EN Official Journal of the European Union C 424/20

Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee – A vision for the internal market for industrial products’

COM(2014) 25 final

2014/C 424/03

Rapporteur: Denis MEYNENT

On 7 March 2014, the European Commission decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the European Union, on the:

Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee — A vision for the internal market for industrial products

COM(2014) 25 final.

The Section for the Single Market, Production and Consumption, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 14 May 2014.

At its 499th plenary session, held on 4 and 5 June 2014 (meeting of 4 June 2014), the European Economic and Social Committee adopted the following opinion by 144 votes to 2, with three abstentions.

1. Conclusions and recommendations

1.1 The European Economic and Social Committee (EESC) welcomes the Commission's communication on a vision for the internal market for industrial products. This communication forms part of the welcome recent moves towards an EU-level industrial policy, as manifested in particular in the communication ‘For a European industrial renaissance’.

1.2 In the EESC's opinion, technical standards for industrial products must be subject to open, democratic, transparent regulation with wide-ranging stakeholder involvement embracing, at the very least, businesses (including SMEs) employees or their representatives, consumers, and environmental protection NGOs. In order to put this opening up of the process into practice, it is justifiable to provide public support to help stakeholders that do not have the resources to take part in the work.

1.3 The scope of the public-interest ‘essential requirements’ that can be translated into technical standards should not be restricted to safety, security, and environmental and consumer protection. It should also include any public interest determined by democratic means to be legitimate, in particular social and environmental production conditions, the interoperability of technical systems, and accessibility for all users.

1.4 Technical standards must be reviewed and improved regularly, and all the more frequently in more innovative sectors. In the EESC's opinion, these changes must not be slowed down, but their impact on businesses — especially SMEs — must be kept to a minimum.

1.5 The impact of legislative proposals on SMEs should be evaluated in line with the Small Business Act (1). SMEs should therefore not be granted exemptions from the regulatory standards, in part because such standards are intended to protect public interests that are independent of the size of the businesses designing or manufacturing the product, and in part to avoid creating a two-speed market.

1.6 The EESC supports the Commission's proposal to use Regulations, which are uniformly and immediately applicable throughout the EU, rather than Directives to harmonise industrial products; it also supports the idea of converting Decision 768/2008/EC of the European Parliament and of the Council into a Regulation with general application, which will simplify the regulatory structure and make it easier to understand, particularly for SMEs.

1.7 The EESC believes that abstracts of standards should be made available free of charge to any interested party, including SMEs.

1.8 The EESC suggests that the Commission should use a dedicated communications budget to disseminate widely — in the internal market and third-country markets — information on the quality and high standards of products that meet European standards, with the involvement of the stakeholders listed in point 1.2.

1.9 It is absolutely vital, when concluding free-trade agreements, to maintain the open, democratic and transparent nature of the current system for regulating technical standards relating to the industrial products market.

1.10 The EESC is in favour of establishing a centralised electronic database disseminating standards information relevant to a given product.

1.11 The EESC supports the idea of creating a mechanism for ‘e-surveillance’ of the single market, enabling good-faith whistle-blowers to inform the authorities confidentially of irregularities they have observed during the design, manufacture or import of an industrial product.

1.12 In the EESC's view, technical information relating to industrial products in paper form constitutes a permanent, authentic and tamper-proof form of contract, and electronic formats would only be considered suitable if they meet the same requirements.

1.13 The EESC notes that there are still some barriers to free movement and free competition on the internal market for industrial products. The EESC would like market surveillance to be strengthened. The Member States should be encouraged to move towards greater uniformity of penalties and comparable levels of — and technicality in — supervision of the market and the distribution of products and services, in order to increase consistency across Europe.

2. Introduction

2.1 In its communication, which follows on from the one published in October 2012, the Commission looks at possible developments in legislation on the internal market for industrial products in view of the internationalisation of trade, technical developments in products and the introduction of new products and technologies. It assesses the impact of the existing rules on the product market from the perspective of industries and operators in the single market, based on the findings of a public consultation and a number of case studies set out in the accompanying Commission staff working document (only available in English).

2.2 The Commission document describes the evolution of EU law on industrial products since the adoption, in 1985, of the ‘new approach’ to harmonised product legislation: the Union legislator lays down the ‘essential requirements’ in respect of safety, health, and environmental and consumer protection that businesses must comply with when putting products on the Union market that meet the highest possible level of protection (Article 114 TFEU). These ‘essential requirements’ are harmonised through standards established by European standardisation organisations on the basis of a mandate given by the European Commission.

2.3 Industrial products are defined as non-food products manufactured through an industrial process, but the communication focuses on those products that have not recently been subject to legislation, revision or evaluation. It does not cover very specific products, such as pharmaceuticals, that are handled separately.

2.4 According to the Commission, harmonisation has resulted in a significant increase in trade in the products concerned, which rose faster than total manufacturing value added between 2000 and 2012. Legislation at EU level has promoted economies of scale, as well as improving business competitiveness, by eliminating the compliance costs previously imposed by different national rules or, in some cases, by a lack of rules.

2.5 The rules laid down under this approach since 1985 have also boosted consumer confidence in European products.

3. General comments

3.1 One factor that is absolutely vital to the proper functioning of the internal market in industrial products is for consumers and professional users throughout the value chain to have confidence that such products meet ‘essential requirements’ of public interest. If this confidence is lacking, transactions will stop, the market will collapse, and only lower quality products will be left (2).

3.2 These essential requirements comprise health, the safety of consumers and industrial workers, and environmental and consumer protection, and also more generally any public interest determined by democratic means to be legitimate, in particular social and environmental production conditions, the interoperability of technical systems, and accessibility for all users.

3.3 These ‘essential requirements’ are the result of a democratic policy-making process leading to laws or regulations, which gives them their legitimacy. The public authorities have the power to set the ‘essential requirements’ and ensure that they are met by all operators on the internal market.

3.4 In the EESC's view, technical standards for industrial products are the technical manifestation of these ‘essential requirements’ of public interest. They are therefore policy tools and should be given full consideration as such. They are, first and foremost, general policy tools for achieving a specified public-interest objective, including but not limited to those set out in Article 114 TFEU: the health and safety of users (consumers, or employees in a work environment); working conditions favourable to workers' productivity and motivation; conservation of sensitive, non-renewable or scarce natural resources (climate, minerals, the biosphere, wildlife, water); animal welfare; the confidentiality and integrity of communications and data; interoperability of components of complex systems, and others determined by democratic decision.

3.5 Secondly, they are also tools for industrial policy and for structuring the market. Compliance with a strict technical standard is a tool for differentiation and competitiveness on the international market, on the basis of quality rather than price. By anticipating future needs and market developments, standards help European industries to stay a step ahead, to be innovative, and to make their products less price-sensitive — and thus both to be profitable and to generate high-quality jobs. Where there are competing standards (particularly with regard to interoperability) in a given market, the choice of standard has an influence on businesses that will gain a competitive advantage from it — and thus on the location of the resulting economic activity and jobs.

3.6 This political aspect of technical standards for industrial products means that they cannot be regarded as the sole preserve of private interests and technical specialists. They must instead be subject to open, democratic, transparent regulation with wide-ranging stakeholder involvement and covering five stages in the decision-making process: — whether standardisation is even appropriate; — the intended objectives of standardisation; — the technical means for achieving those objectives; — monitoring compliance with the standard and market surveillance; and — imposing effective, proportionate and dissuasive penalties for non-compliance.

3.7 These regulations must be based on open, legitimate institutions that give all the stakeholders concerned real opportunities to influence the decision. In the EESC's view, the list of stakeholders with a legitimate right to contribute to this regulatory process is an open one, depending on the specific nature of the regulation (for example, a standard on the welfare of livestock will not involve the same stakeholders as one on the interoperability of digital communications equipment). The list must, however, at the very least embrace businesses (including SMEs), employees or their representatives, consumers, and environmental protection NGOs.

3.8 The fact that technical standards are tools of industrial policy and for competitiveness based on quality and anticipating technical, societal and environmental needs, and also sources of technical innovation, means that, in order to live up to this role, they must be reviewed and improved regularly — and all the more frequently in more innovative sectors. In the case of highly innovative sectors with strong development potential, the Committee recommends pursuing two objectives in parallel: that of ensuring the democratic and social legitimacy of the regulatory and standardisation process, as set out in points 3.2 to 3.7, and that of increasing the pace at which standards are drafted and then updated. The impact of such changes on businesses must, however, be kept to a minimum.

3.9 Finally, technical standards for industrial products are the preferred way of informing and educating (end and intermediate) consumers. They provide objective and stringent criteria by which consumers can independently assess whether the product meets their needs. Consumers armed with this information and education will be attuned to differentiation by quality, which will contribute to the non-price competitiveness of a European industry that relies on the excellent skills and motivation of its employees. These standards are thus a key element in the symbiotic relationship between high-quality industrial suppliers and demanding, exacting consumers.

4. Specific comments

4.1 The use of directives to regulate harmonised standards, as has been the practice to date, both causes instability and entails constant — and often futile — adaptation by businesses. Indeed, it is liable to result in legislation that varies geographically from one Member State to another. This variation may seem minor, but it is significant when it comes to the degree of detail required to ensure that an industrial product complies with a standard. This geographical variation is compounded by variation over time, depending on the different dates when the directive is transposed into national law in each of the 28 Member States. This transposition period may last up to 36 months; given that updates to standards may be brought out with around the same frequency — or even more often in very innovative sectors — businesses are liable to find themselves permanently in the uncertainty and confusion of transitional periods.

4.2 In these circumstances — which are particularly problematic for SMEs that lack the resources to keep up with the regulations — the Committee very much welcomes the Commission's proposal that Regulations, which are uniformly and immediately applicable throughout the EU, should be used instead of Directives. The EESC feels that this arrangement is an extremely positive move: it should eliminate a major source of regulatory instability and enable research, development and innovation (RD&I) teams to work in an environment that is truly uniform for 500 million consumers and that remains stable over several years, moving at a pace appropriate to the level of innovation in each sector.

4.3 The same reasoning can also be used to demonstrate that, in terms of subsidiarity, the use of Regulations to set technical standards for industrial products is a case where action at EU level is clearly more effective than action at Member State level.

4.4 The EESC also supports the idea of converting Decision 768/2008/EC of the European Parliament and of the Council into a Regulation with general application. The establishment of a set of common definitions, terms and concepts that apply horizontally to all sector-specific technical standardisation avoids redundancy and repetition, makes it easier to amend documents, and follows good practices in technical writing.

4.5 It is a public-interest objective for a wide range of stakeholders to be able to contribute to the standardisation process at the five stages referred to in point 3.6 above. Some of these stakeholders, such as trade union organisations, SMEs, and environmental and consumer protection associations, have only limited resources. In the EESC's view, it is therefore justifiable to provide public support to help these stakeholders take part in the work, with voting rights, in order to put this opening up of the process into practice.

4.6 The EESC agrees that abstracts of standards should be made available free of charge. Ignorance of the law is no excuse, but businesses currently have to pay to access technical standards, without even knowing enough about the subject and scope of the standard to determine whether it applies to their specific situation. This is detrimental to SMEs, as well as to all interested stakeholders. The EESC therefore endorses this measure, and also calls for these abstracts to be made publicly available to any interested party.

4.7 The EESC is in favour of establishing a centralised electronic database providing a list of standards with which a given product complies and specifying how said compliance has been certified (in particular, whether it is based on self-certification or certification by an authorised third party). This database could send subscribers automatic e-mail alerts free of charge whenever the standards for a given product change.

4.8 The EESC supports the idea of enabling whistle-blowers to use a single market e-surveillance tool to inform the authorities confidentially of irregularities they have observed during the design, manufacture or import of an industrial product. Good-faith whistle-blowers need to be protected from possible repercussions or penalties, such as dismissal if they are employees. This system of collaborative, distributed market surveillance, using Web 2.0 technologies, will be able to improve the health and safety of users of industrial products throughout the EU and also protect businesses that comply with the rules from unfair competition from those that do not.

4.9 The EESC regards technical information relating to industrial products as a constituent element of the contract of sale, both in ensuring that the purchaser is making an educated and informed choice and, following the sale, in the event of defects, accidents or failure to achieve advertised results. It is certainly not ‘unnecessary’ and does not ‘detract from the aesthetics’, as claimed in the Commission's communication. On the contrary, it should be provided to the customer in a permanent, authentic and tamper-proof form that can still be read regardless of developments in available electronic tools over the lifetime of the product. This is why, in the EESC's view, paper-based documentation in the language of the country where the product is sold, available at the point of sale and provided in the packaging, meets these conditions, while electronic formats would only be considered suitable if they met the functional requirements set out above.

4.10 The EESC suggests that the Commission should use a dedicated communications budget to disseminate widely — in the internal market and third-country markets — information on the quality and high standards of products that meet European standards, with the involvement of the stakeholders listed in point 3.7. This would ensure that consumers and professional buyers were better informed of the benefits of choosing such products, hence providing a competitive advantage based on objective, reliable quality to products designed and manufactured in Europe, or in line with European standards, and thus to European businesses and workers.

4.11 The impact of legislative proposals on SMEs should be evaluated in line with the Small Business Act (3). The EESC therefore fully supports the Commission's position that SMEs should not be granted any exemptions from the rules. The risks that a product presents to the health and safety of consumers or professional users, conservation of natural resources, and compatibility with existing technical systems are all public-interest objectives independent of the size of business designing or manufacturing the product. Moreover, there are entire sectors — particularly for certain consumer goods such as clothing and household goods — that are fragmented into a large number of SMEs. Relaxing the standard requirements for SMEs would be unacceptable, as it would effectively amount to an exemption for these sectors, which have a significant cumulative impact on consumption, and thus on the level of risk. Moreover, any such exemption would lead to the creation of a two-speed market in which products made by SMEs would (legitimately) be regarded as lower quality because they were subject to fewer or less strict standards; this would exacerbate their competitive disadvantage compared to products made by large groups that also have larger advertising budgets.

4.12 The EESC disagrees with the Commission's opinion that changes to standards could be so frequent that businesses were ‘over-burdened’. The frequency with which standards are changed depends on the level of innovation in the sector and contributes to the non-price competitiveness of European industry; it must not be slowed down, but the EESC acknowledges that SMEs should be better informed about developments, if need be using the database referred to in point 4.7. Moreover, the Commission's response, involving changing standards by means of Regulations rather than Directives, is an appropriate and adequate solution to the concerns raised.

4.13 In the EESC's view, the concluding of free-trade agreements absolutely must preserve the historical experience that the EU's Member States have gained on the long road, started in 1993 and still not completed, towards a true single market in industrial products that takes full account of the political — and thus open, democratic and transparent — nature of the process of regulating technical standards for such products. The Committee therefore urges the Commission to establish, during the ongoing negotiations, a similarly open, democratic and transparent institutional framework for the five stages, as set out in point 3.6 above, of the process of standardisation and compliance monitoring. Standards for products and regulations and decisions that protect public interests, as well as penalties for failure to comply with them, must not be open to criticism as non-tariff barriers provided they comply with Community legislation and WTO agreements.

4.14 Efforts to achieve public-interest objectives by means of technical standards present specific, and as yet unresolved, difficulties in cases where value chains are international and extend beyond the scope of a single jurisdiction's rules. The EESC suggests that work in this area should focus primarily on obtaining and certifying reliable, objective data on the product and the physical and social process of manufacturing it. These data would then be passed down the whole value chain so that they could be compared against the ‘essential requirements’ in each jurisdiction, while fully respecting their sovereignty.

4.15 There are still some problems with regard to barriers to free movement and free competition, including patents relating to technical standards, and the effectiveness of checks on the implementation of standards and legislation.

4.16 Where a patent has been granted for an innovation that has become a technical standard, it is vital for competitors to be able to obtain the necessary licences at a reasonable price. Intellectual property law must protect innovation properly, without allowing patents and copyright to be used to block industrial competition and innovation; its role must therefore, in the Committee's view, be to promote free movement in the single market. The single European patent, to which the EESC attaches particular importance, will make a decisive contribution in this regard. However, the EESC notes that in certain non-European countries, including the United States, patents may be granted without an adequate novelty search, raising doubts as to their novelty; the acceptance of trivial patents raises concerns regarding their inventive nature; and the granting of patents relating to abstract concepts of ‘look and feel’ irrespective of the technical means of obtaining those characteristics runs counter to the very principle of patents, which relate solely to the means of achieving a result. These circumstances open the door to abuses of process in which European businesses are at a disadvantage.

4.17 Another problem is that the penalties are not always appropriate, proportionate or sufficiently dissuasive in penalising breaches of national or European technical standards. Administrative and criminal penalties, and market supervision, are the responsibility of the Member States; there is a risk that their diversity may lead to ‘forum shopping’ when new products are introduced to the European market. The ‘blue guide’, RAPEX, the SOLVIT procedure, or other measures should therefore encourage greater uniformity of penalties, and comparable levels of — and technicality in — supervision of the market and the distribution of products and services, in order to increase consistency across Europe. The Commission, which initiates legislative processes and monitors their application by supervising the activities of the Member States, may bring proceedings before the EU courts in the event of non-compliance. It is, ultimately, up to the European courts to safeguard a degree of Europe-wide consistency in the Member States' legislation and in their monitoring of markets, products and services.

4.18 The EESC would like market surveillance to be strengthened.

4.18.1 In order to address the possible improper use of CE marking by ill-informed or unscrupulous producers, it would, in particular, be worthwhile to improve customs checks when products enter and are placed on the market and to ensure that the agents, importers and distributors concerned meet their obligations to bring these products into compliance, in accordance with applicable Community law. The inclusion on CE labels of a reference number for the legally liable party, which could be used to find their legal identity and the compliance file online, could contribute to this process of checking compliance, including by consumers acting as whistle-blowers (see point 4.8).

4.18.2 In a context of budget austerity, the EESC would draw attention to the need to give the authorities responsible for market surveillance the resources they need to do their job, and to focus their activities on hotspots for attempted fraud (ports, hard-discount retail, or itinerant traders), while at the same time bolstering administrative cooperation, particularly as regards the fight against counterfeiting. The whistle-blowing mechanism referred to in point 4.8 could improve their effectiveness, at little cost to the public purse.

4.18.3 The EESC is concerned that certain industrial economic operators may have so much impact on a Member State's economic activity and employment that they could force the national administration to waive any penalties by threatening to relocate — thus endangering consumers and leading to unfair competition for businesses and employees throughout the EU.

4.19 In the Committee's view, it is possible to use regular reporting obligations and research on the ground to monitor product developments very closely; consumer organisations and workers' organisations are in a good position to act as whistle-blowers with regard to health and safety issues in particular, and they should be involved as stakeholders at all levels of drafting and implementing standards.

Brussels, 4 June 2014. The President of the European Economic and Social Committee Henri MALOSSE

(1) OJ C 376, 22.12.2011, p. 51.

(2) This effect was demonstrated by George Akerlof, winner of the Nobel Prize in Economics, in his 1970 article on used cars (Akerlof, George A. (1970)). ‘The Market for “Lemons”: Quality Uncertainty and the Market Mechanism’. Quarterly Journal of Economics (The MIT Press) 84 (3): 488–500. doi:10.2307/1879431).

(3) OJ C 376, 22.12.2011, p. 51.