What's New in the EU: EU to cut red tape

The European Commission presented its list of 11 new fast-track actions to reduce administrative burdens for companies in an effort to promote growth.

eu flag biz 88 (photo credit: )
eu flag biz 88
(photo credit: )
The European Commission this week presented its list of 11 new fast-track actions to reduce administrative burdens for companies in an effort to enhance economic growth. They are the second package of such fast-track actions, and form part of the overall program to reduce the administrative burdens for entrepreneurs by 25 percent in 2012. These immediate measures are hoped to generate significant benefits of about €1 billion through technical changes in existing rules. Before finalizing the list of 2008 fast-track actions, the EC has sought the opinion of the newly established High Level Group of Independent Stakeholders on Administrative Burdens. The opinion adopted on February 26, and the comments received from other sources, expressed general support for the 2008 fast-track action package. Among the new proposals for quickly simplifying legislation that hampers the success of businesses are: • Fewer translations when opening branches in other member states: The need to have translations certified by several member states will no longer be required when the same language is practiced. The proposal contributes to lowering the cost of establishing new branches of companies and thereby gives a very concrete positive signal to European businesses. • The requirement for companies to explain in the accounts formation expenses and to break down the net turnover into categories of activity and geographical markets are clearly excessive for small- and medium-sized enterprises (SMEs) and should therefore be abolished for them. • Facilitating the market introduction of new radio and telecommunication equipment: Producers should notify new products for all member states only once. This will reduce the costs caused by the existence of different rules in the member states. • Reduce paperwork for companies placing medicines on the EU market: Coping with different rules in the member states mobilizes more than 60% of the resources of companies' regulatory departments. This simplification will make it easier to change rules for packaging or the production process without jeopardizing patients' safety. • Reducing the statistical reporting duties of SMEs (Intrastat): The EC intends to further reduce the number of companies that have to report on intra-community trade. • Differences in definitions for "volatile organic compounds" create some confusion and complicate compliance. Aligning different definitions of the same subject will reduce paper work of stakeholders. • Batteries lawfully placed on the market before September 26, 2008, will not have to be withdrawn for new labeling. A possible misunderstanding will be clarified. • Reducing the paperwork for operators reprocessing agricultural starch products. • Duty to pay double to disclose the business information abolished: Companies have to disclose the same details in electronically available commercial registers and in the official journal/national gazette. In the future they will only pay once. The measures envisaged for batteries, disclosure of business information and statistical reporting should be significant. The latter one alone would exempt 190,000 companies from reporting on intra-European Union trade. The total benefits of these measures are estimated to be at least €1b. Ten fast-track actions were tabled in 2007, with estimated savings of €1.3b. for EU businesses. Five of the 10 actions have been formally adopted, reportedly cutting administrative burdens by approximately €500 million. The European Parliament and the European Council are likely to adopt the remaining proposals this year. In the fast-track action program, priority is reported to be given to about 40 EU legislative acts grouped in 13 areas and estimated to account for more than 80% of administrative burdens of EU origin. The priority areas were selected on the basis of a 2006 pilot study; they include agriculture, company law, cohesion policy, financial services, statistics, food safety, tax law and transport. All information obligations in the approximately 40 legislative acts and their national transposition acts are supposed to be identified; the resulting costs imposed on businesses will be measured by the end of 2008. The EC - following the example of most of the national member states embarking on a similar exercise - has hired outside consultants to assist in this measurement program. The methodology used for the measurement is based on the so-called "EU Standard Cost Model," which was inspired by different variants of the Standard Cost Model (SCM) currently used in a number of member states. All EU information obligations concerned have been identified and described (mapped) in 2007. The review of their transposition in all member states followed suit, in cooperation with the so-called "Single Points of Contact" appointed by the members of the High Level of National Regulatory Experts. For the 42 pieces of legislation examined, 344 EU information obligations have been mapped and the largest number has been found in the priority areas Annual Accounts/Company Law (75) and Food Safety (64). The official aim is to identify obsolete or repetitive information obligations that should be clearly distinguished from legislative design features consistent or necessary for achieving the benefits of legislation. Abolishing such information obligations will improve the effectiveness of legislation without jeopardizing the purpose of the legislation. syrquin@013.net Ari Syrquin is the head of the International Department at Joseph Shem-Tov Law Firm.