CER's Meyers: Better regulation in Europe: An action plan for the next Commission
19 March 2024
European businesses are far more likely than US firms to cite regulation as a major obstacle to doing business. As Europe searches for ways to boost economic growth and frets about its competitiveness, the EU needs to ensure its regulations encourage better productivity and more innovation.
- For decades, EU leaders have promised to improve law-making processes. These promises typically aim to ensure that regulations are evidence-based, made transparently, consulted on, and are as simple and targeted as possible. These are all important ways to ensure regulations have clearly defined goals, deliver those goals effectively and efficiently, and cause minimal unintended consequences. Europe has come a long way in this process. But there remains scope for significant improvement.
- Under its last two presidents, the European Commission has become a more political body. That role has helped the EU through recent crises. However, it also means the EU has lost one of its strengths: having a technocratic law-making body focused on designing laws based on evidence and good practice, and which is less beholden to short-term politics than the European Parliament and European Council. A more technocratic stance is also essential so that the Commission is perceived to be an impartial enforcer of EU laws – and so it can hold member-states to account when they do not implement those laws properly.
- If, as expected, Ursula von der Leyen wins a second term as Commission president, as part of her promise to focus on ‘competitiveness’, she should rebalance the Commission’s more political stance. The Commission needs to improve the credibility of its consultations – the process by which it invites stakeholders to comment on its proposals – to show it is driven as much by evidence as by politics. The Commission should also improve the consistency and rigour of its impact assessments.
- Regardless of the identity or agenda of its next president, the next Commission will likely still enjoy an historically high level of power and political independence. The better regulation agenda needs to reflect this by imposing more independent scrutiny and accountability on the Commission. The Regulatory Scrutiny Board has a good reputation for holding the Commission to account. But it could be more effective with more resources and institutional independence. The Commission should also consider ways to protect some of its important functions from the perception of politicisation – for example, with more internal checks and balances to ensure EU laws are enforced impartially and to ensure the Commission is prepared to force member-states to properly implement EU laws.
- The Parliament and the Council have even more work to do. As the Commission now provides less of a technocratic check on member-states and MEPs, the European Council and Parliament now must incorporate better regulation principles into their own practices. Leaving better regulation to the Commission is no longer an option. Unfortunately, neither member-states nor MEPs appear to systemically consider the Commission’s impact assessments when they review proposed laws, or assesses the impacts of their own proposed substantial amendments to Commission proposals. And the ‘trilogue’ process – where all three institutions negotiate the final shape of a new law – remains shrouded in secrecy, undermining much of the benefit of the Commission’s consultations and impact assessments.
- Better regulation is not just about the process of law-making. It is also about the substance, implementation and enforcement of EU laws. Laws need to be targeted, proportionate, predictable and clear – as does their enforcement and implementation. To achieve this, the Commission needs to worry less about maximising its powers and discretion: it should rely more on self-regulation and co-regulation, be prepared to ensure the consistent application of EU laws even when doing so is politically unpopular, and limit its own powers to change how laws are applied.
- Finally, the Commission needs to be more prepared to remove or simplify existing laws which are redundant, ineffective, or whose costs now outweigh the benefits. Despite worries about the EU’s economic performance, the Commission’s determination to cut regulatory burdens seems to be losing momentum. Its initiatives like ‘one in, one out’ need to move beyond a narrow focus on administrative costs and incorporate a broader assessment of how regulation impacts the European economy. The European Parliament and the European Council also need to make burden reduction a higher priority.
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