from the environment including chemicals in the environment, in air, food, water and from proximity to individual exposures. Chronic illnesses including asthma, paediatric cancer, neurodevelopmental and behavioural disorders, congenital defects etc are becoming increasing burden to society.[8]

Against this background, the present provisions on chemical properties in the toys directive need to be assessed whether they address the situation of children as consumers requiring special protection adequately with a view to avoiding harmful medium and long-term effects. A problem occurs in particular because there are no specific provisions on the use of certain dangerous substances in toys, such as CMRs (substances that are carcinogenic, mutagenic or toxic for reproduction) or allergenic fragrances. For cosmetic products that enter into direct contact with the skin, specific EU-rules exist with regard to the use of CMR chemicals and allergenic fragrances. Given the fact that children are susceptible to get in direct contact with toys by e.g. sucking, the current legal framework might present deficiencies that have to be taken into consideration. In this respect it has to be taken into account that a potential exposure depends on the characteristics of the toy, namely on the question whether the chemical substance is accessible.While a considerable number of toys contain encapsulated chemical preparations or substances as e.g. toys using electronic circuits in micro-chips, there are toys - e.g. those which contain plastics - where an exposure can take place, i.e. where the chemicals on the surface of a toy is susceptible to pass to the child.

According to information received from toys industry (TIE) 110 CMR substances can possibly be found in toys, albeit most of them only in trace amounts as left-overs from production processes. A major problem is that the toy industry has only limited control over the chemical specifications and the quality of the materials obtained in open market which is necessary for the production of toys.

There is scientific evidence that noise exposure can induce hearing impairment. Data from animal experiments indicate that children may be more vulnerable in acquiring noise-induced hearing impairment than adults, and toys constitute one specific source of exposure to noise (see for instance WHO Guidelines for Community noise[9]). The Toys directive does not contain any essential safety requirement on noise, although technical requirements on noise level in toys have already been introduced in the toy standard EN 71:1. Hence the objective of introducing specific provisions in this respect, as such an essential safety issue could not rely exclusively on technical requirements as explained above (4.2.1.1)

Lasers are nowadays commonly used in toys. The human body is vulnerable to the output of certain lasers, and under certain circumstances, exposure can result in damage to the eye and skin. However, the Toys Directive does not contain any safety requirement on lasers although technical requirements on them have been introduced in standardisation.

Standards already contain technical requirements on speed limit for electrically powered ride on toys and on activity toys (such as swings and slides) but there is no specific provision to cover the inherent risks (of falling, crushing etc) presented by these kinds of toys in the Toys Directive itself.

The potential specific hazards presented by toys inside food , such as toys in chocolate eggs, are not addressed at Community level although several Member States have specific legislation on these kinds of products. The association of a toy and food could namely be the cause of a specific risk (of choking) that is distinct from the risks associated with the toy alone. A study carried out by the European Parliament (“inedibles in food product packaging”, RPA 2003) indicated that the risks associated with inedibles in food are demonstrably low but could not be ruled out. It has been reported[10] that several accidents resulting in a hospital call have occurred since the 80s, although no fatal accidents have been recorded in the EU since the beginning of 90s. These data present severe limitations, but represent an indication of a safety issue that is worth of consideration.

Lack of clarity in the general requirement of safety

In addition to the need to modernise the particular safety requirements of the Directive, the general safety requirement contained in the Directive needs clarification. According to the general safety requirement “ the users of toys as well as third parties must be protected against health hazards and risk of physical injury when toys are used as intended or in a foreseeable way, bearing in mind the normal behaviour of children ”. The term “normal behaviour of children” has created problems of interpretation in the past, since there are differing views on what “normal” means in this context.

Lack of complete warning requirements

Finally, experience shows that rules on the safety information to be given with toys (warnings) are not sufficiently complete for the purpose of guaranteeing that toys are used by children under conditions guaranteeing a high level of safety for them. The current Directive lays down that toys must be accompanied by clearly legible warnings in order to reduce inherent risks in their use. The Directive also sets out the warnings and indications to be given for certain categories of toys. This list of specific warning is completed by the standard EN 71. These provisions presents gaps because they do not, in particular, provide that the warnings should always contain appropriate user limitations such as those related to age, ability and weight of the user, as well as the need to ensure that the toy is used under adult supervision, which means that these warnings essential to the safe use of the toy might in some cases be lacking.

Enforcement

Efficient enforcement of the Directive is one of the cornerstones for guarantying that a high level of safety of toys is attained in the European market . The enforcement of the Directive by Member States authorities shows room for improving its consistency and effectiveness, in particular in the area of market surveillance .

Given the huge number of diverse toys on the market, the Directive is based on the manufacturers’ responsibility for the safety of their product without requiring mandatory third party verification. Public authorities do not, in principle, control toys before their placing on the market. Instead, the authorities carry out market surveillance of toys placed on the market, which needs to be efficient enough to attain the safety objectives of the Directive. The recent recalls of toys in summer 2007 by a major manufacturer provide a compelling example of such situations. Many of the items concerned had been produced with paints containing an excessive amount of led, a risk that went undetected after their placing on the market.

A specific problem which is linked to efficient market surveillance concerns the analysis of the hazards and risks a toy may present. The existing TSD does not contain any explicit obligation for the manufacturers to carry out such an analysis. There isn’t any requirement for them to document the hazard/risk analysis and to keep it available for inspection to the market surveillance authorities (in the technical file). Responsible manufacturers do already carry out a hazard/risk analysis in order to respect their other obligations under the directive. However, since the analysis is not mandatory, it is difficult for the market surveillance authorities to check whether analysis has been undertaken.

There is also a lack of appropriate institutional framework for the Member States and the Commission to deal efficiently and rapidly enough with some issues concerning the implementation of the Directive, in particular with updating Annex I concerning the scope of the directive and with certain aspects of the chemical requirements. Rapid adaptation of these questions concerning the implementation of the Directive is for the moment only using the procedure to amend the Directive which the co-decision procedure by the Council and the European Parliament.

The rules on the information to be provided with the toys (as the CE-marking and traceability information) are not completely satisfactory to allow an efficient enforcement of the Directive. The present rules require that the CE-marking is affixed either on the toy or on the packaging, and in case of small toys it can also be on a label or a leaflet. Therefore, the CE-marking does not always appear on the toy which has been seen as problematic for the consumer who cannot any more verify its presence once the packaging has been thrown away. The existing rules on the affixing of the CE-marking do not either require the CE-marking to be visible without opening the packaging which complicates the task of the market surveillance authorities. This issue is relevant to the good management of the legislative framework, because the marking provides the goods it is apposed to a presumption of conformity with the safety requirements.

Scope and concepts

In the light of the experience accumulated over nearly twenty years it is has become evident that the TSD’s scope of application lacks clarity .

According to Article 1, the Directive applies to any products or materials designed or clearly intended for use in play by children of less than 14 years of age. The main difficulty of this definition is the concept of “use in play” or “playing value”. Virtually, everything has playing value for a child, but this does not make every object fall into the definition of toy. Annex I completes this general definition by enumerating a certain number of products not considered as toys for the purposes of the Directive. However, the scope of the Directive lacks clarity with regard to certain new products, such as videogames and peripherals. Unclear scope leads to problems of interpretations for the manufacturers and for surveillance authorities, who have often difficulties in determining whether a certain product is covered by the requirements of the Toys Directive or not. These difficulties can in turn lead to different rules being applied to the same product in different Member States and thus to market.

Furthermore, the TSD does not comply with the Commission standards for Better Regulation and good legislative practices [11]. The Directive contains ambiguities, uses long and complicates sentences that include both external and internal cross-references which makes its understanding and interpretation difficult. Individual articles do not have titles and they are not grouped under sections-heading, which would help the reader to better understand the logic of the legal text. The aim is to simplify the application of the Directive and its correct implementation in 27 Member States.

Finally the relationship between the Toys Directive and Directive 2001/95/EC on General Product Safety (GPSD) also needs clarification. The GPSD applies to toys in some cases, but those cases that represent grounds for its application are not clearly defined, which leads to lack of legal certainty for manufacturers and distributors.

Treaty base and subsidiarity

In considering the issue of subsidiarity within the meaning of of Article 5 of the EC-Treaty, it should be taken into account that Directive 88 /378/EEC is a total harmonisation directive adopted on the basis of Article 95 of the Treaty with the objective of the establishment and functioning of the internal market for toys. National legislation cannot impose additional provisions on the safety of toys which would require the modification of the product or affect the conditions for its placing on the market. Therefore, the revision of provisions of Directive 88/378/EEC is, as far as the safety requirements for toys or the conditions of their placing on the market are concerned, within the exclusive competence of the Community. The application of the principle of subsidiarity within the meaning of Article 5, second paragraph, of the EC-Treaty does not arise.

It is important to note that the revision aims at clarifying the scope of products covered by the Directive, but not at extending or changing it otherwise. Therefore the issue of subsidiarity within the meaning of Article 5, second paragraph, of the EC-Treaty does not arise in this respect either.

The respect of the subsidiarity principle, therefore, only arises with regard to the other areas of the revision, namely with regard to the improvement of effective enforcement of the Directive. Experience has shown that coherent and effective enforcement and market surveillance has not been sufficiently achieved by Member States acting alone. The recent massive recalls of toys have shown deficiencies to detect unsafe products on the market. As a consequence, the issue of setting some mandatory common minimum requirements arises. As a result of the proposal, this activity would remain within the authority of the national authorities but some general EU-wide requirements would be introduced to ensure equal treatment, a level playing field for economic operators, and a similar level of protection for the citizens in all the Member States.

Proportionality

In accordance with the principle of proportionality (article 5, third paragraph, of the EC-Treaty), the proposed modifications do not go beyond what is necessary to achieve the objectives set. In order to protect the benefits of the single market in the toys sector, any changes to the existing directive have to be dealt with at the Community level. If Member States acted on their own, there would be a proliferation of safety requirements which would hamper and undermine the achievements of the single market, and very likely lead to confusion for consumers and producers alike. The consequences could be higher prices for consumers, as producers would have to revert to abiding by member state specific requirements, while there would be a lack of clarity regarding the safety of toys bought in another Member State

The proposed modifications have been discussed at length in the Expert Group on Toys safety composed of the representatives of the Member States, industry, consumers, standardisation organisations and notified bodies and have been subject to the two impact assessment studies carried out by independent consultants mentioned in chapter 1. All the modifications have, therefore, been assessed in terms of proportionality so as to not impose unnecessary burden and costs on industry, especially on small and medium sized enterprises, or administrations.

A number of options contained in this impact assessment concern the improvement of clarity of the existing Directive without introducing significant new requirements with cost implication. Where modifications have more significant impacts, the analysis of the impacts of the option serves to provide the most proportionate response to the problems identified.

OBJECTIVES

The legal framework put in place through Directive 88/378/EEC has allowed both, free circulation of toys in the Internal Market and a uniform level of toy safety across the EU. Since the Toys Directive was originally adopted, the need and usefulness of an EU legislative framework have not been questioned. However, as outlined in detail in section 3.2 a number of problems regarding the optimal functioning of the Directive have been identified. In response to these problems the Commission pursues the following objectives with the revision of the Directive.

Overall objective

To enhance the level of safety of toys while maintaining and improving the smooth functioning of the Internal Market for toys

The current toys safety directive aims at ensuring the free movement of toys between Member States while also ensuring a uniform level of toy safety across the EU. The smooth functioning of the Internal Market for toys remains a valid objective of the Directive in a Union of 27 Member States. Over time however, the need to ensure the highest possible level of safety of consumer goods has become a major concern of EU-legislation in the EU. This concern does especially apply with regard to toys used by children, a particularly vulnerable group of consumers. Thus the main overall objective of the revision is, to enhance the safety of toys, in particular to prevent harmful medium and long term negative health effects in children arising from the use of toys.

The indicator to measure the achievement of this objective would be the number of reduction of accidents caused by toys and the reduction of medium and short term negative health effects in children from toys. However, these are in practise very difficult to measure due to the problems indicated above in section 4.2.1.1. Current data makes it impossible to determine the extent of reduction in accidents that could arise as a result of the proposed modifications. In particular, the available data cannot be used to develop a statistical relationship between specific safety requirements and the number of toy-related accidents. Even if such a relationship could be developed, it is inherently difficult to value the human satisfaction gained from children playing with a safe toy or the pain suffered as a result of a major or a minor injury. Moreover, the available statistics do not reflect longer-term impacts on health, for example from chemicals contained within toys.

Specific objectives

In order to achieve the above mentioned overall objective, the revision pursues the following specific objectives:

Strengthening, completing, clarifying and modernising the safety requirements for toys in order to respond, in particular, to scientific progress, to market developments and an increased awareness of health and safety issues (5.2.1),

The indicator to measure the achievement of this objective is the extent to which today known hazards presented by toys are covered in the safety requirements, boosting innovation due to the possibility to apply innovative technological solutions which ensure the safety of toys as well as the reduction of medium and long term negative health effects arising from the use of toys.

Improving the implementation and enforcement of the Directive with regard to market surveillance obligations of Member States and conformity assessment requirements (5.2.2)

The indicator to measure the achievement of this objective is the effectiveness and efficiency of the operation of the Directive to reduce the number of non-compliant toys circulating on the market in order to guarantee that all market players compete under equal conditions as well guaranteeing a high level of protection for the public.

Clarifying and updating the scope, concepts and definitions of the Directive (5.2.3),

Indicator is the more uniform application of the Directive by economic operators and by national authorities in all Member States and resulting from this fewer legal disputes in national courts. However, it would not be in practise possible to measure the reduction in the number of legal disputes, since there is no readily available information on the number of legal cases brought against companies operating in the toy sector that would be avoided in the future.

Ensuring consistency with the general framework for the marketing of products in the EU (5.2.4).

These objectives can reasonably be expected to be met over a 2 to 4 years time-span, taking into account the time required for the adoption of the national implementing measures, the necessary compliance of producers and distributors, and the adaptations to the market surveillance systems.

Strengthening, modernising, completing and clarifying the safety requirements for toys

As set out in section 4.2.1 of the Impact Assessment a number of deficiencies in the application of the existing safety requirements of the TSD have been identified which need to be addressed through a revision.

New safety requirements are especially needed to ensure the protection of children against recently discovered medium and long term health risks in the field of chemicals. The aim of these requirements is to reduce the exposure of children to harmful chemicals and to have the effect of potentially reducing the incidence of diseases or medical conditions associated with these chemicals found in toys. Whilst taking into account the principles and the methodology of the existing chemicals legislation, the aim is to adapting the requirements to the particular circumstances of toys marketing and use.

It is also intended to clarify certain safety requirements to cover risks presented by new popular products that appear on the market. This is in particular the case of toys with suction caps.

The objective of the revision is also to modernise outdated safety requirements so as to allow new technological solutions to be applied which would not be permitted under the current directive but which can nowadays ensure a high level safety of the toy, and in this way also contribute to boost innovation. This applies in particular to electrical properties of toys.

As regards the special case of toys in food, experience shows that the association of toys and food produces a peculiar category choking hazard which needs to be taken into account in the safety requirements to prevent the possibility of accidents arising from these kinds of products.

Furthermore, the revision also aims at clarifying the general requirement of safety foreseen in the Directive in order to be more explicit as to what kind of behaviour of children with toys needs to be taken into account when ensuring the safety of toys.

Also safety information (warnings) to be given with the toys should be improved to guarantee safe conditions of use for toys in all circumstances.

As explained in section 4.2.1, apart from the case of chemicals in toys and the special case of toys in food, the aim of modernising, completing and clarifying the safety requirements is not to directly and immediately respond to accidents or negative health effects that have occurred but to ensure an efficient operation of the legislative framework based on the New Approach principles, which require establishing a complete set of essential safety requirements, and to pave the way for the development of standards in the future. It is however realistic to expect that, indirectly, ensuring the completeness of the safety requirement should in general lead to improved safety of toys which is the overall objective of the whole legislative framework. It appears realistic to expect that, in due course, the revision will achieve a reduction in the number of recalls of dangerous or defective toys from the market[12].

Improving the implementation and enforcement of the Directive with regard to market surveillance obligations of Member States and conformity assessment

Lack of adequate market surveillance of toys has been identified as a major problem in the operation of the Directive and therefore an important obstacle to the achievement of Directive´s safety objective. There is a general consensus that improved enforcement and implementation of the Directive by economic operators and market surveillance is the key to improved safety of toys and thus to the reduction in the number of toy related accidents.

The revision aims, firstly, at developing conditions for a better common approach by national market surveillance authorities in the implementation of the legislation in force. In order to ensure a satisfactory level of market surveillance in all Member States, the objective of the proposal is also to reinforce the consistent and effective enactment of the measures to be taken by the national market surveillance authorities.

The revision also aims at resolving certain specific problems related to the efficient enforcement of the Directive: In order to facilitate a better enforcement of the Directive, the revision pursues to clarify and specify the rules on the CE-marking which is the first indication for the market surveillance of the conformity of the toy with the Directive. As regards the technical file, the revision aims to ensure that the technical file contains all the necessary information for the market surveillance to carry out efficient controls of conformity.

Clarifying and updating the scope, concepts and definitions of the Directive

In order to facilitate the understanding and the application of the Directive by manufacturers and surveillance authorities and to enhance legal certainty, the proposal aims at clarifying the material scope of the Directive, in particular with regard to certain new products, such as videogames and peripherals. The revision aims to clarify the scope as regards other products too, such as electrically driven vehicles. The proposal also aims to clarify the relationship between the Toys Directive and the General Product Safety Directive ( inter alia the European rapid alert system for dangerous non-food products RAPEX, safeguard-measures, administrative co-operation) to ensure legal safety.

The revision aims at clarifying certain concepts used in the Directive which are susceptible to differences in interpretation. The proposal aims, in general, at removing the ambiguities in the text of the Directive. The objective is also to simplify and improve the wording in order to enhance better understanding of the provisions of the Directive and promote their uniform application by the authorities of the Member States.

Ensuring consistency with the general framework for marketing of products

On 14th February 2007, the Commission adopted its proposals for a Council and European Parliament Regulation and Decision within the framework of the revision of the New Approach[13].

The proposal for Regulation setting out the requirements for accreditation and market surveillance relating to the marketing of products contains provisions on accreditation of conformity assessment bodies and provisions on market surveillance. According to the proposal, the provisions of the Regulation on market surveillance shall apply to the toys sector only as regards controls at external borders (see Article 13(2) of the proposed Regulation). Otherwise market surveillance of toys continues to be governed by the provisions of Directive 2001/95/EEC on General Product Safety.

The proposed Decision on a common framework for the marketing of products sets standard Articles to be used in the New Approach Directives. These Articles include, in particular provisions on common definitions, obligations of economic operators, general principles of the CE-marking and certain conditions for its affixing, harmonised standards and presumption on conformity, objections against harmonised standards, the conformity assessment procedures, notification of conformity assessment bodies and safeguard procedures. In order to ensure a consistent approach with the other New Approach directives, the proposal for a revision of the Toys Safety Directive will be aligned to the proposed Decision. In other words, the standard articles will be integrated into the toys proposal with only some adaptations necessary due to the specificities of the toys sector.

- The impact assessment of the TSD concentrates on the specific questions that will be regulated in the Toys Directive itself and not those that emerge from the horizontal revision, which was subject to a specific impact assessment.

POLICY OPTIONS

The main policy options

Option A - repeal of Directive 88/378/EEC

One option could be to repeal the existing EU legal framework, i.e. Directive 88/378/EEC. The option “to not to regulate” is a purely theoretical one. The free circulation of safe toys cannot be achieved on the basis of the EC-Treaty only, without having recourse to specific harmonisation legislation. Namely the same, adequate level of safety of toys throughout the EU can only be achieved by the use of uniform rules. The rules on the product safety in the General product safety directive (2001/95) are not specific enough to take into account the needs of the sector of toys, especially taken into account that the users of toys are a particularly vulnerable group of consumers who need special protection.

Option B – no action by the Commission .

Under this option there would be no legislative proposal. The current Directive would continue to apply as it does since 1988. Pursuing this option would mean that the problems identified in section 4 would persist. However, this option will be analysed as the “baseline scenario” more in detail as regards the main issues of the revision (which are specified under 6.2).

Option C - Non regulatory Approach, guidance documents, recommendations

In general, only a few problems identified under section 4.2 could be addressed to certain degree by adopting and revising guidance documents or recommendations, namely clarifying the scope and concepts of the Directive. However, most of the identified deficiencies that relate to the safety of toys do not seem appropriate to be tackled by soft law. This concerns namely requirements for a wide range of properties in toys as contained in the annex of the directive that need to be clearly set to allow for legal security for both, users and industry. A more stringent effective enforcement might be achieved through recommendations only with less restrictive administrative burden for responsible toy manufacturers who fully apply with the rules for the production of toys. However, the problems identified have not effectively addressed in this way in the past, so that it is unlikely that non-binding rules would be sufficient.

In any case, some new legally binding requirements and obligations are needed, such as new essential safety requirements, new rules on the affixing of the CE markings and warnings, and, therefore, these requirements and obligations could not be imposed using this option. It is also important to note that integrating into the Toys Directive the horizontal provisions adopted in the proposed Decision on the common framework for the marketing of products explained in section 5.2.4, can only be done by adopting them in a legally binding instrument.

This option will, however, be analysed more in detail in section 6 as regards the main issues of the revision (which are specified under 6.2).

Option D – substantially new Directive for the safety of toys based on the “old approach”

It could be envisaged to not use any longer the New Approach method, that is setting only essential safety requirements in the legislation and leaving technical details to the harmonised standards, but to include in the Directive all detailed technical specifications (“Old approach”).

However, adopting all (detailed) technical requirements would not allow the same flexibility and light legislation as using the New Approach method does. Keeping the directives free from detailed specifications has facilitated a flexible legal framework, which is technology-neutral and serves as a catalyst for innovation and growth. It has allowed keeping legislation slim and avoids the need for frequent adaptations to technical progress, an important factor in a business environment which is characterised by fast developing technologies. Manufacturers are given the freedom to choose any appropriate technical and innovative solution that meets the required safety level without being pressed in legal corset running behind technology evolutions.

Option E – adapting the Directive to the extent necessary to ensure that safe toys can freely circulate within the EU

This option would maintain the major New Approach principles of the existing directive with those modifications that are needed to address new safety and implementation challenges. This option would concentrate on improving, updating and completing the regulatory framework in force. It allows for a revision of the existing legal framework in a number of areas that can be precisely identified and where a need to strengthen safety and enforcement requirements exist.

Within the scope of option E, various degrees of stringency and a variety of different tools need to be considered.

The sub-options for the main issues of the revision

In this section the various sub-options for the main issues of the revision will be described before analysing their impacts under section 6. As will be explained in 6.1, the impact analysis concentrates on those changes which are susceptible of having an impact on industry costs. These are the following:

To enhance safety requirements for toys:

- New provisions on the chemical requirements (6.2.1.);

- More stringent requirements on warnings (6.2.2);

- Changes to the requirements concerning the choking risk (6.2.3);

- Clarifying the suffocation risk (6.2.4)

- Clarifying the scope of the general safety requirements (6.2.5);

- Special requirements for toys in food (6.2.6);

To improve the enforcement and efficiency of the Directive:

- Changes to the technical file as regards information on chemicals (6.2.7).

- Changes to the CE marking and traceability information (6.2.8);

- Changes to the conformity assessment procedures (6.2.9);

Chemical requirements

Option 1: no change scenario or non -regulatory approach

The first option to consider is to make no changes to the current requirements on chemicals in toys. This means that toys have to respect the general chemical legislation, including REACH, as well as the specific provisions of the current toys Directive, which include in particular the limit values for 8 elements specified in the Directive.

A non regulatory approach would include recommendations to the manufacturers on the use of certain hazardous substances in toys, such as CMRs and fragrances.

Option 2: Regulatory approach

The Second option would be to change the current rules. Within this option various approaches could be envisaged:

Approach 1: Status quo + ban of allergenic fragrances

This approach is based on the principle of respect of the general chemicals legislation, including REACH, and contains a new provision for allergenic substances in line with the Cosmetics Directive (ban/labelling requirement) as well as updated limit values for elements.

Approach 2: Status quo + ban of allergenic fragrances and ban of all CMR's Cat.1 & 2 unless authorised under REACH

This approach takes over the principle of respect of the general chemicals legislation, including REACH, contains a provision for allergenic substances and fragrances in line with the Cosmetics Directive (ban/labelling requirement), as well as a ban on the use of CMR substances (categories 1 and 2) unless authorised by the procedure foreseen in the REACH Regulation. The limit values for elements would also be updated.

Approach 3: Status quo + ban of allergenic substances and ban of all CMR's Cat. 1 & 2 & 3, unless authorised by dedicated comitology procedure.

This third approach takes over the principle of respect of the general chemicals legislation, including REACH, includes a provision for banning CMR substances (categories 1, 2 and 3) unless evaluated by a Scientific Committee and authorised by the comitology procedure. In addition, it bans substances classified as allergens according to Directive 67/548/EEC. This special regime for CMRs foreseen in the toys Directive would continue to be applied even when the REACH regime becomes fully operational. The limit values for elements would also be updated.

Warnings

Option 1: No changes in the current provisions and non regulatory approach

The option of no change scenario would keep the current rules of the Directive which lay down that toys must be accompanied by clearly legible warnings in order to reduce inherent risks of their use. The Directive also sets out the warnings and indications to be given for certain categories of toys. This list of specific warnings is completed by the standard EN 71.

A non regulatory approach would consist in issuing non binding recommendations to the distributors on the visibility of warnings at the point of sale.

Option 2: Regulatory Approach: all safety information visible at the point of sale

A stringent regulatory approach would consist in requiring that all information required for safe use shall be readily visible, clearly legible and conspicuously displayed at the point of sale.

Option 3 : Regulatory Approach: minimum and maximum ages displayed at the point of sale; appropriate user limitations to accompany the toy

A less stringent regulatory approach would limit the requirement of displaying warnings at the point of sale to warnings specifying minimum and maximum ages for users.

In addition to the rules on warning to be displayed at the point of sale, it has been proposed to complement the current general provisions of the Directive on warnings, which lay down that toys must be accompanied by clearly legible warnings in order to reduce inherent risks in their use. It has in particular been suggested to require that warnings specify, where appropriate for safe use, user limitations, such as minimum and maximum ages or ability of the user of toys or maximum or minimum weight of the users as well as the need to ensure that the toy is used under adult supervision

Choking risk

Option 1: No change to the current requirements

No change to the current requirements means that choking risk, that is the risk of inhalation of small parts is covered for toys intended for children up to 36 months.

Option 2: Regulatory approach

A stringent regulatory option would consist in changing the directive so that the risk of choking would be covered for all toys for children up to 60 months (instead of the current limit of 36 months) and toys intended for children of all age categories, if the toy is intended, likely or enticing to be put in the mouth

Option 3: Regulatory approach

This option would involve changing the Directive so that the risk of choking would be extended to choking risk requirements to toys which are intended to be put in the mouth, such as toys instruments.

Suffocation

Option 1: No change to the current rules or a non regulatory approach

No change to the current requirements would mean that the suffocation risk is covered for all toys and packaging of toys, when suffocation is commonly understood as an external airway obstruction external to the mouth and nose.

The non-regulatory approach could consist in clarifying the concept of “suffocation” in a guidance document.

Option 2 Regulatory Approach

A strict regulatory approach would consist in adding a definition for suffocation in the Directive which would read “Suffocation means the result of airway obstruction external to the mouth and nose, or internal airway obstruction by closing off the flow of air also from the mouth and nose by objects being wedged in the mouth or pharynx”. In addition to this, the rules on suffocation in Annex II would be left unchanged. This would mean that not only all toys but also their packaging should not present any risk of internal airway obstruction.

Option 3 Regulatory Approach

A less stringent approach for changes as regards the suffocation risk consists in covering the risk of internal airway obstruction only for the toy itself.

Scope of the general safety requirement

Option 1: No change in the current rules or non regulatory approach

If no changes are introduced, the general safety requirement would continue to read: the users of toys as well as third parties must be protected against health hazards and risk of physical injury when toys are used as intended or in a foreseeable way, bearing in mind the normal behaviour of children.

Option 2: Non-regulatory Approach

A non regulatory approach would consist in issuing a non binding guidance document to clarify the exact meaning of this requirement.

Option 3 Regulatory Approach: clarifying the definition in the Directive

A regulatory approach would consist in inserting a clear definition into the legal text.

Toys in food

Option 1: No change in the current requirements

If no changes were introduced to the current Directive, this means these products are covered by the same requirements on choking hazard and warnings as other toys, and there would be no specific provisions in the Directive addressing the risk arising from the fact that the toy and food product are associated.

Option 2: Non-regulatory Approach

A non-regulatory approach would consist in issuing non binding guidance documents or recommendations to industry addressing the risks presented by this special category of products.

Option 3: Regulatory approach: separate packaging and prohibition of toys melted into food items

An adequate set of mandatory requirements could include the following:

- the toy should always be in a separate packaging;

- the packaging/capsule should not present any choking hazard and should, therefore, pass the small parts cylinder test;

- prohibition of products consisting of a toy firmly attached to a food product at the moment of consumption, in a way that the food product needs to be consumed in order to get direct access to the toy;

- an explicit warning “adult supervision recommended”.

Information on chemicals in the technical file

Option 1: No change scenario or non regulatory approach

The first option is to make no changes to the provisions on the technical file. This means that there is no specific obligation to include information on chemicals used in toys in the technical file to be available to the market surveillance authorities although there is a general obligation to include a detailed description in the technical file. The suppliers of toys are also obliged under the chemicals legislation to provide a safety data sheet on the chemicals they supply to downstream users.

A non regulatory approach would include a guidance or recommendation on the information on chemicals to be included in the technical file.

Option 2: Regulatory approach:

The second option would consist in introducing provisions in the Directive as regards information on chemicals in the technical file. Within this option different approaches may be envisaged:

Approach 1

It could be envisaged to foresee an obligation to include in the technical file a detailed description of the design and manufacture, including the safety data sheets on chemicals used to be obtained from chemical suppliers.

Approach 2

An another possibility would be to foresee an obligation to include in the technical file a detailed description of the design and manufacture, including a list of components and materials used in toys as well as the safety data sheets on chemicals used to be obtained from chemical suppliers.

Approach 3

The most stringent requirement would consist in an obligation to include in the technical file a detailed description of the design and manufacture, including substances contained in the toy, as well as the amount of the individual substances and the relevant Safety data sheets on chemicals to be obtained from chemical suppliers.

Affixing of the CE-marking

Option 1: no change scenario or non-regulatory approach

The first option to consider is to make no changes to the current requirements which require that the CE-marking be affixed either on the toy or on the packaging and in case of small toys also on a label or leaflet.

Using non regulatory instruments such as guidelines or recommendations could also be envisaged to give better visibility to the CE-marking on a voluntary basis.

Option 2 Regulatory approach: affixing the CE-marking both on the toy and on the packaging

During the discussions in the Expert Group on Toys safety it has been proposed that the CE-marking should always be affixed both on the toy and on the packaging. However, the exception for small toys would remain.

Option 3 Regulatory approach: affixing the CE-marking on the toy or on the packaging + always on the packaging if not visible from outside (a transparent) packaging

A less stringent approach would be to require that the CE-marking should, in principle, be affixed on the toy or on the packaging, as the current Directive foresees. In addition, it is required that if the CE-marking it is not visible from outside the (transparent) packaging, it should be always fixed at least on the packaging.

Conformity assessment procedures

As regards conformity assessment procedures are concerned, two changes could be envisaged: a) introducing an explicit obligation for the manufacturer to carry out safety assessment; b) mandatory third party verification for certain types of products.

a) Safety assessments (hazard/risk analysis)

Option 1: No change in the current requirements

If the current rules are left unchanged, there is no specific mention of an obligation to carry out a hazard/risk analysis in the Directive.

Option 2: Non-regulatory approach, such as guidance documents/recommendations

This option would consist in issuing non binding guidance documents or recommendations to the industry on the safety assessments that should be carried out.

Option 3: Regulatory approach: explicit obligation to carry out a hazard analysis and to keep it in the technical file

The Regulatory approach would consist in requiring the manufacturers to carry out an assessment of the hazards that the toy may present before it is placed on the market and to include the assessment in the technical file.

b) Mandatory third party verification for certain types of toys

Option 1: No change in the current requirements

No change to the current rules means that the manufacturer can carry out the conformity assessment by his own means or by any test laboratory competent to carry out testing, and a verification of the toy by third party is not mandatory unless harmonised standards have not been applied.

Option 2: Non regulatory approach

A non regulatory approach could consist in issuing non binding guidance or recommendations on the use of the third party recommendation.

Option 3: Regulatory approach

A regulatory approach would consist in laying down mandatory third party verification for all or certain types of toys or in any case where no harmonised standards covering all the safety aspects of the toy exist.

Consistency of the objectives with other EU policies and horizontal objectives, such as better regulation and Lisbon strategy or respect for fundamental rights

The objectives pursued by the revision are in line with the EU strategy for jobs and growth. The toys industry is stable and competitive. While a number of elements of the revision will entail higher compliance costs, they will not endanger industry’s competitiveness due to the high likelihood that increased costs will be passed through the end user. Job losses are considered to be minimal and most probably will occur outside the EU.

The objectives also fit into the Community policy of better regulation and simplification. The overall goal is to improve the quality and efficiency of the toys safety regulations and to simplify the current legislation for both economic operators and market surveillance authorities.

Aspects of fundamental rights are not concerned by this proposal.

ANALYSIS OF THE IMPACTS

Identifying impacts

In this section, the general expected impacts from the revision are first presented as they result from the impact assessment studies that were carried out, before analysing in detail the costs and benefits of the main changes and different possible options.

General economic impact

In general terms, the envisaged modifications to the Directive are considered to improve its efficiency, its functioning and reliability as well as its transparency, thus contributing to benefit all stakeholders.

The proposed modifications are expected to have a considerable positive impact on the activities of the authorities of the Member States because the level of ambiguity as to how to apply various provisions would be removed. Many of the measures are aimed at clarifying responsibilities and definitions and making information more accessible. These should make authorities´ duties easier and reduce costs. The simplification of the safeguard procedure in accordance with the horizontal revision of the New Approach should also reduce administrative costs for the Commission and the national administrations.

Manufacturers and conformity assessment bodies would benefit from greater efficiency, reliability and transparency in the operation of the Directive. Industry should benefit from the clarification of the definitions, scope and responsibilities; these clarifications are likely to reduce legal uncertainty, helping to reduce costs in the future, since in the future legal issues will be solved more easily and quickly, or may not arise in the first place.

Furthermore, the general impact assessment study concluded that setting out in detail the power and obligations of the market surveillance authorities under the proposal could have a significant positive impact for manufacturers, in particular by reducing the level of counterfeiting that currently takes place within EU market.

As far as the analysis of the specific modifications proposed during the discussions are concerned, many of them are considered by those consulted within the framework of the impact assessment study to provide useful clarification to the existing Toys Safety Directive without any major impact on industry costs. The clarifications which do not incur costs include, in particular the proposals to clarify the definitions and scope of the Directive as well as proposals to introduce into the Directive essential safety requirements on noise and speed limit as well as on hazards presented by laser and activity toy. As explained previously, toy standards already contain technical requirements on these hazards, and introducing an essential safety requirement in the directive will not have at least any immediate effect on these technical requirements to which manufacturers already are adhering.

However, as explained under section 6.2 envisaged changes as regards the following issues are susceptible to have an impact on industry costs:

- To enhance safety requirements for toys:

- New provisions on the chemical requirements;

- More stringent requirements on warnings;

- Changes to the requirements concerning the choking risk;

- Clarifying the suffocation risk;

- Clarifying the general requirement of safety;

- Special requirements for toys in food;

- To improve the enforcement and efficiency of the Directive

- Changes to the technical file as regards information on chemicals;

- Changes to the CE marking and traceability information;

- Changes to the conformity assessment procedures.

Therefore, these questions are analysed more in depth as regards the impacts of different options that can be envisaged for each problem identified.

There might be additional costs to the administrations as a result of the provisions reinforcing Member States´ the market surveillance obligations, but according to the authorities themselves they are likely to be minimal since many of the obligations are already covered by the General Product Safety Directive. The new requirements on chemicals may also result in higher costs of monitoring and enforcement for the national authorities; these costs are likely to be manageable and part of the general strengthening of the monitoring of chemicals due to the EU framework legislation (REACH) in this area.

Indirect costs, Impact on trade and competitiveness

In the framework of the impact assessment study, industry was asked to comment on the impact of the proposed modifications for international trade and competitiveness of the EU toys sector. Views on these impacts differed. Some industry respondents thought that they would increase costs, making EU industry less competitive. Others were of the opinion that the increased cost of meeting safety requirements would discourage imports of low cost and low quality toys into the EU which will benefit consumers in the form of increased safety. Some companies also felt that the clarification of which toys needed to comply with the directive by the proposed modifications would improve the competitiveness of high quality and high value toy manufacturers.

It is plausible to draw the conclusion that overall market competitiveness should not be affected since EU and non EU manufacturers need to adhere to the same standards if they wish to sell their products in the EU. However, it cannot be excluded that that those manufacturers producing toys in the EU and selling some overseas and some domestically might have some contained cost increase in foreign markets as it is unlikely that they are able to develop two separate production chains.

When considering the impact of the revision, it should be noted that a major part of the toys sold in the EU are imported[14]: an estimated range of €6-9bn of the toys sold within the EU are imported from outside the EU, the overall turnover of the toy industry in Europe 2005 (the last year for which data are available) being roughly €13 billion.

[pic]

Since Chinese imports of toys represent by far a greatest proportion of all imports into the EU, Chinese manufacturers were also asked to comment on the proposed modifications. Their views can be summarised as follows: Costs may result to them from the envisaged modifications, but no major concerns were expressed over the impacts of the proposal for their industry. It was pointed out that manufacturers would adjust their operational strategy to develop new products and thus remain competitive. Some modifications were also identified as having potential benefits/positive implications by improving the quality of exports and their international competitiveness. The higher degree of responsibility placed on the economic operators under the revision would eliminate manufacturers that do not maintain similar standards.

Social impacts

The main social benefits of the revision are likely to be experienced by consumers, namely by children. Strengthening of essential safety requirements is likely to result in significant public health and safety benefits.

As regards safety benefits, overall, consumer organisations and authorities responsible for implementing the Directive and market surveillance authorities agreed that most of the proposed modifications will give rise to significant benefits through reduction in the number of toy-related accidents. Some industry consultees pointed out that in order to result in significant safety benefits, the legislative modifications need to be combined with a more efficient enforcement, which is one of the objectives of the proposed modifications.

As far as the positive health impacts are concerned, the most important benefits should arise as a result of the modifications to the chemical safety requirements. The prohibition/limitation of the use of certain harmful chemicals in toys would reduce the migration of chemicals in children from toys. This in turn would reduce the number of children developing diseases and other chemical-related harmful medium and long term effects (i.e effects on the reproductive system).

The positive social/health impacts can only be estimated, not precisely calculated. Toy related accidents are not uniformly and systematically reported in the Member States or at Community level. However, it is important to note that even a limited decrease in toy related accidents represents a significant social benefit in public health terms.

No significant impacts on employment can be foreseen according to the present knowledge of development trends. According to industry there might be some job losses as regards the new rules for chemicals in toys in a range between 1200 to 3000 jobs from 2008-2051.

Environmental impacts

Environmental protection per se is not within the objectives of the Directive. No direct environmental impacts are thus expected from this proposal.

The only modifications which could potentially result in (indirect) environmental impacts are the proposed restrictions of the use of certain chemicals in toys. These impacts would be beneficial on environment if any since the new limits for or ban of certain dangerous chemicals would limit the amount of these chemicals which could potentially enter the environment[15].

Analysis of the impacts of the main issues at stake

The method followed in the analysis

In the assessment of the costs and benefits, the following factors have been taken into account, since they determine the chosen approach:

- the complexity of the structure of the toy market (see Annex I) makes it impossible to develop meaningful aggregate estimates of the likely costs of the existing Toys Safety Directive, and of the proposed modifications to it, on the sector as a whole;

- companies were unable to provide the data required to undertake a quantitative assessment of costs and benefits or sometimes they were reluctant to do so; instead, the conclusions must be more quantitative in many cases;

- where companies did provide data, in several instances they were inconsistent, as answers varied between their domestic, European and in some cases world-wide operations.

For the above reasons, the analysis of the costs of the revision have been approached through case studies performed within the framework of the general impact assessment study, which were, as far as possible, developed to be representative of the different types of companies operating within the sector. These are a large multinational company, a medium manufacturer, a SME company and an importer. The characteristics of the case study companies and the assumptions used in the analysis are presented in the Annex 2 attached to this Report.

The chemicals part of the revision (including changes to the technical file as regards information on chemicals used in toys) was considered to require a deeper analysis in the form of a specific study, due to the particular complexity and sensitivity of this area of the revision. The approach and method in this analysis was somewhat different: three different scenarios defined by different levels of stringency were presented for analysis.

Main issues

As indicated above in 7.1.1, the main issues in the revision from the point of view of cost impact are the following and these issues will be analysed in more detail in the following subsections:

- To enhance safety requirements for toys:

- New provisions on the chemical requirements (7.2.3);

- More stringent requirements on warnings (7.2.4);

- Changes to the requirements concerning the choking risk (7.2.5);

- Clarifying the suffocation risk (7.2.6);

- Clarifying the general requirement of safety (7.2.7);

- Special requirements for toys in food (7.2.8);

- To improve the enforcement and efficiency of the Directive

- Changes to the technical file as regards information on chemicals (7.2.9);

- Changes to the CE marking and traceability information (7.2.10);

- Changes to the conformity assessment procedures (7.2.11).

- In section 7.2.12 a summary of the administrative costs of the various proposals is presented.

Chemical requirements

Option 1: No change scenario or non regulatory approach

The options of no change to the current requirements or a non regulatory approach have been disregarded at an early stage because of the following reasons: the level of risk is generally high, and the scientific knowledge accumulated over the last decades has permitted to discover new medium and long term risks to health due to chemical substances which need to be taken into account in legally binding requirements to ensure effective protection of children. As a consequence, the basic option retained to address this sensitive area is a regulatory one, and the impact analysis relates to the different levels of stringency of the regulatory option.

Option 2: Regulatory Approach

The revision of the chemical requirements was the object of a separate impact assessment study carried out by an outside consultant. The following subsections present the cost-benefit analysis made by the consultant on three options for chemical requirements. All the options foresee new limit values for certain chemical substances that are accessible to children during use (on the basis of a previous study carried out by an independent consultant referred to above in chapter 1). Besides this, their main content is the following:

Approach 1 Status quo + ban of allergenic fragrances

This approach is based on the principle of respect of the general chemicals legislation, including REACH, and contains a new provision for allergenic substances in line with the Cosmetics Directive (ban / labelling requirement).

Approach 2 Status quo + ban of allergenic fragrances and ban of all CMR's Cat.1 & 2 unless authorised under REACH

This approach takes over the principle of respect of the general chemicals legislation, including REACH and contains a provision for allergenic substances and fragrances in line with the Cosmetics Directive (ban/labelling requirement), as well as a ban on the use of CMR substances (categories 1 and 2) unless authorised by the procedure foreseen in the REACH Regulation.

Approach 3 Status quo + ban of allergenic substances and ban of all CMR's Cat. 1 & 2 & 3, unless authorised by dedicated comitology procedure

This third approach takes over the principle of respect of the general chemicals legislation, including REACH, includes a provision for banning CMR substances (categories 1, 2 and 3) unless evaluated by a Scientific Committee and authorised by the comitology procedure. In addition, it bans substances classified as allergens according to Directive 67/548/EEC. This special regime for CMRs foreseen in the toys Directive would continue to be applied when the REACH regime becomes fully operational.

The study analysed the impact of each proposed regulatory approach against the baseline counterfactual of “do-nothing”. In order to calculate the costs stemming from the options the consultant relied on the results of a questionnaire addressed to toy manufacturers, toy importers and retailers, consumer and health groups and other bodies including chemical testing laboratories and environmental groups. Questionnaires contained common questins and also a number of questions specific to particular groups, i.e. manufacturers were asked about the impacts in the manufacturing process, whereas health agencies where asked about health impacts. In total the questionnaire accessed over 500 stakeholders in the toys industry and elicited around 80 useful replies The period of analysis is between 2008 and 2051, which is the last year for which Eurostat population projections are available. The costs were calculated using the standard discount rate of 4 percent.

The table below which is based on the stakeholder consultation summarises the overall costs and benefits associated with each approach relative to the counterfactual of “do nothing”. The table presents the central estimates that were obtained. They should not be taken as a precise indication of costs. In particular, it is to be noted that the main source of data was a stakeholder questionnaire. Thus responses are stakeholders’ interpretation of the cost impacts of the proposed options and may not be fully reliable because of the inherent stakeholder’s interest in the assessment.

[pic]

To calculate the manufacturing and distribution cost s the consultant calculated an average percent cost increase of each of these cost categories for each of the different options. Then an average ratio was calculated between turnover and operating costs in the toys industry from the annual reports of companies operating in the European market. The last step needed to estimate costs is a measure of overall turnover to which the calculated ratio has to be applied (According to the Toy Industries of Europe the overall turnover of the toy industry in Europe 2005 was roughly €13 billion). With these data a stream of costs from 2008 to 2051 were calculated assuming no adjustment will take place in the toy industry i.e. that the increase in ongoing costs is permanent.

It has to be pointed out that the cost estimations are subject to a considerable number of uncertainties. The level of future costs will not be known for certain. In particular, it is likely that the costs have been overestimated by the stakeholders. The costs have been calculated asking European toys manufacturers to estimate the annual costs for the different options in the range of 0-5%, 6 - 10%, 11-20% and more than 20%. This calculation is, therefore, based on estimates rather than actual cost data.

Based on the information provided by industry consulted the manufacturing costs have been allocated to the following processes:

What percentage of your total manufacturing costs are allocated to the following processes |

Moulding | Sewing | Glueing | Finishing | Other |

23% | 13% | 8% | 19% | 37% |

“Other” costs include, in particular, costs of testing; they do not include the cost of the manufacturing process itself. It has to be taken into consideration that a distinction between the use of CMR in products which are accessible to children and those which are not could not be calculated due to the variety of toys. It could, however, be estimated that manufacturing costs would be lower than the estimated ones if a ban of CMR is limited to toys and their components accessible to children. One can assume that industry has also included the costs for a substitution of CMR.

It is also to be noted that the consultant assumed that the increase in manufacturing costs is permanent and there wouldn’t be any adjustment from the manufacturers at all, which is very unlikely to be the case. Manufacturers are supposed to gradually develop new products and/or adjust the existing ones. It also can be assumed that the costs for replacing certain substances will decrease over time due to economies of scale. In addition, testing costs are likely to be less important than assumed because companies will only test their articles for a limited number of substances, and not for all CMRs of which hundreds are very unlikely to occur in toys at all.

Particular uncertainties are related to the amount of “distributional” costs estimated by the economic operators at around € 6 billion. Based on the questionnaire the consultant has estimated nearly similar costs for manufacturing and distribution. It is not completely clear how the proposed changes to the chemical requirements which indeed render manufacturing more costly have the same effects on costs related to the distribution. One explanation could be that in general distributional costs are a much larger share of total costs than manufacturing costs. It is also likely that the distributional costs contain an element of manufacturing costs as some EU-importers might have included a possible increase in manufacturing costs in third countries in their estimates. In general these assumptions lead to the conclusion that the distributional costs seem to some extent overestimated.

The administrative costs were calculated using the standard cost model defined in the Commissions impact assessment guidelines which assesses administrative costs on the basis of the average of the required action multiplied by the total number of actions performed during a given year. The administrative requirements relate to the costs of having to find out more information about the products concerned, fill in forms related to testing and other regulations

Administrative costs have been calculated on the assumption that the total European toys industry employs approximately 98.000 employees, of which 45.000 are not involved in manufacturing. It has thus been assumed that 5000 of these are directly involved in administrative activities. The average labour cost per hour is given as 21.22€ based on information from Eurostat. The administrative burden has then be calculated over the period 2008-2051 using the standard discount rate of 4%. The breakdown of the costs is the following:

[pic]

It has to be noted this calculation of administrative costs has to be handled with care with regard to the timing of costs. The administrative burden of new legislation can be expected to fall over time with probably a strong emphasis on the first years of implementation. It is therefore to a certain extent questionable that each of the 5000 employees in charge of administrative activities will be spending almost six 40 hours working weeks or 15 40 hours working weeks in 44 years to administer the new legislation.

Table 2 presents the break down of the overall result by company size.

[pic]

As it could be expected, the incremental costs to SMEs are larger that those of multinationals. The next table shows the possible price increases that might be associated with each approach, based on central estimate calculations

[pic]

As the above table 1 shows, no environmental costs or benefits have been identified. This is primarily for two reasons. In the first instance, the disposal of toys is already governed by a number of existing Directives such as WEEE, ROHS, and Packaging and Packaging Waste. Further, the issue of general exposure of chemicals through the environment is usually much less than that of specific exposure gained through playing and everyday use of the toy.

Thus, the main costs and benefits relate to the economic and social (in particular, health) categories.

As regards health benefits, the health impacts were quantified in terms of Disability Adjusted Life Years (DALYs) saved by each option. The consultant divided the number of DALYs saved by the total costs increase associated with the various approaches.

The approach was similar to that used in Life Cycle Impact Assessment (LCIA), which according to the Commission guidelines on Impact assessment can be defined as “the process of evaluating the effects that a product has on the environment over the entire period of its life”. More precisely LCIA entails the comparison of products according to their total estimated environmental impact, summed over all chemical emissions and activities associated with a product at all stages in its life cycle (from raw material acquisition to final disposal). The study looked into one particular aspect of LCIA, i.e. the health impacts associated to chemicals. However, the LCIA approach had to be modified to take into account the fact that the study was not dealing with the emissions of polluting chemicals in the environment but with the chemical content of toys that are not meant to be released. Therefore the LCIA approach was modified to obtain an intake fraction that can be applicable to children playing with toys.[16]As in the case of costs, the benefits were calculated in 2007 prices assuming that the different options would be instantaneously implemented at the end of 2007. The benefits were discounted at 4 percent to be consistent with the discounting of costs.

The Table below presents the results of some scenarios concerning benefits:

[pic]

These scenarios show that the variation of benefits between scenarios is large: in the lowest case scenario with a low monetary value of a DALY, low ingestion and low damages associated to the various chemicals the overall benefits of approach 1 would be €1.2 billion. In the highest case scenario of high ingestion, high damages associated with the chemicals and high value of a DALY this figure would increase to €50.9 billion.

In the scenario labelled as “middle” comparing the costs and benefits, where all these values have been calculated as the average between the highest and the lowest scenario the benefits of the approach 1 are €12.4 billion. The variation is evident even for the two remaining approaches: the incremental benefits associated with the combined hazard/risk based approach vary from a minimum of €32 million to a maximum of €1.4 billion (with €340 million as the middle estimate), while for approach 3 the incremental benefits vary from €6 million to €278 million (with €68 million as the middle estimate).The incremental benefits associated with approach 2 and 3 with respect to the benefits of approach 1 alone are always very small.

The consultant also calculated the cost per DALY saved associated with each approach by dividing the number of DALYs saved by the total costs increase associated with the various approaches. The resulting figure using the central estimates is €27,000, €71,000 and €72,000 for approach 1, 2 and 3 respectively. It should be noted, however, that a value of €71,000 and €72,000 is not necessarily high enough to be higher than a reasonable reference DALY.

The estimated benefits are likely to represent an underestimate of the true benefits for the following reasons:

- the reduction in the burden on the health systems of the various Member States is not taken into account. It could not be calculated, although it would be reasonable to expect benefits in terms of disease and accident prevention,

- the productivity loss due to children falling ill is not taken into account (either regarding children themselves, if they fall ill when they are adults, or their parents if children fall ill when still children)

Choice of the preferred option

Before elaborating on the reasoning behind the choice of the preferred option, it is useful to explain the cost estimates of the REACH Impact Assessment since both REACH and the Toys Directive contain rules for chemicals in toys. It is namely important to understand that the cost estimates of the Toys directive proposal are not directly comparable with those of the REACH Impact Assessment.

The impact assessment of the Toys directive includes inter alia costs directly resulting from the banning of the use of certain chemical substances from usage in toys. In contrast, the impact assessment of the REACH proposals focussed on the costs of the registration procedure for chemical substances estimated between € 2.8 – 5.2 billion. Substances were assumed to be withdrawn purely for commercial reasons, notably avoiding the payment of testing and registration costs. The further work on the REACH impact assessment does, however, provide some evidence that the costs of more widespread withdrawal of substances would have significantly higher cost effects.

The REACH impact assessment outlined the following potential major costs of REACH:

1. Costs of registration and supply chain management

2. Costs resulting from the potential withdrawal of substances as part of the registration process

3. Costs resulting from the potential withdrawal of substances as part of the authorisation process

4. Other costs resulting from impacts on innovation etc.

The €2.8-5.2 billion estimate of costs contained in the REACH impact assessment was based solely on the likely costs of the registration phase of REACH[17] (i.e. categories 1 and 2 above only). It was not found to be possible to quantify the potential costs on innovation etc. (category 4).

The potential costs of the authorisation phase of REA