Opinion of the Economic and Social Committee on "Mutual Recognition in the Single Market"
Date: 2000-11-29
Institutions: Provisional data
Subjects: EU programme, free movement of goods, mutual recognition principle, single market

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Opinion of the Economic and Social Committee on ‘Mutual Recognition in the Single Market’

(2001/C 116/03)

On 2 March 2000, the Economic and Social Committee, acting under the third paragraph of Rule 23 of
its Rules of Procedure, decided to draw up an opinion on ‘Mutual Recognition in the Single Market (Single
Market Observatory)’.

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 8 November 2000. The rapporteur was
Mr Lagerholm, the co-rapporteur Mr Bedossa.

At its 377th plenary session (meeting of 29 November 2000) the Economic and Social Committee
adopted the following opinion unanimously.

1.

Introduction

1.1.
At the Internal Market Council in March 1998, Member
States recognised that the principle of mutual recognition
must be part of a wider debate on future action with regard to
the Single Market and that a well-functioning mutual recog-
nition Principle must be part of the future priorities of the
Communities.

To this end and as a part of the Commission strategy
1.2.
in the Single Market Action Plan,
the Commission has
presented a Communication on mutual recognition (1) and a
first biannual report on the application of mutual recognition
in product and services markets (2). The Council supported the
Commission by adopting a Council Resolution on mutual
recognition on 28 October, 1999(3).

1.3.
The ESC would like to make the following comments
on the Communication: the Commission Communication
deals with mutual recognition of both products and services.
This paper deals mainly with mutual recognition of products.
In the services area, the paper comments specifically regarding
mutual recognition of diplomas.

2.

Background

2.1. Mutual
the most
important instruments for creating Free Movement of Goods

recognition is seen as one of

in the Single Market. As a long standing principle it is part of
the Acquis Communautaire. During a large part of the 1990s,
the Council and Commission have relied heavily on mutual
recognition to solve the remaining problems of free movement
of goods between the Member States (4). The difficulty of
applying the principle of mutual recognition efficiently has
however in many cases become apparent and a problem for
the proper functioning of the Single Market.

2.2. Defining mutual recognition

2.2.1.
Under the Principle of mutual recognition, an econ-
omic operator has the right to put its products on the market
or freely provide its services in one Member State if these have
been lawfully produced/marketed or provided in another
Member State. A Member State may not forbid the sale of such
lawful products or services on its territory. A Member State
may waive this Principle only under extremely restrictive
conditions, for instance where health consumer protection or
the environment are at stake, or where there is an overriding
requirement of general public importance. The reasons for
such an exception are set out mainly in Article 30 (ex-
Article 36) of the EC Treaty.

2.2.2.
The preconditions for the functioning of mutual
recognition differ greatly between goods and services, and
between specific sectors — e.g. foodstuffs, electrical engineer-
ing, motor vehicles — and professions — doctors, lawyers,
dentists, etc.

2.2.3.
nition can be distinguished:

For products, the following levels of mutual recog-

a)

recognition of technical rules, including standards and
specifications;

(1) COM(1999) 299 final, of 16 June 1999.
(2) SEC(1999) 1106 final, of 13 July 1999.
(3) 12122/99.

(4) Including 3 EFTA Member States, making up the EEA.

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b)

c)

recognition of
assessment procedures
accepting each other’s testing procedures, test report
forms, accreditation systems as equivalent;

conformity

recognition of results of conformity assessment pro-
cedures which involves recognising test results, certifi-
cates of conformity, marks of conformity or inspections.

States. For products, 41 % related these obstacles to differing
national specifications/standards and 34 % related them to
unusual testing, certification or approval procedures. A large
part of these obstacles could be expected to be tied to areas
where there are no harmonised directives and where mutual
recognition is the guiding principle for assuring market access.

2.2.4. With Articles 28 (30) and 30 (36) and the Cassis de
Dijon principle as a base, mutual recognition has mainly been
dealt with at the regulatory level,
i.e. recognition of the
technical rules. In order for the internal market to function
fully,
it is however important for mutual recognition to
function at all the above levels. Mutual recognition on the
conformity assessment level is in fact an important prerequisite
for free movement also in the harmonised area.

It is important to take note that the application of
2.2.5.
individual
the principle is primarily the responsibility of
Member States. An efficient
the principle
therefore depends on mutual confidence between the Member
States, regulatory agencies and conformity assessment bodies.

functioning of

2.2.6.
Among the instruments intended to monitor and
safeguard the functioning of the mutual recognition principle
are the infringement procedures which the Commission can
use against a Member State (article 226) and the notification
systems. Two notification systems are laid down in directive
98/34 (former 83/189) and decision 3052/95. The former
concerns notification of new national legislation and the latter
concerns ex-post notification when a Member State takes the
product off the market or stops a product from being imported
to or circulated on their territory. The system is thus intended
to keep track of new national
legislation or government
actions in individual Member States which may disrupt the
internal market.

2.3. Problems with the functioning of mutual recognition

The ESC has also taken note from the Commission
2.3.2.
Communication and other studies made that
the largest
problems with mutual recognition for products can be found
in sectors with strong safety and health concerns and differing
regulatory objectives between Member States. The obstacles to
implementing the principle are often found at the conformity
assessment level.

The following points can be made regarding prob-

2.4.
lems/malfunctions with mutual recognition for products (1):

— lack of confidence between Member States in each other’s
conformity assessment — i.e. accepting only national
testing and certification bodies;

— lack of regulatory co-operation between government
agencies in Member States on applying the principle;

— difficulty of applying the principle where there are
differing national health and safety concerns or differ-
ences in regulatory objectives — for example in areas
such as foodstuffs or dietary supplements;

— difficulty of applying the principle in the environmental
area where there are differing environmental concerns or
regulatory objectives;

— lack of knowledge of the principle at regulatory level and

level where it is to be applied;

— difficulty for government agencies to make the required
assessments of proportionality and taking into account
other Member States’ rules — this requires a good
regulatory knowledge of other Member States;

— difficulty of applying the principle and making the proper
risk assessment in complex product areas requiring in-
depth technical analysis;

2.3.1.
As the Commission acknowledges in its communi-
cation, according to results of a business survey presented in
the October 1998 Single Market Scoreboard, 80 % of the
companies asked still found obstacles to free movement within
EU inhibiting their ability to do business in other Member

(1) Position Paper from UNICE, ‘Mutual Recognition’, June 1999.

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— Member States’ ambitions to go ahead and set an example
in consumer and environmental areas leads to differing
requirements, overriding the mutual recognition prin-
ciple;

— there is an overlap and lack of efficiency in the notifi-
cation/information procedures — some of them are not
used or do not catch the trade barriers that they are
designed to assess;

— inefficiencies in applying the principle include adminis-
trative delays and costs or red tape imposed on operators;
and

— where harmonised directives for different reasons do not
work, e.g.
the
principle of mutual recognition should be able to work
as a base for giving products market access. This is today
not the case.

in the construction equipment area,

2.5.
In the services sector, business surveys referred to in
the Commission Communication show little improvement in
removing obstacles to trade between Member States. Difficult-
ies in the functioning of mutual recognition of services are
often related to different consumer protection rules in Member
States.

3. Comments on the Commission Communication

clauses in national legislation; increasing administrative
cooperation.

Referring to the problems of implementing mutual
3.2.
recognition of products, the Commission, in its future work,
needs to distinguish further between problems with impli-
cations at different levels of recognition — technical rules,
conformity assessment, procedures and results — as defined
above. This is important since the problems and remedies are
different for different levels.

3.3.
The present obstacles for products, perceived by busi-
ness in the conformity assessment area may prove difficult to
eliminate with the principle of mutual recognition. These
barriers, which the Commission tends to look upon as ‘market
related’‘grey area’ requirements, have strong ties to national
standards and regulations. While harmonisation would be a
catalyst for changing national regulatory culture and thus
removing some of these ‘grey area’ barriers mutual recognition
could rather give these barriers further foothold.

Since a major part of the conformity assessment in the
3.4.
it is difficult for the
EU today is done by private bodies,
the
the problems of
Commission to do anything about
principle not functioning in this area. In many cases however,
harmonised legislation gives a better base for mutual recog-
nition to function in the conformity area.

The ESC gives strong support to the approach and
3.1.
measures proposed by the Commission in their Communi-
cation on Mutual Recognition. Within this approach, the ESC
welcomes the following important proposals:

1)

Strengthening the monitoring of the application of the
principle to make it more credible — e.g.
issuing a
biennial report; underlining Member States’ obligations
and speeding up the infringement proceedings; making
better use of the notification procedures.

3.5.
Referring to the fact that mutual recognition seems to
function inefficiently in areas with strong safety and health
concerns, one could conclude that mutual recognition can
most likely only work properly where there is a general
acceptance/recognition between Member States of the func-
the objectives and the regulatory
tional equivalence of
approach. Where great differences exist in objectives and
regulatory approach, strong harmonising mechanisms need to
be put into place in order to bridge this gap so mutual
recognition can work. A more systematic approach to reinforc-
ing exchanges of information and administrative co-operation
is needed to deal with this problem.

2) Measures aimed at citizens and economic operators
— e.g. improving information, economic analysis and
training (sector round tables) — rendering mechanisms
which help put the principle into place.

3) Action by Member States — inserting mutual recognition

3.6.
In the Communication, the Commission argues in
favour of mutual recognition, which gives the impression that
the Commission favours this instrument over harmonisation.
In some cases the ESC thinks that
the case for mutual
recognition is argued too strongly.

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3.6.1.
One of the main arguments behind the Commission
favouring mutual recognition over harmonisation is the
respect for subsidiarity. While the ESC acknowledges the
importance of subsidiarity, this principle may be less relevant
in areas dealing with the harmonisation of product require-
ments where business, including SMEs, as well as consumers
are better off with one standard and one set of product
requirements in a harmonised directive.

3.6.2.
The ESC would also like to underline that harmonis-
ing legislation in many cases may very well be in line with the
EU goal of keeping legislation in the EU and its Member
States to a minimum, making EU legislation more effective.
Harmonisation in this case means going from more to less
legislation, substituting different and disparate national rules
for harmonised ones. This is especially important taking into
account the enlargement process where ‘one set of rules is
better than fifteen plus’. In harmonised product areas the EU
has in fact been able to go ahead and conclude pre-accession
agreements covering conformity assessment and acceptance
of industrial products (so called PECA-agreements — Protocol
to the European Agreement between the European Community
and candidate countries on Conformity Assessment and
Acceptance of industrial products.) with certain candidate
countries. These Agreements align the candidate countries
legislation with EU legislation and extend the benefits of the
Single Market to these countries, on a sector basis.

3.6.3.
As the Commission points out in its Communication,
mutual recognition may, when working efficiently, promote
product diversity. When the principle is not working however,
it may have the opposite effect — i.e. the lack of harmonisation
could have a negative impact on diversity by protecting local
markets and excluding products from other Member States.
Harmonised requirements in the form of a directive and or a
standard are normally not prescriptive but performance or
functionally based and should not have any affect on product
diversity.

3.6.4.
Harmonisation is in many cases a prerequisite for a
multilateral dismantling of technical barriers to trade and for
aligning regulations. The Communication refers to support for
the mutual recognition principle in the WTO Agreement on
Technical Barriers to Trade. The ESC would like to point out
that
this reference is relevant mainly in the conformity
assessment area. Even here, if we look at the Mutual Recog-
nition Agreements which have been agreed between the EU
and the US, a prerequisite for such agreements has been that
the EU has had harmonised legislation.

4. Recommendations

4.1.
The ESC is of the opinion that a well-functioning
principle of mutual recognition should be one of the top
priorities for the Commission and Parliament, especially
considering that the Commission seems to prefer mutual
recognition as an instrument for completing the Single Market.
The ESC gives strong support to the proposals in the Com-
mission Communication and especially the first biennial
report.

4.2.
The Commission states that striking a balance between
harmonising legislation in the Member States and applying
mutual recognition is a delicate but essential task. The ESC
would like to underline that the costs of not harmonising and
relying on mutual recognition may be much higher than the
Commission implies in their communication. A harmonised
European market is in many cases the only way forward to
eliminate the barriers which remain. The Commission should
in its further work strike a better balance when choosing
between harmonisation and mutual recognition.

4.3.
A harmonised European market is in many cases a
prerequisite for a multilateral dismantling of technical barriers
to trade and global alignment of product requirements. The
development of the Single Market strongly affects the global
competitiveness of European industry, where products are
becoming more complex and the time span to develop and
market products more short. For both industry and consumers,
this global aspect is important for the Commission to take into
account in choosing what instrument to use, i.e. harmonisation
or mutual recognition.

4.4. With many of the obstacles to free movement remain-
ing in the conformity assessment area, the ESC suggests that
the Commission needs to put stronger focus on mutual
recognition at the level of conformity assessment and the role
played by testhouses, certifiers and standardisation bodies. The
ESC specifically proposes that the Commission look at the
following: 1) how to create a stronger pan-European infrastruc-
ture tying the conformity assessment bodies to the mutual
recognition principle; 2) widening the current notification
procedures obliging conformity assessment bodies to notify
when duplicative tests are required; 3) looking further into the
role of product marking in this area.

4.5.
The ESC would like to see the Commission put greater
emphasis on strengthening the network between the Single
Market Coordination Centres in each Member State and their
role in promoting mutual recognition.

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4.6.
Since administrative cooperation is a cornerstone for
the functioning of mutual recognition the ESC calls for a
progress report from the Commission on administrative co-
operation as a follow up on the Council resolution from 1994,
reinforcing exchanges of information and administrative co-
operation between Member States.

4.7.
According to the Commission’s Strategy for Europe’s
Internal Market and the Target Actions for eliminating the
remaining obstacles (1), Member States and the Commission
should have implemented measures from the Commission
Communication and Council Resolution by June 2001. The
ESC would be interested in following up this implementation
when it comes to the following:

— refining the notification system;

— promoting mutual recognition of certificates and tests;

and

— reinforcing exchanges of information and administrative

cooperation.

4.8.
The ESC would also like to give its support to its Single
Market Observatory cooperating with the Commission on this
matter, and play a role in improving the efficiency of measures
taken to promote mutual recognition.

5.1.2.
Problems in this area particularly affect individuals
because they arise from the case-by-case assessment of the
equivalence of qualifications obtained.

5.1.3.
It is important to improve and increase awareness of
the principle of mutual recognition by the relevant authorities
of the Member States, as emphasised in the communication
from the Commission.

5.1.4.
Commission concerning the recognition of diplomas:

The ESC endorses the guidelines proposed by the

5.1.4.1.
Sector-based round tables at European level
between representatives of authorities responsible for super-
vision and representatives of
the professions concerned;
national seminars on specific issues.

5.1.4.2.
Realisation of specific projects submitted to the
Commission by the Member States, to help bring about an
interactive information policy.

5.1.4.3. Management of individual complaints in problem
sectors, and systematic follow-up of solutions proposed by the
Member States. If the Member States are responsible for the
implementation of this principle, there must be partnership
and successful co-operation between Member States in order
to raise the profile of this process.

In general the ESC believes that complaints from
4.9.
business on obstacles created due to the malfunctioning of
mutual recognition need to be taken care of and processed in
a more structured and transparent way. The ESC supports the
proposals made in the Communication related to this.

5.1.4.4.
The ESC considers it particularly important that a
telematic contact network be set up, and that greater use be
made of ‘contact points’ — or more specifically co-ordinators
— set up for regulated professions in all sectors of the internal
market.

5. Comments and recommendations regarding mutual

recognition of diplomas

5.2.
The ESC particularly approves of the measures pro-
posed to ensure the credible monitoring of the application of
the principle of mutual recognition:

The Commission’s Communication clearly states the
5.1.
problems experienced by a number of the professions, particu-
larly those for which there is no specific directive concerning
the introduction of the principle of mutual recognition and
application of the principle of free movement of diploma-
holders.

5.1.1.
It is therefore necessary to find ways of improving
the application of the principle of mutual recognition, which
constitutes for these professionals a practical and powerful
tool for economic integration.

— evaluation reports, particularly Reports on Directives
89/48 and 92/51 on the general arrangements, already
sent to the Council and European Parliament, and work
to increase the awareness of Member States confronted
with similar problems;

— compliance with obligations arising from the proper
application of Community law and (in some cases
automatic) application of the infringement procedures
provided for under the Treaty in all relevant cases;

— notification procedure, particularly in non-harmonised
areas, with the aim of incorporating the principle of
mutual recognition into the national law; and

(1) COM(2000) 257 final.

— improving information and economic analysis.

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5.3.
Professional bodies and associations, both at national
and Community level, have sometimes tried to propose ways
of closing the gap between the generality of Directive 89/48
and the specificity of individual professions, in view of the
clear advantages secured by adoption of the sectoral directives.

The legislative approach, which encompasses the
5.3.1.
current revision of Directive 89/48 now undergoing its second
reading at the European Parliament, proposes a new Directive
bringing together the current sectoral directives which would
also cover those professions currently regulated by 89/48
which require a high level of education — five or more years.
The goal is to provide the Community with a common tool
capable of facing technological innovation and the demands
of the complexity of the market, providing the consumer with
a guarantee of the quality of services.

5.3.2.
time and
Since the legislative approach takes
resources, a second approach has been followed towards the
establishment of a European frame of reference without the
force of law but possibly that of a recommendation.

The non-regulated professions may adhere to a set
5.3.2.1.
of common rules of education, professional standards and
ethical codes, so as to distinguish their qualification in a
voluntary but recognisable way.

5.3.2.2.
The current example of this process is the title Eur-
Ing which is awarded to European engineers who fulfil

Brussels, 29 November 2000.

certain educational and professional criteria commonly set at
European level by the European engineering community.

5.3.3.
provided that:

Other professions are ready to follow this example,

— They have some kind of European professional organis-

ation;

— They have already set standards of education and possibly

rules for mutual recognition;

— They are willing to assert their professionalism in the

market for the protection of consumers.

5.3.3.1.
Among the professions concerned are agronomists,
geologists, land and building surveyors, agro-industrial tech-
nicians and laboratory technicians. It is interesting to note that
these professions all have something to do with health and
safety, in line with the provisions of Article 152 of the Treaty.

5.3.3.2.
Obviously this list must be considered provisional
and will require gradual updating since the data collected by
the Group of Coordinators set up in the framework of
Directives 89/48 and 92/51 are patchy.

5.3.3.3.
Of course this second approach applies only to the
professions which are not regulated, i.e. which have not set up
a professional order or body of their own.

5.4.
However, in view of the urgency of the situation and
the importance of the recognition of diplomas, particularly in
non-regulated professions, the ESC supports the establishment
of a European system granting recognised status, recorded in a
European register, to all professionals covered by the arrange-
ment throughout the European Union.

The President

of the Economic and Social Committee

Göke FRERICHS