SECTION || PAGE

|| Glossary and use of terms || 3

1. || Introduction and background || 6

|| 1.1 Evaluation aims 1.2 Evaluation scope and methodology 1.3 Recent developments in Union harmonisation legislation || 6 7 13

2. || Evaluation framework and typology of regulatory simplification || 17

|| 2.1 Evaluation questions 2.2 Intervention logic 2.3 Typology of simplification and support measures || 17 19 24

3. || Relevance and coherence of Internal Market Legal Framework || 34

|| 3.1 Relevance 3.2 Coherence of instruments 3.3 Coherence of definitions || 34 36 49

4. || Efficiency of the implementation regime || 53

|| 4.1 Overall picture 4.2 Conformity assessment of products 4.3 Notified Bodies 4.4 Accreditation 4.5 Declaration of Conformity 4.6 CE marking 4.7 Role of support and coordination mechanisms 4.8 Market surveillance || 53 54 56 67 70 74 78 79

5. || Costs of compliance and scope for simplification || 90

|| 5.1 Introduction and approach taken 5.2 Costs of compliance for firms 5.3 Scope for regulatory and administrative simplification 5.4 Benefits of simplifying administrative requirements 5.5 Quantification of the benefits from simplification of Union harmonisation legislation 5.6 Macro-economic impacts of simplification on growth and jobs || 90 93 106 110 114 117

6. || Effectiveness and fitness for purpose || 121

|| 6.1 Regulatory and non-regulatory barriers 6.2 Barriers to the free movement of innovative products 6.3 Barriers to the free movement of green products 6.4 Effectiveness in responding to the challenges of e-commerce 6.5 Effectiveness in allowing SMEs to operate across EU28 6.6 Effectiveness in handling the relationship between services and products 6.7 Effectiveness with respect to business-to-business products 6.8 Impact of IM legislation on the internal market 6.9 Impact of IM legislation on health and safety and consumer protection 6.10 Impact of IM legislation on environmental protection || 121 126 130 132 136 138 142 144 153

7. || Conclusions and recommendations || 158

|| 7.1 Conclusions 7.2 Recommendations || 158 163

Glossary

AB Accreditation Body

ADCO Administrative Co-operation

ADR Alternative Dispute Resolution mechanism

BAU Business-as-usual

CA Conformity Assessment

CAB Conformity Assessment Body

CE Conformité Européenne

DoC Declaration of Conformity

EA European co-operation for Accreditation

EO Economic operators

EQ Evaluation question

ESO European Standardisation Organisation

EU European Union

FTE Full-time equivalent

IA Impact assessment

ICSMS Information and Communication System on Market Surveillance

IM Internal market

MSAs Market Surveillance Authorities

NANDO New Approach Notified and Designated Organisations Information System

NB Notified Body (Bodies)

NBGs Notified Bodies Groups

NLF New Legislative Framework

NRTL Nationally Recognized Testing Laboratory

ODM Original design manufacturer

OEM Original equipment manufacturer

PCP Product Contact Point

PSMSP Product Safety and Market Surveillance Package

R&D Research and Development

SCM Standard Cost Model

SDoC Supplier’s Declaration of Conformity[1]

SME Small or medium-sized enterprise

TD Technical Documentation

TFEU Treaty on the Functioning of the European Union

UK United Kingdom

Internal Market Directives/ Regulations

ATEX Directive on Equipment and protective systems intended for use in potentially explosive atmospheres

CPR Construction Products Regulation

EMC Electromagnetic Compatibility Directive

GAD Gas Appliances Directive

LD Lifts Directive

LVD Low Voltage Directive

MD Machinery Directive

MID Measuring Instruments Directive

OED Outdoor Equipment Directive

PED Pressure Equipment Directive

PPE Personal Protective Equipment Directive

REACH Registration, Evaluation, Authorisation and Restriction of Chemical substances Regulation

R&TTE Radio and Telecommunications Terminal Equipment Directive

RoHS Directive on the restriction of the use of certain hazardous substances in electrical and electronic equipment

SPVD Simple Pressure Vessels Directive

A full list of Internal Market directives and regulations within study scope is provided in Table 1.1.

Notes on the use of terminology

· The terms: internal market legislation for industrial products and Union harmonisation legislation have been used interchangeably in the report.

· When referring to specific internal market legislation, a distinction has been made between (i) product-specific harmonisation legislation and (ii) horizontal harmonisation legislation.

This Staff Working Document builds on the Evaluation of Internal Market Legislation for Industrial Products was carried out for the European Commission’s DG Enterprise and Industry by the Centre for Strategy & Evaluation Services (CSES)[2], supported by our partner organisations, Panteia and Oxford Research.

Drawing on evidence gathered through the research, the evaluation provides an independent evaluative judgment on the current state of play in the development and modernisation of the body of internal market legislation for industrial products. It does not represent the official view of the European Commission.

1. Introduction and background

Section 1 provides an overview of the evaluation’s objectives and scope and outlines the methodology adopted. The subject of the evaluation, the overall policy and legal context and recent developments in the regulatory architecture are then set out.

1.1 Evaluation aims

The objectives of this evaluation are, in summary, to:

· Examine how far the overall body of internal market (IM) legislation for industrial products and the regulatory approach is fit for purpose and to what extent they constitute an effective means of addressing barriers to the functioning of the EU’s internal market for industrial products;

· Evaluate the relevance and coherence, efficiency, utility, effectiveness and impact of Union harmonisation legislation and address a series of specific evaluation questions[3];

· Identify and analyse any gaps, loopholes, inconsistencies and duplication in IM legislation for industrial products or in administrative requirements for economic operators;

· Assess the costs and benefits of Union harmonisation legislation for economic operators and the impact on strengthening industrial competitiveness;

· Assess the cumulative impacts of, and interaction between legislation and compliance requirements[4].

· Make recommendations as to how the efficiency and effectiveness of IM legislation for industrial products (including structures and institutional actors to support its implementation) could be improved so as to strengthen industrial competitiveness and to create more favourable conditions for growth and jobs;

· Identify possible simplification measures through a preliminary analysis of the potential impacts, and a comparison of the appropriateness and feasibility of the different options to feed into a possible future impact assessment.

Since the mid-1980s, the EU acquis for industrial products has gradually expanded, and there are currently more than 30 directives and regulations covering specific areas of industrial products (e.g. pressure equipment, gas appliances) and horizontal directives that apply across many different product groups, such as the RoHS (hazardous substances), REACH (chemicals) and Ecodesign. A distinction can be made between two different types of legislation falling within scope:

· Product directives – Directives that address specific types of products, such as the Pressure Equipment Directive (PED) and the Recreational Craft Directive; and

· Horizontal directives – that cover a broad range of product groups. Examples are the Low Voltage Directive (LVD), the Machinery Directive and the RoHS Directive.

Although evaluations of individual pieces of IM legislation (directives and regulations) have been undertaken, this study is the first overarching strategic review of IM legislation for industrial products in 25 years. As such, it provides an opportunity to: assess the fitness for purpose of the regulatory architecture for ensuring the free movement of industrial products; consider the extent to which further improvements could be made to strengthen coherence, efficiency and effectiveness and to take stock of progress already being made through the New Legislative Framework’s (NLF’s) modernisation agenda.

There is a strong backwards-looking aspect to the evaluation. Progress to date has been reviewed and any problems have been identified and analysed, either in the legal framework itself, or in the implementation regime. There is equally an important forward-looking element, since the study has examined the extent to which Union harmonisation legislation is fit for purpose for the internal market of the 21st century, and whether any simplifications or further changes are necessary.

Strengthening the effectiveness of the internal market for industrial products was identified as a priority in the October 2012 update on an Integrated Industrial Policy[5]. The European Commission therefore committed to carrying out an evaluation of the EU acquis in the area of industrial products to assess the coherence and ‘fitness for purpose’ of the regulatory framework. The study is especially timely because 2012 was the 20th anniversary of the establishment of the internal market. The study will make a contribution to the objectives set out in the Single Market Act I[6] and follow-up Communications[7] to maximise the contribution of the internal market in industrial products to achieving the Union’s growth and employment objectives, in line with the Europe 2020 strategy for smart and inclusive growth. In particular, the evaluation provides a technical input to the Roadmap for the Reform of the Internal Market for Industrial Products[8] expected in late 2013.

1.2 Evaluation scope and methodology 1.2.1 Evaluation scope

The study is ambitious in scope, since it covers not only most pieces of IM legislation, but also the workings of the regulatory regime, including European and national implementation structures. The focus of the study is on Union harmonisation legislation, although the specifications also required consideration of some issues relating to non-harmonised products.

The majority (though not all) pieces of IM legislation were within the study scope, as set out in the following table:

Table 1.1: Union harmonisation legislation within study scope

No || Year || Directive

1 || 1989 || Directive 89/686/EEC on personal protective equipment (PPE)

2 || 1992 || Directive 92/42/EEC on efficiency requirements for new hot-water boilers fired with liquid or gaseous fuels

3 || 1993 || Directive 93/15/EEC on explosives for civil use

4 || 1994 || Directive 94/9/EC on equipment and protective systems intended for use in potentially explosive atmospheres (ATEX)

5 || 1994 || Directive 94/25/EC on recreational craft

6 || 1994 || Directive 94/62/EC on packaging and packaging waste

7 || 1995 || Directive 95/16/EC on lifts

8 || 1996 || Directive 96/98/EC on marine equipment

9 || 1997 || Directive 97/23/EC on pressure equipment (PED)

10 || 1999 || Directive 99/5/EC on radio and telecommunications terminal equipment (R&TTE)

11 || 2000 || Directive 2000/9/EC on cableway installations designed to carry persons

12 || 2000 || Directive 2000/14/EC relating to the noise emission in the environment by equipment for use outdoors (OED)

13 || 2004 || Directive 2004/22/EC on measuring instruments (MID)

14 || 2004 || Directive 2004/108/EC concerning the electromagnetic compatibility electrical and electronic appliances, systems and installations (EMC)

15 || 2006 || Directive 2006/42/EC on machinery (MD)

16 || 2006 || Directive 2006/95/EC on low voltage devices (LVD)

17 || 2007 || Directive 2007/23/EC on pyrotechnic articles

18 || 2009 || Directive 2009/23/EC on non-automatic weighing instruments

19 || 2009 || Directive 2009/105/EC on simple pressure vessels (SPVD)

20 || 2009 || Directive 2009/125/EC establishing a framework for the setting of ecodesign requirements for energy-related products (Ecodesign)

21 || 2009 || Directive 2009/142/EC on gas appliances (GAD)

22 || 2010 || Directive 2010/35/EU on transportable pressure equipment

23 || 2010 || Directive 2010/30/EU on the indication by labelling and standard product information of the consumption of energy and other resources by energy-related products (Energy Labelling Directive)

24 || 2011 || Directive 2011/65/EU on the restriction of the use of certain hazardous substances in electrical and electronic equipment (RoHS)

Some IM legislation was excluded because it has recently been subject to major revision, such as the Construction Products Regulation (2011) and Medical Devices Regulation (2012)[9]. It should also be noted that a further legislative initiative aimed at simplifying four IM directives is under consideration as part of a separate study[10]. Sectoral legislation is also outside the scope, since regulation in areas such as the chemicals and automotive sectors has recently been evaluated. The transposition of Union harmonisation legislation into national legislation was formally outside the scope. However, since one of the issues examined was whether directives or regulations are a more effective instrument in achieving internal market goals, some consideration was made as to the extent of divergence in the implementation of directives.

While environmental legislation falling outside the scope of Article 114 was beyond the scope, as part of the assessment of cumulative regulatory effects, through the case studies, it was necessary to consider the interaction between IM legislation for industrial products and other legislation applicable to products. A series of EU regulations have been adopted in the past 10 years that impose additional costs on industry, such as the WEEE Directive (2012/19 EC), the Energy Performance of Buildings Directive and product--specific regulations such as the F-gas regulation (842/2006 EC).

The second main area of focus has been on assessing how well the regime works to support the implementation of Union harmonisation legislation at European and national level, including the role played by different institutional actors, coordination mechanisms and support structures.

The scope also included a review of progress made through recent initiatives to help modernise Union harmonisation legislation such as the New Legislative Framework (2008), the Alignment Package of 9 Directives that forms part of the NLF’s implementation (2011) and the proposals set out in the "Product Safety and Market Surveillance Package" (2013). These and other recent relevant developments are set out in Section 1.4. This was essential given the need to take stock of what simplification measures have already been undertaken, or are planned in the near future, before considering what further simplification measures might also be considered.

1.2.2 Methodological approach

The research has been carried out using a number of different research tools that have allowed us to verify and to cross-check the evidence in accordance with triangulation principles. These include: extensive desk research, two different online surveys, carrying out a major interview programme with more than 200 stakeholders, undertaking product-based case studies across 10 selected product categories, and analysing the results of DG ENTR’s Your Voice online consultation.

The following diagram shows the interconnection between the different phases and elements of the study.

Figure 1.1: Methodological framework by phase and research and data analysis tools

Desk research involved a review of a wide range of documents and a bibliography is provided in Appendix B. Among the documentation reviewed were key EU legal texts and non-binding guidance produced by the Commission to support the implementation of Union harmonisation legislation overall, and guidance on specific Directives and Regulations. Relevant findings from evaluations and impact assessments carried out focusing on individual pieces of IM legislation have also been reviewed[11].

Two online surveys were carried out with (i) Notified Bodies and members of Notified Body Groups and (ii) Accreditation Bodies. The survey of Notified Bodies received 128 responses, which equated to 11.4% of the total viable sample of 1116 Notified Bodies contacted. The number of responses achieved represents a 95% confidence level with an 8% margin of error. The response level was positive given the problem of survey fatigue and contact problems[12].

The distribution of responses from NBs by country in the sample broadly reflects the distribution in the total population of NBs across Europe (distribution by country is provided in Section 2) and was representative by size of the NB in terms of the number of employees. Certain smaller EU countries (e.g. Bulgaria and Czech Republic) are over-represented, while a few countries (e.g. France) are comparatively under-represented in the sample.

In terms of the pieces of legislation covered by the NBs that responded to the survey, the participating NBs cover all pieces of IM legislation under investigation. The most common are the Personal protective equipment (27% of respondents), the Machinery Directive (24.6%), the Pressure equipment Directive (18.9%), the Low Voltage Directive (18.9%). Good coverage of all conformity assessment procedures (Modules) has also been achieved, with all procedures covered by at least 35% of participating NBs. EC-type examination (Module B) is the most common procedure (84% of respondents).

While the majority of Notified Bodies primarily serve their national markets (67% indicate that national market represent more than 50% of the their turnover from conformity assessment services), there are also NBs with a more international character (43% indicated that firms in other EU countries represent more than 10% of the turnover and 34% referred to a similar share of turnover for firms in non-EU countries).

The survey of Accreditation Bodies attracted 20 responses out of a total of 32 contacted[13] 62.5%) including all Member States with a large manufacturing base as well a range of smaller Member States. It is provides a broad geographical coverage. Additionally, a few Accreditation Bodies were interviewed, which ensured a high level of coverage of this stakeholder group.

201 interviews have been carried out[14]. The extensive interview programme with key stakeholders included the broad spectrum of stakeholders such as national competent authorities, market surveillance authorities, Notified Bodies and members of NB groups, ADCOs, Product Contact Points, industry associations and individual firms. An overview is set out in the table below:

Table 1.2: Interview programme – Number of interviews completed

|| Total

EU industry associations and stakeholders || 31

National industry associations || 9

Individual firms (e.g. manufacturers, importers, large/small firms) || 62

European Commission officials || 12

National authorities (market surveillance authorities, Accreditation Bodies, and chairmen/women of the ADCO groups). || 77

Notified Bodies Groups/ organisations at EU level || 4

Notified Bodies || 1

Consumer, environmental organisations and trade unions representatives || 1

Standardisation organisations || 1

Total || 201

A total of 62 firms were interviewed, together with 19 industry associations for the product-based case studies, out of a total of more than 220 firms contacted. It should be stressed that only a small number of Notified Bodies Groups were interviewed and Notified Bodies because as noted above, a large-scale survey was undertaken with Notified Bodies.

CSES also carried out an analysis of the 144 responses to the Your Voice Consultation[15] organised by the European Commission carried out between January and April 2013 as part of the roadmap initiative "Reforming the internal market for industrial products". The consultation received response from industry associations and individual firms across a broad range of sectors such as manufacturing and ICT, and from public authorities, organisations providing professional, scientific and technical services, wholesale and retail, consumer organisations and individual citizens. The findings have been integrated into this report and CSES provided DG ENTR with a summary analysis of the consultation results. The analysis has also been integrated into the various parts of the report.

Last but not least, in consultation with the Commission, the project team selected 10 product categories for the case study research, eight in harmonised sectors and two in non-harmonised sectors (ski/Snow footwear and bicycles). A number of selection criteria were used, such as ensuring that the product included professional users, products in which SMEs have a strong presence among manufacturers, the need to include intermediate not only final end products, etc. The case studies selected were:

• Electric motors

• Laptops

• Domestic Refrigerators and freezers

• Lifts for persons

• Gardening equipment

• Instruments & appliances for measuring, testing and navigation

• Air conditioners

• Integrated circuits

• Ski/Snow footwear (non-harmonised)

• Bicycles (non-harmonised)

The full versions of the 10 case studies are in Appendix C. These were carried out using a combination of desk research, statistical analysis and interviews with relevant firms and industry associations. For each case study, we analysed relevant data sources (e.g. Eurostat Prodcom and SBS data, industry data). Section 5 provides a summary overview of the findings through the case study research.

1.3 Recent developments in Union harmonised product legislation

Since Union harmonisation legislation is complex and there have been a number of significant developments in the legal framework since the mid-1980s, it is necessary to provide a factual overview as to how the basic regulatory architecture works, and to summarise steps taken by the Commission to improve and modernise the regime supporting its implementation (e.g. the legal framework on market surveillance and accreditation.

1.3.1 Introduction

Since January 1993, the Internal Market (“IM”) has ensured the free movement of goods, services, people and capital within the European Union (EU). Article 114 of the Treaty on the Functioning of the European Union (TFEU)[16] provides the legal basis for Union harmonisation legislation for industrial products. The objectives are to promote approximation through technical harmonisation measures and to ensure high levels of protection for safety and health, consumers and the environment. An assessment of the intervention logic is set out in Section 2.2.

1.3.2 Harmonised products and the New Approach Directives

In 1985[17], the New Approach was adopted as the principle regulatory mechanism for harmonised product legislation under which the “essential requirements” in respect of safety and health are set out in the applicable internal market legislation.

The legislative framework is non-prescriptive and technology-neutral with detailed technical implementation dealt with through standardisation. Economic operators are then free to determine how they demonstrate compliance with the essential requirements, typically following European harmonised technical standards, or an alternative means of showing that presumption of conformity has been achieved.

After two decades, the “New Approach” gained recognition and acceptance across many industrial sectors as a method for achieving the effective operation of the internal market in industrial products, while ensuring that minimum common technical standards are met. In order to improve the effectiveness of the regulatory framework under the New Approach Directives, the New Legislative Framework (NLF) was adopted in 2008. The aim was to retain the central tenets of the New Approach but to reinforce the regulatory system’s effectiveness, improve transparency and remove any remaining obstacles to the free movement of industrial products. In 2008, in order to support the NLF’s implementation, two EU regulations and a decision were adopted as part of a broad package of measures. In the area of harmonised products, the “Goods Package” consists of:

· Regulation (EC) No 765/2008 sets out the requirements for accreditation and market surveillance relating to the marketing of products and Decision 768/2008/EC on a common framework for the marketing of products. The Regulation applies to harmonised products; and

· Decision 768/2008/EC on a common framework for the marketing of products. The Decision lays down common principles and reference provisions. This includes harmonised definitions and general obligations for economic operators, rules for CE marking and a “menu” of conformity assessment procedures. The Decision provides a general framework for future legislation which will harmonise the conditions for placing products on the market.

1.3.3 The Alignment Package

On 21 November 2011, the Commission adopted an “Alignment Package” to align nine Directives with the common rules and approaches outlined in the NLF, taking into account the “toolbox” set out in Decision 768/2008/EC, namely: Low Voltage Directive (2006/95/EEC), Electromagnetic Compatibility Directive (2004/108/EC); ATEX Directive (94/9/EC); Lifts Directive (95/16/EC); Simple Pressure Vessels Directive (2009//105/EC); the Measuring Instruments Directive (Directive 2004/22/EC); Non-automatic Weighing Instruments Directive (2009/23/EEC); Civil Explosives Directive (93/15/EEC); and Pyrotechnic Articles Directive (2007/23/EC). In addition, there are a number of other Directives subject to a broader revision that includes an alignment to the model provisions of Decision 768/2008/EC.[18].

1.3.4 Non-harmonised products

Until 2008, the mutual recognition principle was implemented under Decision 3052/95/EC. Regulation (EC) No 764/2008, also known as the Mutual Recognition Regulation, provides a common framework for mutual recognition in the area of non-harmonised products. This relates to the application of the mutual recognition principle in the area of non-harmonised products. Regulation 764/2008 complements two other pieces of EU legislation:

· Directive 98/34/EC[19] and the TRIS notification procedure - which requires the Member States to notify the Commission and each other of any draft ‘technical regulations’ for products before they are adopted in national law; the Directive is a preventive measure that allows the Commission and Member States to verify that any new technical rule is compatible with EU law before it is adopted; in contrast, the Regulation 764/2008 is a corrective measure that ensures the correct enforcement of national rules on a case-by-case basis; and

· The General Product Safety Directive,[20] which requires the safety of all consumer products to be assessed in accordance with European standards, Community technical specifications, codes of good practice, the state of the art and expectations of consumers; except where national rules apply, the Directive applies to all consumer products (whether harmonised or not), whilst Regulation 764/2008 applies to all non-harmonised products (whether likely to be used by consumers or not). Through the new Product Safety and Market Surveillance Package, a new proposed regulation is expected to replace the 2001 GPSD by 2015.

Approximately 25% of intra-EU trade is in the non-harmonised product area. In the absence of Union harmonisation legislation, each Member State can adopt its own national technical rules in relation to issues such as weight, size, composition, labelling and packaging or, indeed, to apply no rules at all. National legislation must still comply with the requirements of Articles 34–36 of the Treaty on the Functioning of the European Union (TFEU). In order to prevent national technical rules from inhibiting trade, the TFEU also forms the basis of the “mutual recognition” principle. According to Articles 34-36, Member States are obliged to accept products lawfully marketed in another Member State (and which are not subject to EU harmonisation legislation) even when the product does not fully comply with the technical rules of the Member State of destination. Since 2008, the NLF has helped to drive the modernisation agenda to ensure that IM legislation for industrial products is fit for purpose and that present inconsistencies are eliminated. Following the adoption of the two Regulations and Decisions mentioned earlier concerned with setting out a common regulatory framework and common arrangements for market surveillance and accreditation measures, there have been a series of further developments that form part of the NLF and its follow-up.

1.3.5 Product Safety and Market Surveillance Package

In order to improve consumer product safety and to strengthen market surveillance of products on the internal market, the Commission proposed a new package of legislative and non-legislative measures, the “Product Safety and Market Surveillance Package” on 13 February 2013. This builds on the overarching framework provided by the NLF.

The PSMSP consists of a number of elements, namely a Proposal for a Regulation on consumer product safety, replacing Directive 2001/95/EC on general product safety; a Proposal for a Regulation on market surveillance of products, a Multi-annual plan for market surveillance until the expected coming into force of the Regulations in 2015. The final part is an implementation report on Regulation (EC) No 765/2008 setting out requirements for accreditation and market surveillance relating to the marketing of products. Overall, the Package is intended to enable better coherence of the rules regulating consumer products identification and traceability and improved coordination of the way authorities check products and enforce product safety rules across the European Union. More specifically, the Commission highlights a number of key changes to be introduced by the Package:

· Alignment of the general obligations of economic operators to ensure the safety of consumer products with clearer responsibilities for manufacturers, importers and distributors;

· More effective tools to enforce safety and other product-related requirements and to take action against dangerous and non-compliant products through a single set of rules for market surveillance;

· Creation of a more co-operative system of market surveillance across the EU; and

· Streamlined procedures for the notification of dangerous products and synergies between the existing Rapid Alert Information System (RAPEX) and the Information and Communication System for Market Surveillance (ICSMS).[21]

The proposed Regulation on the Market Surveillance of Products responds to the confusion said to be caused by the current “three-tier” system of market surveillance which results from the fact that market surveillance rules and obligations for economic operators are laid down in several different pieces of EU legislation. For example, the General Product Safety Directive[22] creates overlaps in relation to harmonised products intended or likely to be used by consumers. Such overlaps have been criticised by the European Parliament and stakeholders in industry and national administrations. In order to improve the effectiveness of the regulatory regime, the proposed Regulation would merge the rules on market surveillance of the General Product Safety Directive, Regulation (EC) 765/2008 and many sector-specific pieces of Union harmonisation legislation into a single legal instrument that applies horizontally across all non-food sectors. There would be no distinction between consumer and professional products or between harmonised products and non-harmonised products for the purposes of market surveillance.

2. Evaluation framework and typology of regulatory simplification 2.1 Evaluation questions

The specifications for this evaluation set out a number of high-level evaluation issues under the headings of (i) relevance and coherence (ii) efficiency (iii) effectiveness and fitness for purpose and (iv) impacts. In the following table, we summarise the evaluation questions (EQs) that have been considered by the evaluation. In order to address the overall objectives of the evaluation, it has been necessary to revise some of the questions set out in the task specification and to introduce additional questions.

Table 2.1: Evaluation Questions

No. || Evaluation Question

|| Relevance and Coherence – Section 3

EQ1 || · Is harmonised product legislation (supported by voluntary technical standards) a relevant response to the problems and needs identified in the intervention logic?

EQ2 || · Are directives the most suitable legal instruments for the purposes of technical harmonisation in the relevant fields or should directly applicable regulations (requiring little or no transposition) be used?

EQ3 || · Is there evidence of gaps, loopholes, inconsistencies and duplication across Union harmonisation legislation and in the corresponding administrative requirements for economic operators?

EQ4 || · How coherent is the approach to definitions and product scopes in the various legal texts? (e.g. components, spare parts)

|| Efficiency of the implementation regime – Section 4

EQ5 || · What is the overall picture in relation to the efficiency of IM procedures, mechanisms and structures to support its implementation?

EQ6 || · How efficient is the conformity assessment process?

EQ7 || · How well do Notified Bodies serve the conformity assessment process

EQ8 || · Are conformity assessment bodies sufficiently regulated or are more stringent rules are needed?

EQ9 || · Is it appropriate to allow different elements of a conformity assessment to be performed by different bodies?

EQ10 || · What are the challenges for national competent authorities in monitoring the activities of Notified Bodies located outside the EU? How far is it appropriate – if at all – to open up Europe’s conformity assessment market to third countries?

EQ11 || · Should third-party conformity assessment be required for all industrial products?

EQ12 || · What are the benefits of accreditation for enhancing the single market for products (and services) and how could it best be used to support single market initiatives?

EQ13 || · Should accreditation be made compulsory for the purposes of demonstrating the technical capacity of conformity assessment bodies in the regulated sector?

EQ14 || · Is the current regime for the Declaration of conformity satisfactory?

EQ15 || · Is the current regime of CE marking satisfactory? Are there ways to improve the interaction between CE marking and other compulsory and voluntary markings enshrined in EU legislation?

EQ16 || · What contribution is made by support and co-ordination mechanisms such as Administrative Co-operation Working Groups and Product Contact Points?

EQ17 || · What are the main challenges facing market surveillance authorities?

EQ18 || · How effective is the co-operation between market surveillance authorities?

EQ19 || · Should non-harmonised/non-consumer products be covered by common EU market surveillance rules?

|| Costs of Compliance and Scope for Simplification - Section 5

EQ20 || · What steps do firms take to ensure compliance with IM legislation? What costs do they incur?

EQ21 || · How far is there scope for administrative and regulatory simplification of Union harmonisation legislation? To what extent is there scope for merging different directives?

EQ22 || · How far will administrative simplification bring about benefits for economic operators in terms of reduced administrative burdens?

EQ23 || · To what extent can the benefits of administrative simplification be quantified?

EQ24 || · What benefits from simplification can be identified for the wider economy?

|| Effectiveness and Impacts – Section 6

EQ25 || · What, if any, are the barriers (regulatory/ non-regulatory) to the effective functioning of the internal market for industrial products stemming from IM legislation for industrial products?

EQ26 || · Are there specific regulatory barriers to the development and free movement of innovative products, including products integrating key enabling technologies (KETs)? Are there any legal gaps not already covered by IM legislation for industrial products?

EQ27 || · Are there specific regulatory barriers to the development and free movement of green products? Are there any legal gaps not already covered by IM legislation for industrial products?

EQ28 || · To what extent is legislation adapted to the challenges presented by e-Commerce?

EQ29 || · How are SMEs (micro, small and medium-sized) affected by IM legislation for industrial products and how do they cope with the requirements? Is there scope to alleviate the burden on the different SME categories without compromising the overarching objectives of the legislation?

EQ30 || · Are there barriers to trade stemming from the way legislation handles the relation between services and products which are part of the same value chain?

EQ31 || · The specific situation of business-to-business (B2B products) which are developed and supplied to be used by professionals for the development of other products: Do these products require a special treatment?

EQ32 || · Overall, how effective is IM legislation for industrial products as a mechanism and means to achieve the objective of improving the functioning of the internal market?

EQ33 || · Overall, how effective is IM legislation for industrial products as a mechanism and means to achieve the objective of ensuring a high level of health and safety and consumer protection?

EQ34 || · Overall, how effective is IM legislation for industrial products as a mechanism and means to achieve the objective of ensuring a high level of environmental protection?

2.2. Intervention logic 2.2.1 Problem definition and identification of needs

The starting point was to define the problems and needs that Union harmonisation legislation seek to address. The counterfactual situation prior to the introduction of harmonised technical product regulations at EU level was also considered. Prior to the introduction of the internal market for industrial products, there was significant market fragmentation due to there being different national legislation and technical standards in different Member States. There were regulatory barriers to cross-border trade and customs tariffs. There were practical barriers to exporting industrial products, and it was more difficult to find out what national legislation was applicable in another Member State.

Prior to the advent of an internal market in industrial products, there was a lack of a level playing field and fair competition since national regulations and administrative requirements were more burdensome in some EU countries than in others. In some cases, such as machinery, there was the absence of a national equivalent to the Machinery Directive. In order for industry and SMEs to benefit from the potential economies of scale that stem from the elimination of barriers to cross-border trade, there was a need for technical harmonisation measures.

2.2.2 General, specific and operational policy objectives

The general objectives underlying IM legislation for industrial products are set out in Article 114 of the Treaty (TFEU). This provides the legal basis for the adoption of approximation measures. In adopting such approximation measures, Union harmonisation legislation should ensure a high level of protection as regards safety and health, environmental and consumer protection.

A number of specific objectives then relate back to these overarching general objectives, such as in the case of harmonised products: ensuring access to the internal market and fair competition; developing harmonised rules across the EU for placing products on the market, preventing unsafe and unhealthy products entering the market, etc. The circulation of non-harmonised industrial products is intended to be ensured by the application of the mutual recognition principle. Under the goal of environmental protection, the Industrial Policy Communication (COM(2010) 614) also mentions the role of IM legislation in promoting a more resource-efficient and sustainable European economy.

Balancing the economic objectives relating to the internal market are the social and environmental objectives within Article 114 relating to the prevention of unsafe and unhealthy products from entering the market and the minimisation of harmful environmental impacts. Whilst not incompatible with the internal market objectives, these objectives reflect the need to protect against a “race to the bottom”, whereby producers of harmful products are able to undercut other producers. Here, clearly the adoption of recent IM Directives such as the Ecodesign Directive and energy labelling requirements has potential to contribute to this objective.

Although Article 114 provides the sole legal base for Union harmonisation legislation, the effective implementation of Union harmonisation legislation should also contribute – albeit indirectly - to the achievement of EU industrial policy objectives. Article 173 (TFEU) provides the basis for EU industrial policy and is an important part of the wider policy backdrop. However, since IM legislation does not differentiate between European economic operators and those from third countries, since it is concerned with ensuring a level playing field within the internal market, industrial competitiveness is a subsidiary objective.

Operational objectives provide the basis for evaluating the immediate activities and effects associated with Union harmonisation legislation. They relate to concrete actions taken at EU level, including formal activities, namely i.e. introducing directives and regulations and setting standards, as well as defining administrative requirements. For instance, Regulation (EC) 764/2008 establishes a framework for the implementation of the mutual recognition principle and mechanisms for non-harmonised products to be recognised, Decision 768/2008/EC provides a common framework for the marketing of products. They also include “soft” interventions, including providing practical support to industry and promoting harmonisation with global trading partners.

2.2.3 Intervention logic mapping diagram

An intervention logic diagram is provided on the following page (Figure 2.1) setting out the hierarchy of objectives. This ranges from the general (strategic) policy objectives through to specific and operational objectives. In the next sub-section, we describe the specific mechanisms by which the objectives are pursued.

Figure 2.1: Intervention logic - IM legislation for Industrial Products

2.2.4 Division of competence between the EU and national levels

At EU level, the European Commission is responsible for the development of Union harmonisation legislation for industrial products and its periodic review and revision. It also has an important overarching role in monitoring and evaluating its implementation. The Commission is also responsible for mandating EU standardisation bodies to develop technical standards and for setting up appropriate mechanisms and support structures to ensure its effective implementation. It is also responsible for coordination aspects relating to market surveillance.

In order to strengthen the effectiveness of IM legislation and its implementation, a number of different institutional mechanisms have been set up at EU level, such as ADCO Groups and Notified Bodies Groups. These promote information exchange and facilitate the discussion of the main challenges in the implementation of Union harmonisation legislation. In addition, information tools have been developed to support the implementation regime, such as the NANDO Database of Notified Bodies across EU28 and the ICSMS, the internet-supported information and communication system for the pan-European market surveillance. Furthermore, EU guidance documents have been developed for economic operators as to how to ensure more effective compliance with IM regulations (Blue Guide, specific legislation).

Turning to the national level, a number of mechanisms and structures that support the implementation of Union harmonisation legislation are the responsibility of the Member States. Member States are responsible for the development of national implementing rules and for nominating the necessary competent authorities, and have responsibility for designating Notified Bodies – including determining whether accreditation mechanisms are required and for monitoring the operation of NBs. Further responsibilities include the provision of support and guidance to economic operators to ensure effective implementation, market surveillance and enforcement.

In the non-harmonised area, Member States are required to follow a notification process where they consider that products should not enter their national market, to establish national product contact points and to submit an annual report on implementation. Product Contact Points also provide information and guidance since 2008.

Finally, manufacturers and other economic operators are expected to comply with requirements and follow the various conformity assessment procedures while at the same time – mainly through the industry associations – participate in the development of technical standards and the working groups set up to monitor the implementation of IM legislation. Other relevant stakeholders – e.g. consumer, environmental groups and trade unions – also participate in this process.

For all these activities, the Commission, the Member States, industry and stakeholders all dedicate certain resources in the form of human and financial inputs. The level of these inputs has a significant effect on the overall efficiency of the legal framework. An assessment of how effective a role is being played by the various institutional actors involved in supporting the implementation of Union harmonisation legislation is provided in Section 4 (efficiency).

2.2.5 Mechanisms and structures

The implementation of Union harmonisation legislation is underpinned by a number of mechanisms and structures that help to ensure effective implementation. These are summarised below, with a distinction between EU and national level implementation, monitoring and enforcement activities:

EU level - Harmonised products

· Mandate EU standardisation bodies to develop technical standards

· Review and evaluate implementation of legislation and propose amendments /changes to Directives and Regulations to reflect technological developments, address implementation problems and economic and technical feasibility

· Create Notified Body coordination groups

· Develop information/support structures to assist industry and stakeholders in implementation of legislation (e.g. NANDO, ICSMS online information and communication system for pan-European market surveillance)

Non-Harmonised products

· Third countries

· Conclude Mutual recognition agreements to reduce costs of testing and certification in other markets

National Level (Member States)

· Appoint national competent authorities in respect of specific IM legislation

· Appoint national Accreditation Bodies

· Transpose EU Directives into national legislation

· Designate Notified Bodies to carry out conformity assessment

· Establish national Accreditation Bodies to accredit Notified Bodies

· Conduct monitor and enforcement activities to ensure compliance with the legislation

· Communicate to other Member States decisions (notify) for approval, withdrawal of products

· Lay down rules and penalties for non-compliance

· Participate in support/coordination structures/groups (ADCOs)

· Develop support structures for industry (industry)

Non-harmonised products

· Operating Product Contact Points

· TRIS notification system (98/34 notification procedure)

· Submit annual reports on implementation of Regulation 764/2008

Industry and stakeholders

· Comply with legal requirements

· Participate in support structures for development of technical standards

· Participate in working groups monitoring the implementation of legislation (e.g. ADCOs, Notified Bodies Groups)

The human resources required at EU and national level in order to promote an effective internal market in goods form an important part of the intervention logic since they are the processes that need to be implemented efficiently in order to bring about the effective implementation of IM legislation. An assessment as to how effective some of the different aspects of the framework for the implementation of IM legislation for industrial products (including the role of different institutional actors) is explored in Section 3 of this report (efficiency).

2.2.6 Effects and impacts

The final stage in the logic mapping was to assess the full and effective implementation of IM legislation for industrial products in order to check what sort of effects and impacts should materialise at different levels, namely:

· Effects on economic operators - strengthened access to the internal market and global markets, leading to greater economies of scale and enhanced firm-level competitiveness, cost-efficiencies through regulatory and product convergence at European level and to some extent also globally.

· Effects on users and consumers - reduce incidence of non-compliant products placed on market, promoting more sustainable consumption

· Impacts on the internal market – such as promoting an increase in intra-EU trade, strengthening market access, promoting fairer competition and a level playing field

· Impacts on health, safety, the environment and consumer protection – through the setting of essential requirements, IM legislation’s effective implementation should help to prevent unsafe and unhealthy products from being placed on the market, and the environmental impacts of products should be minimised.

· Wider impacts on industrial competitiveness and innovation – although not explicit objectives in the legal base, Union harmonisation legislation has the potential to strengthen competitiveness, e.g. through the promotion of industry consolidation with manufacturing firms being able to operate across the internal market, rather than in national markets, with greater economies of scale, effects from the development of a body of Union harmonisation legislation in promoting global regulatory convergence and convergence in technical standards, enhanced take-up of innovation and RTD results (through a technology-neutral approach).

The extent to which the different types of effects identified through the logic mapping have been substantiated through the research is examined later in this report, in particular in Section 6 (effectiveness and impacts).

2.3 Typologies of simplification and support measures

The Commission has sought to make improvements to strengthen the coherence and effectiveness of internal market legislation and the support structures and mechanisms that support its implementation at EU and national levels. This has been achieved through the framework of the NLF (and the current Alignment Package) with an effort to modernise the legal framework and to promote greater consistency between different IM legislation in order to reduce administrative burdens for economic operators. In addition, through periodic reviews and recasting of individual IM directives and regulations, efforts have been made to promote regulatory simplification.

A typological framework was developed in order to assess what steps have already been taken towards regulatory and administrative simplification, and to strengthen the implementation of Union harmonisation legislation through measures and support actions. This was an essential step in order to be able to examine the future scope for further simplification measures and possible measures to strengthen efficiency and effectiveness more generally. The typology consists of three main aspects:

· Regulatory simplification measures relating to Union harmonisation legislation for industrial products (horizontal and vertical/ sectoral legislation);

· Administrative simplification measures (for economic operators, national authorities and market surveillance actors); and

· Non-legislative support actions that strengthen the efficiency and effectiveness of regulatory implementation and the enforcement and monitoring of IM legislation.

The validity of this typological framework has been tested through the research. Examples of existing simplification measures have been identified and analysed in the sections dealing with efficiency and effectiveness respectively (Sections 4 -6). The mapping was a crucial starting point in exploring the potential scope for further simplification. The typology provides a framework for presenting the conclusions and recommendations relating to simplification measures.

2.3.1 Regulatory simplifications and clarification measures

Regulatory simplifications can take different forms such as:

· Changing the structure of legislation relating to the internal market for industrial products - the possibility of a horizontal regulation to replace Decision 768/2008; overcoming regulatory fragmentation in market surveillance by combining different pieces of legislation;

· Merging different directives or regulations – combining different directives or regulations where there is scope to do so e.g. Machinery Directive and Outdoor Noise Equipment Directive;

· Updating IM legislation for industrial products using the same regulatory instrument – periodic reviews of legislation leading to the codification and recasting of individual directives and regulations, or groups of legislation aligned in parallel;

· Updating IM legislation through the use of a different regulatory instrument – transition from an EU regulation to a directive;

· Repealing EU legislation –in cases either where legislation has proven to be obsolete altogether, or where Union harmonisation legislation has been replaced by recast or codified IM legislation.

Simplifications and clarification measures can either be applied to individual pieces of legislation or to groups of regulations and directives through recasting and codification[23] exercises. Through the NLF, an effort has been made to promote regulatory simplification through the adoption of the common elements set out in Decision 768/2008 within the Alignment Package, without any major changes to the substance of the legislation. Where legislation has been updated, opportunities have been taken to provide clarity as to definitions, the scope (for instance, whether spare parts and components are included) and in making administrative requirements more consistent. The proposed typology of regulatory simplification measures relevant to IM legislation for industrial products is set out in Table 2.2, and is supported by concrete examples:

Table 2.2: Typology of regulatory simplification and clarification measures

Type of simplification measure || Simplification – short description and key benefits || Union harmonisation legislation

Changes to structure of IM legislation (horizontal) || Proposal for a horizontal Regulation on the Market Surveillance of Products (PSMSP). The proposal would bring into a single piece of legislation applying across all non-food sectors rules on market surveillance. Making the rules more accessible. Benefits Simplification of Union rules on market surveillance and reduced market fragmentation – combining market surveillance rules scattered across different legislation e.g. General Product Safety Directive, Regulation 765/2008 and sector-specific legislation into a single Regulation. || PSMSP - COM(2013) 74 final

Changes to structure of IM legislation (vertical) || Merging IM directives and regulations Merging IM legislation could help to maximise synergies, minimise overlaps and inconsistencies and reduce administrative burdens for economic operators. || · Machinery Directive (2006/42/EC) and Outdoor Noise Efficiency Directive (2000/14/EC)[24] · PED (97/23/EC) and SPVD (2009/105/EC) Directives · PED (97/23/EC) and transportable pressure equipment (99/36/EC) Directives

Updating IM legislation (using same regulatory instrument) || Recasting and codification of directives There is no fixed timetable for reviewing and recasting legislation. Periodic reviews of IM legislation provide an opportunity to review and simplify legislation and to apply lessons from practical experiences of the legislation’s implementation through recast directives. The New Legislative Framework (NLF) and alignment of groups of IM regulations Decision 768/ 2008 introduced a common framework for marketing products to ensure greater consistency between IM legislation. The Alignment Package will implement the NLF’s common approach across 9 directives (common definitions of economic operators, their obligations and responsibilities). || · Machinery Directive 89/392/EEC recast in 2006/42/EC · RoHS Directive 2002/95EC, recast (2011/65/ EU)[25] · PPE Directive 89/686/EEC, revision process on-going · R&TTE Directive 1999/5/EC revision process on-going with proposal for new “Radio Equipment Directive”

Updating IM legislation (using a different regulatory instrument) || Replacing directives with directly applicable regulations Benefits: no national transposition requirements with reduced scope for differences in interpretation between Member States, uniformity across the internal market, legal certainty for economic operators. || Examples of industrial product legislation where Regulations have replaced Directives: · Cosmetic Products Regulation (1223/2009/EC) · Construction Products Regulation (305/2011/EC) · Proposal for a Regulation on medical devices (COM(2012) 542

Repealing EU legislation || EU regulations can include periodic review clauses so that any which are no longer relevant or have become obsolete can be repealed. || IM legislation under the New Approach covers broad harmonised product areas

The updating of Union harmonisation legislation, through recasting and codification allows for clarifications to be made. This may include, for instance, clarifying the demarcations between directives, a clearer presentation of the scope and definitions of key terms, and updating the list of product groups falling within scope, widening and clarifying product exclusions, and taking into account industry developments and innovation, for instance, accommodating new product groups that did not exist when the legislation was first drawn up.

Given that there has already been a substantial amount of legislative revision across IM legislation for industrial products, it is worth an assessment as to the value of legislative review processes. Such improvements are not always concerned with simplifications, but are rather part of on-going efforts to improve the overall coherence and effectiveness of the regulatory framework.

Table 2.3: Clarifying legislation

Clarifying the borderline and delineation between Directives || The MD 2006/42/EC clarifies the borderline between the scope of the Machinery Directive and the Low Voltage Directive to provide greater legal certainty. It also sets out clearly the delineation between the MD and the Lifts Directive and ensures mutual exclusivity.

Clearer presentation of scope and definitions of the key terms || NLF: provides a clearer definition of the obligations for different economic operators e.g. manufacturers, importers and distributors. Previously, responsibility for product safety was entirely on manufacturers.

Widening and clarifying exclusions of products || EMC: the Directive allows the display & demonstration of non-compliant equipment at trade fairs, exhibitions etc. provided that a sign indicates that the equipment may not be marketed or put into service until it has been brought into compliance and that electromagnetic disturbances are avoided. EMC: Apparatus intended for a fixed installation and not otherwise commercially available may be exempt from the Declaration of Conformity, CE marking, etc. EMC: Where new editions become available and are to be applied it does not necessarily mean that a complete EMC re-assessment of an existing product is necessary. The evaluation may be restricted to those modifications directly affecting the apparatus concerned. R&TTE: radio receivers and fixed-line telecommunications terminal equipment will be excluded from the proposed new Directive and will instead fall within the scope of the EMC Directive and, depending on power supply voltage, either the Low Voltage Directive or the General Product Safety Directive. R&TTE: - the proposed new “Radio Equipment Directive” will introduce an exemption for components used for pre-production purposes not placed on the market.

2.3.2 Typology of administrative simplification measures

In order for the overall regulatory regime to work effectively, economic operators need to demonstrate that they have complied with the essential requirements set out in Union harmonisation legislation in order to achieve presumption of conformity. Since the adoption of the New Approach, and its subsequent evolution through the NLF, which will help to modernise Union harmonisation legislation itself, administrative requirements for economic operators have been set out in the legislation. Examples are CE marking requirements, which have been in place since 1993 indicating a product's conformity with EU legislation and the obligatory steps before a product can bear CE marking, such as producing a Declaration of Conformity (DoC).

Although in principle, administrative requirements for economic operators are clear (CE marking, DoCs, self-certification or third party conformity assessment depending on the IM legislation and safety risk involved), in practice, anomalies and differences between EU legal texts have emerged. This is partly due to the fact that the overall volume of legislation has increased, and the fact that legislation has evolved piecemeal. This was explicitly recognised through the adoption of the NLF in 2008, which provides a framework for coordination and ensuring a more common approach.

Requirements for DoCs currently vary between Directives in relation to information that needs to be provided, and whether the DoC needs to be placed together with the product or can be in the accompanying manual alone. The date when a product is considered as having been placed on the market may also vary. In some instances, products are considered as being on the market from the date of publication of an information notice in the EC Official Journal (OJ) whereas for other IM legislation, presumption of conformity applies from the date when the DoC is signed off by the manufacturer. The review allowed us to identify different types of administrative simplification measures. The typology includes examples of simplifications that have been introduced through the NLF, and examples of administrative simplifications specific to particular IM directives or regulations.

Table 2.4: Typology and examples of administrative simplification measures

Type of administrative simplification || Examples

Common approach to conformity assessment || The NLF (Decision 768/2008): common approach across Union harmonisation legislation to conformity assessment through a standard suite of modules with a new more consistent lettering system. These are gradually being integrated into IM legislation, for instance through the Alignment Package Legislators can choose from these modules in drawing up IM legislation. Art. 4 refers to the need to “avoid imposing modules which would be too burdensome in relation to the risks covered by the legislation concerned”.

Standardised template and information requirements for DoCs || The NLF (768/2008) sets out common procedures for producing DoCs and a standard format across different applicable IM legislation.[26] The NLF also provides a suggested standard template for a DoC.

Removal of requirement to notify placing on the market || R&TTE: a revision in the proposed new Radio Equipment Directive to remove the requirement to notify the placing on the market of equipment using frequency bands which are not EU-wide harmonised.

Identification of apparatus || EMC: There is flexibility in the requirement that apparatus be identified by “type, batch, serial number or any other information allowing for the identification of the apparatus”, allowing the manufacturers to choose their own means of identifying an apparatus for regulatory purposes.

Unused administrative provisions (i.e. choosing not to enforce them) || R&TTE: the relevance of some of the administrative provisions in the Directive has been questioned, e.g. various kinds of small equipment such as RFID tags or cochlear implants, emit radio signals that are unlikely of causing harmful interference.[27]

Lighter regime for SMEs || CPR: offers simplified procedures for the drawing up of declarations of performance for SMEs. However, concerns about how this operate in practice.

Lighter requirements on technical documentation || EMC: Declaration of Conformity and technical documentation to be made available on request does not need to be an original document but can be a copy. Technical documentation can be kept in any format, for example as a hard copy or CD-ROM.

Electronic processes, e.g. forms, reporting, notification procedures, NANDO || CPR: allows use of electronic forms for the submission of information and of online databases for registering products.

2.3.3 Typology of non-legislative support actions

The third strand of the typology (in addition to regulatory and administrative simplifications) is non-legislative support actions. There are many examples of support actions and these help to promote the efficient and effective implementation of Union harmonisation legislation. These are essential in closing the “gap” between formal legislative texts and the situation on the ground. The table below provides a typology of non-legislative support actions, supported by examples.

Table 2.5: Typology of non-legislative support actions

Types of non-legislative support actions || Examples

Information, guidance, advice and publicity (customised to difference audiences) || · Guidance and handbooks, e.g. EU Blue Guide covering Union harmonisation legislation (2000, with revision during 2013) · Guidance on individual harmonised directives and regulations (EU, sometimes also national) · Website information – e.g. DG ENTR and national competent authority websites responsible for specific harmonisation legislation · Expert groups · Technical assistance visits and consultations · Communication campaigns

Coordination of activities between Member States || · GRAS-RAPEX · Coordination of cross-border surveillance activities · Joint enforcement · European cooperation on market surveillance (e.g. ADCO)

Pooling of information, experience and expertise || · EU-level dialogue bodies · Portability of test reports · Collection of information on enforcement, etc. · Databases, e.g. ICSMS, public platform for complaints and injuries · Traceability systems and information · Exchanges of officials, e.g. market surveillance authorities

Common methodologies || · EU general risk assessment methodology for products · Common approach to market surveillance of e-commerce · Common risk-based approach to customs product safety and compliance controls

Benchmarking || · Performance Benchmarks for market surveillance

Studies and research || · Feasibility studies · Impact assessments and evaluations · Stakeholder and public consultations

A number of stakeholders at EU and national level have an important role to play in implementing support actions. These may be taken by the Commission at EU level or by national authorities at Member State level. The Commission has a vital role in terms of ensuring overall coordination of support actions. It is also directly involved in some activities, such as the development of non-binding guidance on the application of IM legislation and in ensuring that cumulative experiences of implementing legislation are built into this guidance (e.g. Blue Guide, specific guidance).

National authorities, notably competent authorities and market surveillance authorities are also involved in implementing support actions on the ground, for instance in communication, awareness-raising and information campaigns about administrative requirements for economic operators (manufacturers, distributors & importers), especially SMEs. Market surveillance authorities may also launch dedicated campaigns about specific issues, for instance, problems relating to non-compliant products and/ or documentation, awareness-raising about impending deadlines e.g. timescales for different thresholds of chemical products within the REACH Regulation coming into force.

Sectoral bodies and industry associations may also implement actions in support of their members. One of the advantages of non-legislative support actions is that they do not need to be negotiated or require legislative changes. Some care is needed in their design and use, since support actions do not replace the requirements of the legislation; they should help clarify rather than contradict the legislation. Among the wider target audience of such measures are: end-users & consumers, researchers and the media.

In Sections 3 – 6, we set out the detailed findings from the evaluation research. The analysis draws on a number of data and information sources, namely desk research, online survey work, an analysis of the results of the Your Voice Consultation, an extensive interview programme and ten product case studies. At the end of each sub-section, we list the main Research Findings (RFs) that have emerged from the analysis of the evidence presented. These numbered RFs have in turn informed the overall conclusions in Section 7, thus ensuring that each conclusion is evidence-based.

3. Relevance and coherence of Internal Market Legal Framework

The relevance and coherence of Union harmonisation legislation were assessed through the evaluation. Among the issues considered were whether the intervention logic is appropriate and meets the identified needs of economic operators, consumers and end-users, whether directives or regulations are the most appropriate regulatory instrument for IM legislation for industrial products to achieve key objectives, and the overall coherence of the regulatory framework.

3.1 Relevance

EQ1: Is harmonised product legislation a relevant response to the problems and needs identified through the assessment of the intervention logic?

Technical product harmonisation legislation which sets essential requirements that avoid being too prescriptive, supported by voluntary harmonised technical standards, has been a highly relevant mechanism for the achievement of the objectives set out in Article 114 of the TFEU. Technical approximation measures were viewed by industry and national authorities as an appropriate mechanism for ensuring an effectively functioning internal market with high levels of product safety and health, environmental and consumer protection. However, ensuring that the implementation of legislation leads to the achievement of such objectives relies on effective market surveillance to ensure that non-compliant products are not placed on the market (see sections on efficiency and effectiveness).

In assessing the relevance of technical product harmonisation legislation, the “counterfactual” situation was considered i.e. problems that existed prior to the adoption of Union harmonisation legislation under the New Approach and the establishment of an internal market in industrial products. As is well documented in the seminal Cecchini studies in the late 1980s[28] and in subsequent studies to assess the benefits of the internal market[29], the situation prior to the adoption of the internal market was characterised by regulatory fragmentation and legal uncertainty for economic operators, with different national technical regulations and standards for industrial and consumer products across EU12[30]. The New Approach Directives provided a mechanism for addressing these problems through a common, harmonised EU-wide approach to meeting the essential requirements. This was highly relevant to achieving the objectives of an effectively functioning internal market in products, with a level playing field and fair competition for economic operators.

Prior to the adoption of Union harmonisation legislation, each Member State imposed obligations on economic operators in the interests of safety, health and consumer protection. This meant that there were considerable regulatory and non-regulatory barriers to trade in goods because of the different requirements in different countries.

This meant that economic operators had to treat each EU Member State as a separate market, with its own rules. Although difficult to quantify, doing business on a cross-border basis in this operating environment imposed considerable regulatory compliance costs on economic operators. The adoption of successive vertical and horizontal Union harmonisation legislation was therefore highly relevant to addressing the identified needs of European industry. IM legislation for industrial products has been a highly relevant instrument to address the needs of economic operators. The approximation of product legislation through internal market legislation has been relevant in promoting industrial competitiveness because regulatory convergence at EU level (supported by voluntary technical standards) has made it easier for economic operators to access the whole internal market. It has promoted access to new markets within the internal market, promoted economies of scale and industry consolidation, led to fairer competition and a level playing field between economic operators.

In some instances, no national regulatory frameworks were in place prior to the adoption of EU legislation, therefore harmonised IM legislation addressed regulatory gaps enabling economic operators to develop a larger market for their products, while ensuring high levels of product safety and protection. For instance, until the adoption of the Machinery Directive in 1989, many national legal frameworks did not sufficiently regulate the safety and usage of electrical and mechanical machinery, despite the high level of risk involved for those operating such machinery. In these sectors, EU legislation largely preceded the development of national legislation, which was relevant in preventing the emergence of different national regulations which would otherwise have led to higher administrative burdens for regulatory compliance for economic operators.

Feedback through the interview programme from across the broad spectrum of stakeholders in the area of internal market legislation for industrial products confirmed that overall, there was broad satisfaction with the overall regulatory framework and with recent efforts to modernise and strengthen it, most notably through the NLF. An industry association commented that “IM legislation is effective because it sets out common requirements for placing products on the market and eliminates barriers to the free movement of the products. It is also very effective in ensuring common minimum standards”. While there is always scope to improve the efficiency and effectiveness of IM legislation for Industrial Products, from a relevance perspective, the regulatory framework is considered to be relevant to identified needs in that it is flexible, responsive and often used as a model for the development of industrial product regulation globally.

Overall, the intervention logic underpinning the regulatory framework - and the link between different levels of objectives - is broadly coherent. It allows the development of appropriate pieces of legislation that can facilitate the functioning of the internal market whilst offering protection for consumers, health and safety and the environment. Since the internal market in industrial products is crucial to the creation of growth and jobs, there may be scope to include broader policy objectives relating to competitiveness and innovation. An area of the logic behind Union harmonisation legislation that is less coherent is the lack of a policy as to whether directives or regulations are the most appropriate mechanism for achieving objectives. This question is addressed in detail below.

Research Findings (RFs):

· (RF1) The situation prior to the adoption of Union harmonisation legislation was characterised by regulatory fragmentation with different national regulations and technical standards for industrial products across EU12.

· (RF2) Prior to the adoption of Union harmonisation legislation, there were many gaps in the regulation of products posing a potential risk to health & safety, consumer protection or environmental protection.

· (RF3) In the absence of Union harmonisation legislation, economic operators would face barriers to trade and higher costs as a result of different national regulatory regimes for many products.

· (RF4) In the absence of Union harmonisation legislation, there would be potential risks to health & safety, consumer protection or environmental protection, in cases where national regulatory regimes were inadequate.

3.2 Coherence of instruments 3.2.1 Directives or regulations? EQ2: Are directives the most suitable legal instrument for the purposes of technical harmonisation or should directly applicable regulations be used?

Introduction

Since the New Approach[31] was adopted in 1985, more than 30 harmonised pieces of internal market legislation have been adopted, the majority of which were EU directives, which were the preferred regulatory instrument during the early stages in the development of Union harmonisation legislation, when the internal market for products was less integrated, and there was a need to allow for greater flexibility during national transposition. In the past 10 years, however, the use of regulations has become more common when new legislation has been introduced (e.g. REACH Regulation, 2006, Fertiliser Regulation, 2003). Moreover, following periodic legislative revision processes to recast legislation, a number of pieces of internal market legislation that were formerly Directives have been recast as Regulations. Examples of Directives that have evolved into Regulations are the EU Cosmetic Products Regulation (1223/2009/EC), the Construction Products Regulation (305/2011/EC) and the Proposal for a Regulation on Medical Devices (COM(2012) 542).

According to feedback from the Commission obtained through this study, among the reasons for this trend are that there is now longstanding experience of implementing New Approach Directives under harmonised product rules and the internal market for industrial products is much better integrated. There is consequently greater support among stakeholders for harmonisation to be supported by an appropriate regulatory instrument that avoids minor divergence in transposition when directives are transposed into national legislation. The use of regulations rather than directives by the Commission has not explicitly been stated as a Commission policy due to the need to retain flexibility. The most appropriate regulatory instrument is given due consideration as part of impact assessment processes prior to the introduction of new, and the revision of existing legislation.

Advantages and disadvantages of Directives

Harmonisation directives set out the legal framework and essential requirements while leaving Member States flexibility to adopt national implementing rules to achieve the legislation’s general objectives. A summary of the advantages and disadvantages of directives is now provided, followed by examples of stakeholder feedback as to the merits and drawbacks of using directives:

Table 3.1: Advantages and disadvantages of directives

Directives - advantages

Flexibility for Member States as to how European legislation should be transposed into national legislation, for instance as regards: · Whether national implementing provisions should be incorporated into new legislation at national level, or through the modification of existing legislation. · The form and national legal instrument used in transposition, which is left up to Member States (Article 288 TFEU). There is no obligation to create a single national measure where all the provisions are located. · The transposition process into national legislation provides an opportunity for national competent authorities to strengthen their knowledge about the specific implementation details of each Union harmonisation directive. This helps to build capacity before legislation is implemented, since national implementing rules are needed irrespective of which regulatory instrument is used. · Flexibility for Member States as to whether particular product groups designated as being of lower risk should be excluded from scope (e.g. optionality clause under the MID). This would be difficult to achieve through regulations.

Directives - disadvantages

· Minor regulatory divergences - directives help to ensure a minimum level of harmonisation across the EU, but there is minor divergence in the interpretation and application of legislation between Member States in some instances. · Lack of synchronised timing across EU28 of the entry into force of Union harmonisation directives. · Most manufacturers do not use national legal texts but refer to European legislative texts on product safety and to the applicable European technical standards. This was seen as leading to duplication in legal texts, whilst resources could be better used elsewhere. · There is a perception – albeit a largely erroneous one - among some economic operators, that some Member States impose additional national requirements through gold-plating · The risk that a two tier approach as regards consumer and safety protection may emerge if Member States use the ‘optionality clause’[32].

The feedback gathered through the research in relation to the advantages and disadvantages of Directives are now examined in further detail.

Stakeholders in some Member States were in favour of retaining Directives as the main regulatory instrument to implement Union harmonisation legislation. For instance, a market surveillance authority in Germany commented that “Directives provide extra room for manoeuvre through the transposition process into national legislation and the development of national implementation rules. Directives work well for sectoral (or “vertical”) Directives such as the Machinery Directive, LVD and the Outdoor Noise Directive”. A market surveillance authority in France commented that “Directives are a better legal instrument, since national implementing rules are required for the effective application of internal market legislation at national level. Regardless of the instrument, public administrations still need to be nominated as competent authorities".

A national body in charge of metrology in Spain commented that Directives are preferable for the MID. “The optionality clause is useful since it provides the option of not regulating products that are not considered to be of serious concern to safety and consumer protection in each EU country”. The same interviewee also stressed that the transposition process provides an opportunity to build knowledge and capacity among relevant national competent authorities about forthcoming Union harmonisation legislation.

A government Ministry interviewed in the Netherlands stated that the question of the relative merits and drawbacks of directives and regulations respectively is complex. Whilst at first sight, regulations appear to be a more effective instrument because they are directly applicable, national legislation still sometimes has to be adjusted and national implementing regulations drawn up.

As regards the disadvantages of using directives, a number of interviewees have pointed to regulatory divergence in the application of Union harmonisation legislation due to minor differences following national transposition processes in the interpretations and/ or application of the law. A detailed assessment as to the effectiveness of national transposition was outside the study scope (see Section 1.2). However, since the issue of the merits and drawbacks of the use of regulations and directives was one of the evaluation questions, we have considered this issue in general terms.

Evidence from the interview programme, Your Voice Consultation and CSES online surveys found that stakeholders perceive there to be regulatory barriers due to differences between Member States in national interpretation and in the application of IM rules[33] However, only a few detailed examples were provided as to these barriers (see Section 4 – efficiency).

Some national competent authorities stated that there was less scope for divergent interpretation in the national transposition of Union harmonisation directives than in other areas of EU legislation due to the nature of such approximation laws. Moreover, those that downplayed the significance of minor divergences in the transposition and interpretation of legislation pointed out that many Member States have transposed European legislation in a way that text that remains close to the original spirit and intention of the law.

A major industry association in the electronics and IT sectors commented that “The transposition process can create problems, and requires industry to engage in active monitoring of how legislation has been implemented into different national laws, and any translation issues that may result in misapplication of IM legislation. However, the internal market should be a single legal jurisdiction”.A further drawback mentioned by interviewees relating to the use of directives is the difficulty in ensuring synchronised timing of the entry into force of IM legislation, since transposition processes mean different timelines in each Member State. This was mentioned by stakeholders such as some national competent authorities, industry representatives and individual manufacturers. National transposition processes also take time and require human resources yet the research found that many manufacturers do not even read national legislation, but take European legal texts as their reference point. A number of market surveillance authorities suggested that resources currently used by national competent authorities to transpose directives into national legislation could instead be redirected towards improving the effectiveness of market surveillance.

Advantages and disadvantages of regulations

EU regulations are directly applicable, although they still require the development of national implementing rules. The research found that the use of regulations rather than directives can have a number of benefits in contributing to the achievement of internal market objectives. A summary of the advantages and disadvantages of regulations is now provided, followed by an assessment of some of the stakeholder feedback received:

Table 3.2: Advantages and disadvantages of regulations

Regulations - advantages

· Regulations are directly applicable and do not require transposition (with the exception of the need to develop implementing rules) · Synchronised timing of the entry into force of regulations across the internal market · Uniformity in application with reduced scope for differences in interpretation, thereby ensuring greater legal certainty and a level playing field for economic operators · Potential to reduce the overall volume of Union harmonisation legislation by eliminating the need for transposition into one or more pieces of national legislation (most economic operators follow European legislation anyway). · Potential scope for cost savings and the use of human resources among national competent authorities for alternative purposes if civil servants are not tied up in national transposition processes. · Regulations may be a more appropriate instrument for pieces of horizontal Union harmonisation legislation, such as common rules on market surveillance and for placing products on the market (the latter is currently in the form of a decision).

Regulations - disadvantages

· There would still be a need for a minimum set of national implementing regulations to be developed, but arguably with less scope than is the case for directives to tailor these according to national-specific situations. · Less flexibility to accommodate national-specific interpretations, although generally there is only limited room for manoeuvre in this regard (e.g. optionality clause within the MID).

The research identified support among some stakeholders for the greater use of regulations to implement Union harmonisation legislation in future.

Some Member State authorities appear to be more willing than in the past to use EU regulations as a mechanism for regulating harmonised products over time. This reflects strengthened confidence in the regulatory framework for harmonised industrial products and the level of integration of markets.

Support was especially strong among industry associations and individual firms, since industry has a clear interest in internal market legislation for industrial products being implemented on as uniform a basis as possible since divergences in application and interpretation between Member States - albeit minor - causes legal uncertainty for economic operators. A number of companies interviewed stated that regulations help to reduce the risk that unexpected regulatory barriers are experienced in particular national markets within the internal market. An EU industry association in the field of safety noted that industry tends to prefer regulations over directives because “Regulations are clear, and there is no need for national transposition. This means that all actors are on the same playing field”.

There was support among many national competent authorities for the greater use of regulations, although this view was not shared by all Member States (see comments under the advantages of directives). A number of competent authorities noted that regulations could help to reduce the overall volume and administrative costs of legislation since national legislation transposed from Union harmonisation legislation is largely duplicative. Moreover, the majority of economic operators follow European legislative texts and harmonised technical standards in managing compliance with IM legislation, often in conjunction with European guidance on IM legislation. This renders national legislation somewhat redundant, although there remains a need to develop national implementing regulations, regardless of which regulatory instrument is used.A national Ministry in Romania commented that "EU Regulations would eliminate the administrative costs of the transposition process by significantly decreasing the resources needed to transpose and implement legislation and in the application of particular terms and concepts”. A market surveillance authority in Slovenia noted that "Regulations lead to more coherent and uniform application, especially in respect of horizontal issues such as market surveillance and general product safety". Support for the adoption of regulations across IM legislation was not universal.

Among the potential disadvantages of using regulations identified by a small number of stakeholders were the lack of flexibility for Member States to take national-specific contexts into account. For instance, under the Measuring Instruments Directive (MID), there is an ‘optionality clause’ which allows scope for Member States to opt out of EU requirements to regulate particular product groups, if they classify them as low risk, or if a particular market segment is not present.

Although there is no universal consensus among stakeholders on this matter, the evidence points to the conclusion that in future, the Commission should consider using regulations as the preferred legislative instrument for Union harmonisation legislation so as to ensure synchronised timing in Directives coming into force.

A number of national authorities suggested that a gradual transition to using regulations rather than directives would help to avoid regulatory fragmentation within the internal market due to differences in the interpretation and application stemming from national transposition. At the same time, there are likely to be product groups such as measuring instruments for which directives are more appropriate. The possibility of using directives should be retained.

Research Findings:

· (RF5) Directives allow a minimum level if flexibility for Member States to ensure that national-specific operating contexts are taken into account during the transposition process into national legislation. However, in many cases, Member States transpose the Directives very close to the original European legal texts. Economic operators typically refer to the text of the Directive rather than to the relevant national legislation.

· (RF6) Among the advantages of Regulations are the synchronised timing of their entry into force.

· (RF7) The rationale for using Regulations rather than Directives has not been explicitly stated by the Commission.

· (RF8) The EU should retain the possibility of using both regulatory instruments to maximise flexibility, but clarify the criteria for determining the choice of regulatory instrument.

3.2.2 Gaps, loopholes, inconsistencies and duplication EQ3 - Is there evidence of gaps, loopholes, inconsistencies and duplication across Union harmonisation legislation and in the corresponding administrative requirements for economic operators?

Over a 30 year period, the gradual accretion of IM legislation has resulted in inconsistencies arising between the different requirements set out in some IM legal texts and in the administrative requirements set for economic operators. This does not appear to be a universal problem that affects the overall body of IM legislation. Indeed, only 16% of Notified Bodies responding to the study suggested that there were any such problems related to those Directives for which they had been notified. However, where gaps, loopholes, inconsistencies and duplication do exist, they can cause significant difficulties for those operating in the relevant sectors. The can include:

· Legal uncertainty for economic operators;

· Inconsistences in administrative requirements leading to unnecessary minor differences in the templates produced for CE marking; and

· Higher administrative costs not only in complying with these requirements but also in terms of familiarisation with the requirements.

Examples of inconsistencies and duplication were identified through the interview programme and Your Voice consultation and are provided in the following table.

Table 3.3: Examples of gaps, loopholes, inconsistencies and duplication in IM legislation

Product area || Applicable directives || Problem type || Examples of gaps, loopholes, inconsistencies and duplication

Printers || LVD and Machinery Directive || Gap || Unclear demarcation between the LVD and the MD with regard to the definition of industrial printers. Lack of text in LVD as to when printers should be considered as being within the scope of the LVD Such text is however provided in the MD, which explains clearly that the Directives are mutually exclusive.

Pressure equipment || PED || Gap || Since the Directive was adopted, new product groups have come to market with evidence of new innovations. The definition of product groups consequently remains unclear and as to whether particular spare parts and components are within scope. Over-reliance on guidance for legal interpretation on product scope leading to legal uncertainties.

Non-road mobile machinery || Machinery Directive || Gap || Mobile machinery is within the scope of the MD, but the MD does not include requirements for road circulation of this machinery. These remain non-harmonised and subject to national requirements.

Cables || EMC Directive || Gap || Cables are not currently included within the scope of the EMC-directive

Electrical appliances under 50V || LVD Directive || Gap || Under the LVD, appliances under 50V are not covered. In practice, the GPSD provides a framework, but safety is not covered through harmonised requirements. There is no need for a declaration of conformity and CE marking. Doubtful whether voltage should be the most appropriate criteria. Energy usage of a product is today more important, but low voltage products presently excluded from the LVD with high energy-efficiency may not necessarily be safe.

Multiple products || R&TTE and Medical Devices Directive || Inconsistencies in requirements || Products where multiple legislation is applicable may face differences in CE marking requirements. This can result in conflicting requirements for integrated products. Problem should be solved since the proposed Medical Devices Regulation requires CE marking. See evaluation question on “CE marking” in efficiency section.

Multiple products || Declarations of Conformity Examples: MD, LVD, R&TTE and EMC Directives || Inconsistencies in requirements || Differences in CE marking requirements between the MD, LVD, R&TTE and EMC Directives (where the CE marking must be placed on product, detailed addressee information that has to be provided on the DoC). Where multiple legislation is applicable to a given product, problems in terms of differences in requirements for the format / layout of the DoC, and whether the DoC has to be provided along with the product/ product documentation.

Multiple products Example: Pressure equipment || Spare parts and components Pressure Equipment Directive, ATEX Directive || Gaps and loopholes || Lack of legal clarity as to whether spare parts and components are included within IM legislation Inadequate definitions of spare parts and components. Confusion as to whether spare parts and components are distinct from one another or synonymous within scope of Directives. See evaluation question on spare parts and components.

Equipment and noise-emitting machinery || Machinery Directive, Outdoor Noise Emissions Directive and EMC Directive || Overlaps || There is a dedicated Directive on noise (Directive 2000/14/EC). However, the MD also covers issues relating to noise, pressure and electromagnetic compatibility. This raises the possibility of these IM regulations being merged.

OSH vehicles || Machinery Directive || Overlaps || Overlaps between requirements in the Machinery Directive concerning OSH vehicles that need to be EC-type approved

|| || ||

Non-road mobile machinery || Non-Road Mobile Machinery Directive and ATEX Directive || Conflicting requirements || Technical conflicts between Directive 97/68/EC (non-road mobile machinery) and the ATEX Directive. Stage IIIB engines are unable to be manufactured or adapted to conform to the technical requirements of both directives.

Construction Products || ATEX Directive, Construction Products Regulation || Unclear demarcation || Unclear demarcation between the ATEX Directive, and the Construction Products Regulation

Multiple products || PED and Simple Pressure Vessels Directive || Unclear demarcation || Unclear demarcation between the PED and Simple