Opinion of the European Economic and Social Committee on the Communication from the Commission to the European Parliament and Council — A Competitive Automotive Regulatory Framework for the 21st Century — Commission's position on the CARS 21 High Level Group Final Report — A contribution to the EU's Growth and Jobs Strategy COM(2007) 22 final
Date: 2007-09-26
Institutions: European Economic and Social Committee
Subjects: EU industrial policy, administrative formalities, competitiveness, international competition, motor vehicle industry, reduction of gas emissions, research and development, road safety, trade agreement

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Opinion of the European Economic and Social Committee on the ‘Communication from the
Commission to the European Parliament and Council — A Competitive Automotive Regulatory
Framework for the 21st Century — Commission's position on the CARS 21 High Level Group Final
Report — A contribution to the EU's Growth and Jobs Strategy’

COM(2007) 22 final

(2008/C 10/04)

On 7 February 2007, the European Commission decided to consult the European Economic and Social
Committee, under Article 262 of the Treaty establishing the European Community, on the abovementioned
proposal.

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 18 July 2007. The rapporteur was Mr Davoust.

At its 438th plenary session, held on 26 and 27 September 2007 (meeting of 26 September), the European
Economic and Social Committee adopted the following opinion by 144 votes with 2 abstentions.

1. Overview and main recommendations

i) the quest for consensus tends to delay decision-making on

the various issues involved;

is

the

aiming

Commission

The Committee is pleased that,
European

‘in the spirit of better
1.1
regulation’,
‘to
promote coherent interaction between different policy areas,
provide predictability and seek the protection of public interest
(e.g. environment and safety) while attempting to reduce the
regulatory burden on industry’. The Committee welcomes the
commitment to a holistic approach and the willingness to take
on board the various different dimensions of industry develop-
ment
stakeholders
involved.

and competitiveness

and the different

1.2
On a more general level, the overall CARS 21 initiative
reflects a desire for coordination among public policymakers —
not only between themselves but also with the various industry
stakeholders. In the Committee's view, this deserves the fullest
support. The Commission communication, which outlines the
regulatory work already in place and sets out action to be taken
in the future, illustrates the importance of such an approach,
while also highlighting the difficulties involved.

1.3
The main benefit of this approach is that it makes the
broad direction of European car policy clear for all stakeholders.
The predictability of EU policies is improved in each of the key
areas, while the regulatory burden on industry is also reduced.

1.4
One direct benefit of the approach is the reduction in the
regulatory burden made possible by the replacement of 38 EU
directives by UNECE regulations. Similarly, from the progress
made in the fields of the environment and road safety, it is clear
that an integrated approach is practicable and boosts the legiti-
macy of the regulatory framework in the eyes of all the stake-
the same time making it more
holders involved, while at
predictable for industry. Such an approach thus generates a
consensus that can be drawn on by all concerned as a basis for
further action.

However, there are also difficulties inherent in pursing

1.5
such an approach. These fall into three categories:

ii) the content of the analysis and of the recommendations is
very much contingent on which stakeholders are consulted
in the process;

iii) an integrated approach may result in an analysis of the

issues that muddies the responsibilities involved.

1.6
The list of 39 measures or commitments set out in the
Commission communication is very long and, considered sepa-
rately, each one does seem warranted. Bringing all 39 points
together, however, will probably be more problematic, raising
unresolved issues of consistency and timetabling. For instance,
although an integrated approach is adopted to tackle environ-
mental and safety issues, the two questions are not, in them-
selves, addressed in an integrated way. Such an integrated
strategy would doubtless have been possible if, as was done in
the High Level Group report, questions had been asked about
the pricing of products that meet all the proposed requirements,
but that would,
in turn, also have highlighted the need for
choices to be made. Similarly, the High Level Group was keen to
back up its conclusions with a roadmap for all public policy-
makers. This document embodied the integrated approach that
the Commission hoped CARS 21 would foster. The Committee
laments the fact that the Commission communication did not
propose a roadmap of this kind, even in a modified form.

1.7
Broadly speaking, the High Level Group based much of
its analysis on the views of car manufacturers. As a result, most
of the issues raised relate to products and technologies. The
Committee notes that the same exercise would have produced a
different outcome had it been more sensitive the interests of car
users. It is important therefore to ensure that provision is made
for a future revision of the list of stakeholders to reflect ongoing
assessments and reassessments of the issues involved.

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1.8
One risk of an integrated or holistic approach is that
each of the stakeholders may well argue that it is up to the
other stakeholders to change. In the field of road safety or envir-
onmental performance, for instance, industry players may take
the view that their efforts — particularly on the technology
front — are being thwarted by the actions of infrastructure
managers or consumers.

2. The Commission proposal

2.1 The Commission approach: CARS 21, an original and model

initiative

it

is clear that

these factors,

In the light of all

1.9
the
Commission communication is not the last word on car-related
public policy and the choices that have to be made. The
Committee therefore backs the strategy of keeping the public
debate on car policy alive and open not only to all the social
partners but also, more broadly,
to the other stakeholders
involved, and of providing information on the choices that have
to be made at various times. Such a strategy is preferable to
drawing up a definitive list of all potential ways forward, leaving
it to the experts and industry to decide at their own discretion
which path to follow.

1.10
In a concluding point, the Commission communication
states: ‘(There) exists a unique opportunity to develop a distinct
policy-making culture with regard to industrial policy. The
Commission believes that principles such as the quality of legis-
lation, simplification, impact assessments, stakeholder consulta-
tions,
lead times and choice of instruments should be at the
heart of developing legislative proposals’.

The Committee welcomes this approach and hopes that this
opinion will help the Commission to put it fully into practice.

The Committee therefore recommends:

— that industry players be given the time to fully develop the
technologies needed to meet more stringent requirements
without products becoming significantly more expensive as
a result, and thus ultimately slowing down the renewal of
the car fleet;

— that environmental

issues should not be restricted to the
question of CO2 and that interest should not focus exclu-
sively on technological remedies but should encompass a
more holistic approach, taking due account of the actual
role of cars and road transport in European societies;

— that the restructuring forum, the review scheduled for 2009
and the impact assessments on which that review is to be
based should reflect the integrated approach fostered under
CARS 21, and that steps should be taken to boost credibility
both upstream (in the choice of stakeholders) and down-
stream (in incorporating the recommendations put forward
by the working groups);

— that

the European Economic and Social Committee be
involved more directly and at an earlier stage, in line with its
remit — reflected in its set-up and membership — to
involve the various components of European society in
Commission policies in precisely this way.

In line with its policy to improve the quality of
2.1.1
lawmaking and to face the challenges of
increasing global
competition, in 2004 the Commission asked the CARS 21 High
Level Group — comprising all the main stakeholders (Member
the European
States,
Parliament) and also the three key commissioners involved in
this area (enterprise and industry, environment, and transport)
— to advise on future policy.

and members of

industry, NGOs

2.1.2 More specifically, the High Level Group set up at that
time was given the following remit: to make recommendations
for a short, medium and the long term public policy and regula-
tory framework for the European automotive industry that
enhances
and employment while
sustaining further progress in the safety and environmental
performance of vehicles at a price affordable to the consumer.

competitiveness

global

2.1.3
In this way, the Commission wanted to showpiece the
car sector as an example of its more modern approach to indus-
trial policy by explicitly incorporating its activities in this field
into the ambit of the Lisbon agenda. In a bid to ensure that
production sectors develop in a way that is at once sustainable,
economically viable, socially responsible and environmentally
sound, the Commission wants any action it takes to be preceded
by a wide-ranging consultation process among the stakeholders
involved so as to take stock of the current state of play and the
future outlook and to carve out a broad consensus as to what
action should be taken. In this particular case, the stakeholders
represented in the High Level Group included car makers, oil
producers, suppliers, car distributors, car repair businesses, car
users, national public authorities and the three main Commis-
sion directorates-general
involved (environment, transport and
energy, and enterprise and industry). DG Enterprise and Industry
was responsible for coordinating the work, which continued
throughout 2005. A public hearing was held in April 2005.
The report was adopted by the working group in December
2005. Its findings were then submitted for broad public consul-
tation in 2006. The Commission communication is based both
on the CARS 21 report and the 34 submissions received in
2006.

2.1.4
The CARS 21 report represents a very laudable move
on the part of the Commission to avoid excessive numbers of
uncoordinated and sometimes therefore inconsistent regulatory
initiatives.

it

terms a ‘holistic’ approach,

To do that, as the report repeatedly states, the working
2.1.5
group calls for what
i.e. an
approach that looks at the interactions between the various
elements involved. The High Level Group members thus want
to see more readily understandable and predictable rules and to
avoid situations in which the various Commission DGs take
action where the impact is unclear and where no checks have
been made on consistency.

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incentives; and intellectual property.

In its final report, the working group lists 18 recom-
2.1.6
mendations grouped into seven chapters: better
regulation;
environment; road safety; trade; research and development; taxa-
It also
tion and fiscal
concluded by proposing a roadmap for those responsible for
public policies and regulatory measures that will
impact the
automotive industry over the next ten years. Fully in line with
the objectives laid down by the Commission, the roadmap was
designed to give European car policy the coherence and predict-
ability that private investors need to ensure the sector's competi-
tiveness. The roadmap was supposed to provide that predict-
ability by setting out the regulatory path to be followed over the
next few years.

region) to improve market access, and reinforces the need to
enforce intellectual property rights globally.

core

— Research and development: Clean renewable fuels and
vehicles and intelligent vehicles and roads have been identi-
research priorities. With approximately
fied as
EUR 20 billion (about 5 % of
the industry's turnover)
invested into research and product development, the auto-
motive industry is the largest R&D investor in Europe in
absolute terms.

2.1.7
This communication is the Commission's response to
the report presented by the CARS 21 group. It includes the
Commission's assessment of the recommendations and the reac-
tions to the CARS 21 report expressed during the 2006 consul-
tation exercise. It sets out the direction in which the Commis-
sion intends to steer future automotive policy. The main lines of
action are as follows:

— Reduction of administrative burdens: The Commission
will propose replacing 38 Community directives with corre-
sponding global UNECE (1)
instance on
tyres, safety glass, fog lamps and seatbelts. By doing so,
industry can rely on one single text valid throughout the
world.
In addition, self-testing and virtual testing will be
introduced for 25 EU directives and UNECE regulations to
reduce compliance costs and make administrative proce-
dures less costly and time-consuming.

regulations,

for

— Reduction of CO2 emissions: The Commission strategy is
based on an integrated approach, involving not only engine
technology, but also technological improvements (e.g. setting
minimum efficiency
air-conditioning
requirements
systems, setting maximum tyre rolling resistance limits
and the use of gear shift indicators) and increased use of
bio-fuels. The strategy also focuses on additional efforts by
Member States
traffic management,
improvement of driver behaviour, infrastructure and further
CO2 emission reduction.

in areas

such as

for

— Road safety: The Commission believes an effective road
safety strategy should be based on a combination of
improvements in vehicle technology, road infrastructure,
driver behaviour and enforcement. A total of 11 future
actions are proposed, including for example the mandatory
inclusion of Electronic Stability Control and seat belt remin-
ders and obligatory use of daytime running lights for new
vehicles.

— Trade: The communication proposes assessing the potential
of using bilateral trade agreements (particularly in the Asian

(1) United Nations Economic Commission for Europe.

3. The Committee's comments

Before coming back to the method and to the merits and limits
of this new approach to the question of automotive policy and
sectoral policies in general, this opinion would refer to the five
key areas and the proposals which the Commission has set out
for each.

3.1 Internal market, regulatory simplification and internationalisation

3.1.1
The EESC supports the proposal that the framework
directive for the approval of motor vehicles be extended to all
categories of vehicles. It stresses, in particular, the importance of
this directive for the marking of spare parts.

The EESC supports the plan to simplify and internatio-
3.1.2
nalise the regulatory environment, but also wishes to avoid
harmonisation becoming an absolute priority that would take
precedence over all other considerations.

3.1.3
Therefore, whilst agreeing with the Commission that in
principle it is worth giving preference to multilateral commit-
ments, it also fully supports the Commission when it states that
it is ‘conscious of the need to maintain the possibility for the
EU to legislate independently from the UN/ECE system where
this is required to meet EU objectives in terms of health, envir-
onment or other policy objectives’. Given that such provisions
are potentially crucial
trade and
access to markets, it is indeed vital that this proviso be main-
tained, so as to ensure that European industry has the means to
respond to any laws or regulations introduced in other regions
of the globe that might be an obstacle to its competitiveness.

in relation to international

3.2 Environmentally sustainable road transport

3.2.1
The EESC welcomes the quality of the measures already
introduced and envisaged for making road transport environ-
mentally sustainable. Following the commitments entered into
by the Commission, which stresses its intention to carefully
analyse the impacts of future regulatory activity on employment
and safety, the EESC alerts the Commission to the need to give
industry time to develop the requisite technologies to meet

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stricter requirements, without producing steep rises in product
prices or, ultimately, a slowdown in the renewal of fleets. This
issue, whose importance was emphasised in the CARS 21
report, appears to be relatively neglected in the Commission
communication.

trade-offs sometimes have to be made to the detriment of the
environmental or safety aspects of vehicle performance. This
phrase has not been taken up in the communication.

Similarly,

the EESC notes with interest

the
3.2.2
Commission intends to pay more attention in future to real-life
emissions (point 8), but regrets that the Commission does not
consider the implications of this with respect to the inspecting,
maintenance and reparability of vehicles.

that

3.2.3
The EESC stresses that the integrated approach upheld
by the Commission essentially translates into a focus on pollu-
tant emissions and particularly CO2 emissions from new vehi-
cles sold in Europe in the coming years. In effect, the Commis-
sion focuses solely on the technological solutions (biofuels,
hydrogen, Intelligent Vehicles and Intelligent Transport Systems)
or economic responses (possible inclusion of the road transport
sector
intends to
promote. The Committee regrets that the Commission does not
give sufficient attention to exploring the potential of a holistic
approach more attentive to the place of the automobile and
road transport in European societies.

in the EU Emission Trading Scheme)

it

In this respect,

the Committee emphasises that

the
3.2.4
CARS 21 report explicitly expressed concern over the speed of
fleet renewal, which it considered to be a key factor. It also
stressed the importance of traffic congestion. The Committee
wishes these avenues for promoting more environmentally
friendly automobiles, and other issues, such as the promotion of
new forms of access to automobiles, to be given the same
consideration, in future, as the technical solutions.

3.2.5
The Committee would stress the need to encourage the
supply of — and demand for — cleaner vehicles. The Commis-
sion should thus strive to develop tax incentives for certain cars
and fuels that are coordinated, technically neutral and, as far as
possible, harmonised; this could be done for instance on the
basis of CO2 emissions, which would help to reduce the CO2
emitted by vehicles by directly influencing consumers and
demand.

3.3 Increasing safety on European roads

3.3.1
The Committee supports the comprehensive approach
to road safety issues upheld by the Commission, which is based
on ‘the interaction between improvements in vehicle technology,
road infrastructure, driver behaviour and enforcement’.

3.3.2
The same issues that arose in relation to the environ-
ment also apply here. Thus, a key phrase in the CARS 21 report
— ‘at a price affordable to the consumer’ — made the point that

3.3.3
list of proposals in the area of road safety is as follows (2):

in the Commission communication, the

Accordingly,

— make the inclusion of Isofix child restraint systems obliga-

tory for all new M1 vehicles;

— make the use of daytime running lights obligatory (a public
consultation was launched on this subject on 1 August
2006);

— make the inclusion of

the Electronic Stability Control
mandatory starting with heavy-duty vehicles and followed
by passenger cars and light-duty vehicles as soon as a test
method has been developed;

— make seat-belt reminders mandatory for all new vehicles;

— amend phase II requirements of the Pedestrian Protection
Directive in order to improve the provisions of Directive
2003/102/EC (3).

3.3.4 With a view to ensuring that increases in the cost of
new vehicles as a result of these proposals remain at reasonable
levels, the EESC advocates a clearer focus on vehicle prices and
their impact on the speed of fleet renewal and — therefore —
on road safety. The EESC draws attention to the fact that the
delay in the second phase of the proposed Pedestrian Protection
Directive means a shortening of the necessary phasing-in period
for the manufacturers and complicates the planning of
the
measures to be taken. The timetable for implementing the direc-
tive and the precise specifications for manufacturers should also
be clarified without delay. The Committee urges the Commis-
sion to consider that road safety also means that vehicles in
circulation must be maintained by users, even when they are
old. The Committee advocates that the planned measures be
classified in accordance with the cost/benefit ratio of each, when
their cost to the user is weighed against the impact they may
have on the number of accidents and the likelihood of death or
injury to road users. To the same end, the EESC urges the
Commission to look beyond the technologies that have already
been introduced and to integrate, more explicitly, all the means
of influencing the behaviour of road users (including education,
prevention and road signs). In this regard, the EESC would stress
the need to be particularly attentive in future to the impact on
the issues involved here of demographic developments and of
the growing numbers of old or very old drivers among car and
road users.

(2) COM(2007) 22 final, page 13.
(3) Directive 2003/102/CE of the European Parliament and of the Council
of 17 November 2003 relating to the protection of pedestrians and
other vulnerable road users before and in the event of a collision with a
motor vehicle and amending Council Directive 70/156/CEE (OJ L 321
of 6.12.2003, p. 15); EESC Opinion: OJ C 234 of 30.9.2003, p. 10.

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3.3.5
To the same end and in accordance with the position
upheld in the CARS 21 report, the EESC emphasises the impor-
tance of the tax incentives aimed at boosting demand for safer
cars. Steps should be taken to encourage the supply of — and
demand for — safer vehicles.

3.4 Trade and overseas markets

The EESC backs the Commission's approach to international
trade issues and particularly the attention it devotes to bilateral
international agreements, non-tariff barriers to trade and the
question of intellectual property rights, particularly in Asia. In
the choice of countries for concluding free trade agreements,
more attention should be paid to economic criteria such as the
size of the potential market and the prospects it offers and reci-
procity in the removal of trade barriers. Beyond the upstream
questions, the EESC draws the Commission's attention to the
need to give more explicit consideration to the spare parts
market, both in order to harmonise the way it is dealt with in
the various European countries and to devise a strategy towards
China, India and Russia.

3.5 Research and development

The EESC lends its full backing to the Commission's support for
R&D and its conviction that the three pillars of sustainable
development will only hold together if private and public sector
research efforts are maintained and stepped up. Nevertheless,
echoing the concerns set out in point 3.4, the EESC draws atten-
tion to the need to involve the whole of the automotive sector,
in these efforts.
including post-production chain operations,
Such questions as the cost of technological progress, the repar-
ability of the products that benefit from this progress, and the
training needed to adapt repairs and infrastructures accordingly
must be raised very early on and the Commission must be
proactive in ensuring that this is the case. The Commission
should focus an appropriate part of the Seventh Framework
Programme on other activities as part of an integrated approach
to road safety issues including infrastructure (e.g. electronic
communication systems).

3.6 Taxation and fiscal incentives

3.7 Spare parts market

The EESC, whilst regretting that these issues were not given
more attention in the Commission's analysis, supports its
defence of Regulation (EC) No 1400/2002 (5) and its intention
to ensure that it is applied in a homogenous way throughout
the Commission
the EU. The EESC welcomes the fact
intends to support provisions that will make technical informa-
tion freely accessible. In this regard the EESC stresses the impor-
tance of playing close attention to the implementation of the
provisions required by the adoption of the OASIS format.

that

3.8 The CARS 21 method and its application by the Commission

that

the fact

to promote coherent

The EESC welcomes

3.8.1
the European
Commission henceforth intends to improve the regulatory
interaction between
framework and ‘aims
different policy areas, provide predictability and seek the protection of
public interest (e.g. environment and safety) while attempting to reduce
the regulatory burden on industry’. It welcomes the commitment to
develop a comprehensive approach and to integrate the various
its
dimensions of
competitiveness and the various stakeholders.

the automotive industry's development,

In connection with the social and industrial aspects as
3.8.2
addressed in the first pages of the report, the EESC feels, like the
Commission, that the two need to be linked, in that employ-
ment
the
is directly connected with the competitiveness of
European automotive industry as a whole and of the various
locations. From this perspective, the EESC largely agrees with
the analysis of the situation of Europe's automotive industry.

It is pleased that the Commission considers that,

3.8.3
‘it
appears probable that vehicle assembly for the European market
will largely be conducted in Europe’ whilst also agreeing with
the Commission that this is not necessarily synonymous with
job stability.

3.8.4
The EESC urges the Commission to organise the
dialogue between the social partners so that the patterns of job
relocation within and beyond the European Union, as described
in the CARS 21 report, can be anticipated and managed. Simi-
larly, the EESC would ask the Commission to consider the
impact of developments in this sector on second-level subcon-
tractors and those further down the line, who are being placed
in a particularly precarious position by current trends.

The EESC supports the Commission which ‘urges the Parliament
and Council to adopt the proposed directive (4) as soon as possible’.
Once the Parliament has adopted this proposal for a directive,
which encourages fiscal harmonisation, the Council will have to
be convinced that it is a good idea to bring about convergence
of the provisions that are currently creating distortions between
the vehicle and automobile services markets within the EU.

(4) Proposal

for a Council Directive on passenger car related taxes
(COM(2005) 261 final); EESC opinion: OJ C 195 of 18.8.2006, p. 80.

3.8.5
To the same end, the EESC gives its full backing to the
support measures envisaged in the communication as well as to
the idea of organising a restructuring forum on the automotive
industry in order to ‘address challenges and better anticipate and
adapt to change’. The EESC urges the Commission to seize this
opportunity to ensure that the automotive sector as a whole,

(5) Commission Regulation (EC) No 1400/2002 of 31 July 2002 on the
application of Article 81(3) of the Treaty to categories of vertical agree-
ments and concerted practices in the motor vehicle sector (Official
Journal L 203 of 1.8.2002, p. 30).

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and particularly the actors involved in post-production, are
taken into account in this work and included in the support
measures. Such initiatives accord with the approach of holding
joint discussions and strategy appraisals within the sector, which
are needed by the various players involved. The EESC empha-
sises that it has a key role to play in this work and these discus-
sions, in particular in ensuring that all the social partners, and
the stakeholders more generally, are more clearly represented.

3.8.6
For example, SMEs or very small enterprises often have
greater and less fulfilled needs for training and these actors
within the automotive industry should also be able to benefit
restructuring support
from the Structural Funds and other
instruments.

3.8.7
that:

The Commission ends its communication by saying

exists a unique opportunity

‘there
to develop a distinct
policy-making culture with regard to industrial policy. The
Commission believes that principles such as the quality of legisla-
tion, simplification, impact assessments, stakeholder consultations,
lead times and choice of instruments should be at the heart of
developing legislative proposals’.

3.8.8
The EESC agrees with this approach and hopes that
this opinion will help the Commission to implement it fully.
Accordingly, it draws the Commission's attention to the occa-
sionally incomplete analysis set forth in the communication.

Brussels, 26 September 2007.

More specifically, even if they were not forgotten, the analyses
in the CARS 21 report and the conclusions that the Commis-
sion drew from them appear to be characterised by an under-
representation of consumers and post-production chain players
in the debate. As a result, it would seem to the EESC that the
automobile sector in general and the environmental and safety
aspects in particular, are not dealt with in a sufficiently holistic
way. The approach is biased towards production and technology
and pays insufficient attention to existing car fleets and vehicle
use.

the

that

under

sector

automobile

just car manufactures and that

Consequently, the EESC considers that the evaluation
3.8.9
to be conducted in 2009 must take account of this opinion and
integrate more effectively than heretofore the views of the post-
production players and users. To do so,
‘stakeholder consulta-
tions’ must remain open and must be better organised, so as to
consideration
ensure
comprises not
the ‘impact
analyses’ can be revamped. The quality of impact assessments
needs to be improved. They need to be comprehensive, based
on verified information, objective and neutral. It is not appro-
priate for the Commission department which has drawn up a
political opinion on an issue to draw up the corresponding
impact assessment as well. The EESC welcomes the proposal to
set up an Impact Assessment Board and calls on the Commis-
sion to convene those stakeholders all too readily forgotten by
the private-sector ‘architects’ of the automotive system that is to
be regulated.

The President

of the European Economic and Social Committee

Dimitris DIMITRIADIS