WRITTEN QUESTION E-2079/99

by Giles Chichester (PPE-DE) to the Commission

(12 November 1999)

Subject: EU legislation and exemptions for small businesses

The important contribution which SMEs make to employment, growth, competitiveness is widely recognised. Commissioner Liikanen at the European Parliament hearing in September this year expressed his unequivocal support for a coherent enterprise strategy, especially for the creation of a genuine European spirit of enterprise and the support of SMEs as the most important job-creating sector. The setting up of the BEST task force to make proposals to improve the quality of legislation and eliminate unnecessary burdens on SMEs is welcomed. But still many legislative burdens exist.

Is the Commission aware that the US has produced details of the extent to which small firms in the USA are exempt from employment regulations? Does the Commission have comparable information?

If not, will the Commission, together with BEST, follow the US best practice and compile a comprehensive list of all policy areas of legislation which have an effect on small businesses?

Is there a list of legislation containing exemptions for micro enterprises? If not, why not?

Will the Commission review all business and employment legislation to see if further exemptions for micro enterprises are possible?

Will the Commission produce in the interim, within two months, an assessment of every item of legislation which has an effect on business by type, turnover, number of employees etc?

Answer given by Mr Liikanen on behalf of the Commission

(20 January 2000)

Regulation must strike a balance between widely different interests. Community businesses have to be competitive. Small and medium-sized businesses (SMEs) in particular need a business environment in which they can be innovative and achieve their potential to create growth and jobs.

The Commission welcomes the Honourable Member's suggestions regarding simplification and exemptions for small businesses. In the new Directorate general for enterprise aspects of better regulation and administrative simplification will play a key role. A specific unit will be created and charged with simplification of the regulatory business environment and reducing the administrative burden in particular of SMEs. One of its key functions will be to evaluate the impact of Community legislation on businesses,

including through an improved business impact assessment system and direct consultation of businesses. In improving the regulatory impact assessment the Commission will, among other things, draw upon the work of the Organisation for economic cooperation and development (OECD) on regulatory reform and on examples of good practice from other countries. The unit will also consider existing practice in the United States with a view to developing appropriate information tools in the Commission. The work foreseen in the BEST action plan on improving employment and working conditions will also be taken forward by both the Member States and the Commission.

The Commission will also consider the idea of a list of legislation containing exemptions for micro enterprises. The existing business impact assessment already contains information on derogations and thresholds for certain businesses, in particular small firms.

The Commission has noted the Parliament's call for the results of business impact assessments to be published. These are already available as part of the COM-documentation and therefore available to the public.

The Commission also manages two other initiatives designed to improve the quality of the regulatory environment within which European businesses operate. The creation of the business test panel pilot project was envisaged in the single market action plan. The panel is composed of European business representatives which review proposed new Community legislation. Much of the panel's work concentrates on identifying compliance costs and likely administrative burdens of proposed legislation. The novelty of the approach lies in the direct feed-back from businesses. The test panel has so far been consulted three times and its overall effectiveness will be evaluated in early 2000.

The SLIM initiative was launched in 1996 with the objective of identifying ways of simplifying internal market legislation. Since then it has reviewed 14 different areas of legislation and SLIM teams (composed of national experts and users) have issued a wide range of recommendations which include reducing costs and administrative burdens arising from Community rules. The operation of the initiative is now being examined by the Commission in order to strengthen its overall capacity to deliver recommendations and proposals aimed at improving the implementation of internal market rules, simplifying procedures and reducing costs and administrative burdens on businesses.