COUNCIL OF THE EUROPEAN UNION. Brussels, 6 July /04 COMPET 102

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1 COUNCIL OF THE EUROPEAN UNION Brussels, 6 July /04 COMPET 102 NOTE from : General Secretariat of the Council to : Permanent Representatives Committee No. prev. doc. : 10535/04 COMPET 96 INST 179 Subject : Enhancing the Competitiveness dimension of impact assessments information on the work undertaken by the High Level Group on Competitiveness and Growth 1. The conclusions of the March 2004 Spring European Council 1 welcomed the Commission's commitment to further refine the integrated impact assessment process, working with the Council and the European Parliament within the framework of the inter institutional agreement on better lawmaking, with particular emphasis on enhancing the competitiveness dimension. Moreover, the conclusions adopted by the Competitiveness Council at its May session 2 called for consideration in September 2004 of how the Council will contribute to enhancing the competitiveness dimension of the integrated impact assessment process on the basis of inputs from Member States. 1 2 See doc SN 100/04. See doc 9995/ /04 DGE/amr/kdv 1 DG C II EN

2 2. Against this background and in accordance with its remit from Coreper 1, the Working Party on competitiveness and growth meeting at High Officials Level (HLG) undertook to carry out competitiveness-proofing of proposals both from within the Competitiveness Council and across Council formations, taking as a point of departure the Commission's extended impact assessments. 3. On the basis of suggestions put forward by the Presidency, there was agreement to carry out three pilot projects in the short term. The work would be undertaken by informal groupings of Member States (on a transparent and open-participation basis) and making maximum use of "virtual" working methods (electronic communications) to prepare the ground work for the HLG which would duly report its outcomes to Coreper and to the Competitiveness Council. The following areas were selected as pilot projects: i) strengthening the competitiveness dimension of impact assessment; ii) the cumulative impact of legislation on the automotive sector; iii) the draft framework directive on services. 4. At its meeting on 28 June 2004, the HLG examined the state of play in relation to the areas mentioned in 3 above. It acknowledged, moreover, that: - the work is without prejudice to the Commission's prerogative to pursue its work on impact assessment, refine the process and to make its own recommendations in this area. Likewise it does not impinge upon the work being undertaken by the High Level Technical Group created under the inter-institutional agreement; - while the emphasis, for obvious reasons, has been placed on the economic/competitiveness aspects, it was fully recognised that the Commission's integrated impact assessment process had to take full account of the three pillars of economic, social and environmental impact; 1 Decision of the Permanent Representatives Committee (doc /02 MI 280 IND 94) 10688/04 DGE/amr/kdv 2 DG C II EN

3 - the working method adopted in relation to the pilot projects involving the use of "virtual" groups of representatives from Member States on a voluntary, transparent and open basis was chosen for practical reasons to make full use of the expertise available at national level. The HLG valued the experience gained of the working method adopted in relation to the pilot projects. It was however made clear that these modalities have no effect on the normal preparatory framework and reporting processes within the Council and all work undertaken in this regard will transit as normal via the Working Parties, Coreper and Council. 5. Regarding the first pilot project, the competitiveness dimension of impact assessments, the HLG expressed broad support for the report (see annex) setting out a proposed model for competitiveness testing. It considers that its recommendations should provide useful input both to the Commission's own work on impact assessment and to future discussions at the Competitiveness Council aimed at developing its crosscutting role with regard to the analysis of the impact on competitiveness of legislative proposals. In addition to the general considerations referred to in para 4 above, delegations emphasised in particular the importance of placing the impact assessments of policy proposals clearly within the Lisbon goals as well as the need for an outward-looking approach that considers the EU's policy framework compared with its main international competitors. 6. Regarding the second pilot project, the cumulative impact of legislation on the automotive sector, the HLG took note of the discussion paper as presented. There was broad support for the general thrust of this report, both as regards its assessment of the regulatory burden which the automotive sector carries, and the general direction of the paper's conclusions and recommendations. There was, however, a recognition that further work was required, particularly as regards ensuring more balance in recognising the trade-offs between cost imperatives on the one hand and environmental and safety benefits on the other. As regards the specific idea of establishing a High Level Group on the automotive industry it was agreed that further reflection was necessary. Delegations were invited to submit further comments in writing before a more detailed examination at a later meeting /04 DGE/amr/kdv 3 DG C II EN

4 7. As far as the final pilot project on the draft Framework Directive on Services was concerned, it was noted that the work would be complementary to the impact assessments already carried out by the Commission and that, in any case, it would not impinge upon the examination of the legal text being undertaken by the Working Party. The HLG took note of the state of play, as presented by the rapporteur and, following clarification of the mandate of the "virtual" group, endorsed the presented outline of the plan of work. Progress would be reviewed at a later meeting. 8. The Permanent Representatives Committee is invited to take note of this report and agree that it will be forwarded to the Commission. It is further invited to keep these issues under review, bearing in mind the intention of the Presidency to report on progress to the Council in September /04 DGE/amr/kdv 4 DG C II EN

5 ANNEX REPORT OF THE SUB-GROUP ON THE COMPETITIVENESS DIMENSION OF IMPACT ASSESSMENTS COMPETITIVENESS TESTING: A POSSIBLE MODEL Summary The European Council has welcomed this commitment by the Commission to enhancing the competitiveness dimension in its integrated impact assessment. The High Level Competitiveness and Growth Group established an informal working group to look at criteria used by the Commission in its Impact Assessment process in relation to competitiveness and to recommend how they might be enhanced. The Group feels that these criteria map well onto the widely accepted drivers of productivity, providing a good basis for competitiveness assessment. The Commission has made a strong start in developing and rolling out its procedures. The quality of assessments themselves has inevitably been variable in the early stages. Ensuring disciplined use of these criteria to deliver consistently high quality assessment of competitiveness issues is an important issue going forward. The Group believes that assessment would be enhanced by: q a requirement for policy makers to highlight Lisbon impacts (positive and negative across the 3 pillars) in assessments; q q q a global perspective - comparing the EU policy framework in question with those in key competitor economies, looking at relative impacts and successful, competitive approaches; an assessment of the (economic) employment impacts; analysis of new policy proposals in terms of the existing regulatory framework, including the scope for attendant simplification and reduction of administrative burdens; 10688/04 DGE/kdv 5 ANNEX DG C II EN

6 q q making explicit to decision makers the framework used to identify trade-offs between policy options and conflicting objectives, and the value judgements and reasoning behind the selection of the preferred option; and continuing development of practice in quantifying impacts, including in monetary terms where possible, to enhance the data on the benefits and costs of proposals. The Group also looked at the processes that can interact with impact assessment to ensure effective competitiveness testing, in particular methods to ensure systematic and transparent stakeholder involvement in the pre-proposal phases. The Group sees a model based on two stages (Green and White Paper), with the fullest possible time for consultation, as providing the strongest basis for assessing impact of significant proposals on competitiveness. However, in cases of exceptional urgency, a different model may be required. Therefore it recommends that the Commission be invited to set out how, in general, the balance can best be struck between maximising the scope for external input and time considerations, and to articulate its strategy for stakeholder involvement for individual proposals at an early stage. Robust assessment of competitiveness issues by the Commission will facilitate work in the Council and assist the Competitiveness Council in its cross-cutting role. The Group notes that Coreper is looking at how Council can make systematic use of Commission impact assessments. Identification and examination of the competitiveness dimension in major dossiers will be an important part of this /04 DGE/kdv 6 ANNEX DG C II EN

7 The Group feels this would be aided by systematic examination of such dossiers in the Competitiveness and Growth Groups (both levels) to inform work in Coreper and regular review in the Competitiveness Council. Informal work by volunteer Member States to assess competitiveness impacts could feed into this. The methodology should be consistent with that used by the Commission. The Council should make explicit how it has assessed and managed competitiveness issues, setting this in the wider Lisbon context, including in its statement of reasons that accompanies proposals when they go to Parliament /04 DGE/kdv 7 ANNEX DG C II EN

8 ANNEX TO THE ANNEX COMPETITIVENESS TESTING: A POSSIBLE MODEL Introduction 1. The Commission has said it will strengthen its efforts to ensure that competitiveness is properly taken into account in its proposals 1. The European Council has welcomed this commitment by the Commission to enhancing the competitiveness dimension in its integrated impact assessment 2. It has given the Competitiveness Council a cross cutting role 3 on legislative proposals that may significantly impact on competitiveness. 2. Thorough coverage of competitiveness aspects in impact assessment will help ensure that new regulations or other means chosen to deliver EU policy objectives are consistent with the Lisbon objective and in the long run remain consistent with the Sustainable Development Strategy. The EU s failure to close the productivity gap with the US as it approaches the halfway point in the economic reform agenda underlines the importance of this. 3. To help take this forward, the High Level Competitiveness and Growth Group has established an informal sub group of volunteer Member States, in which the Commission takes part as an observer, with the following Terms of Reference: To review the current criteria used by the Commission in its [Regulatory] Impact Assessment process in relation to the competitiveness impact of its proposals on business and to come forward, by June 2004, with recommendations as to how it might be enhanced Commission Communication COM (2003) 704 Some Key issues in Europe s Competitiveness: Towards an Integrated Approach p.12, para 5.2. Presidency Conclusions Brussels European Council 25/26 March 2004, p.4, para 23. Presidency Conclusions Brussels European Council 20/21 March 2003, p.7, para /04 DGE/kdv 8

9 4. This paper contains the group s recommendations for the development of these criteria and for making transparent the trade-offs across the three pillars that have shaped Commission proposals. Some of the areas we have highlighted are at least partly covered in the present Commission guidelines so for these it is to some extent a question of emphasis and of developing practice. 5. The group has also looked more widely at how impact assessment and policy processes can combine to competitiveness test proposals as they develop, drawing lessons from recent practice. The paper also makes some recommendations on systematic approaches to developing and using the assessment at the pre-legislative and legislative stages therefore, including handling in the Council. The Commission s Impact Assessment Process 6. The Commission has committed 1 to an impact assessment process consisting of an initial filtering stage (preliminary) followed by an assessment of the likely economic, social and environmental impacts of proposed measures (extended). Commission guidance says the analysis should cover the following. Preliminary A light screening based on the main impact assessment questions: problem identification; policy objective(s); policy options, including whether intervention at EU level is justified, consideration of regulatory [including outcome based] and non-regulatory alternatives; and likely impacts: economic, environmental and social. identification of further analysis to be undertaken; and a recommendation for or against an extended assessment 1 Communication on Impact Assessment COM(2002) 276 final /04 DGE/kdv 9

10 Extended More in-depth analysis of: the issue/problem; main objectives; main policy options, including alternative instruments; and likely impacts: economic, environmental and social. 7. In respect of possible economic impacts, the Commission guidance examples include growth, price levels, investment, human capital, economic cohesion, market mechanisms, income growth, price level and stability 1. This methodology maps well on to the widely accepted drivers of productivity, which are: investment (including ICT); innovation; entrepreneurship; human capital i.e. skills; and the competitive environment (inc. the competition regime). 8. The guidance also covers micro-economic effects on business, including administrative burdens. There is clearly very considerable scope already, therefore, for assessing the economic implications of policy proposals and for examining how the means of delivery regulatory or non-regulatory, prescriptive or outcome based might itself impact on the EU s business environment and so its global competitiveness. The guidance also suggests assessment of administrative burdens. 9. Competitiveness assessment will rest to a considerable extent on this economic analysis but not exclusively. Evidence from the other 2 pillars of sustainable development will also be relevant. 1 See Commission Handbook on Impact Assessment - Technical Appendix 5, pages /04 DGE/kdv 10

11 10. The main conceptual innovation in the Commission Communication on Impact Assessment 1 was to combine all sectoral assessments into one integrated impact assessment 2. This new tool was to allow policy makers to assess trade-offs between the three pillars and to evaluate and compare alternative policy options in a sound and consistent analytical framework 3. This is vital in terms of rendering decision-making processes and the value placed on competitiveness within them - transparent. How could the competitiveness assessment be enhanced? 11. The Commission has made a strong start in defining and introducing its integrated impact assessment process. It wants to see ongoing development of this in line with best practice but at a pace that allows these difficult procedures, which are still very new, to bed down. 12. Inevitably, at this early stage, the quality of the assessments has varied. As part of its ongoing work to establish and further develop better regulation disciplines, the Commission will no doubt continue its efforts to ensure its systems, including central coordination and interservice consultation, deliver consistent quality in the assessment of impacts, including competitiveness impacts. 13. The present Commission Impact Assessment Handbook encourages consideration of potential impacts across the three pillars of sustainable development. As already noted, the economic pillar is quite well covered in this. Again, competitiveness does not derive wholly from the economic dimension. Evidence from many areas covered in the technical annexes to the guidance will be relevant to its assessment Communication on Impact Assessment COM(2002) 276 final Last para on p.2 of the Communication See also SPEECH/02/520 p. First two bullets on p.3 of the Communication. See also SPEECH/02/477 p /04 DGE/kdv 11

12 14. The Commission s guidance does comparatively little to remind policy makers of the Lisbon European Council objectives or to ask them to set their overall assessment in this context. This should inform all EU policy making. Recommendation 1 That the Commission be invited to consider, in revising its guidance: placing the impact assessment of policy proposals in the context of the Lisbon goal to make the EU, by 2010, the most competitive knowledge based economy in the world, characterised by growth, social cohesion and respect for our environment ; and asking officials to highlight in their summary assessment how the policy proposed contributes to delivering this, drawing on assessment evidence from across the 3 pillars, and equally to set out risks it poses to achievement of the Lisbon objectives. 15. The present Commission guidelines suggests officials look at impacts on international performance 1 but does not ask them to compare and contrast regulatory frameworks in the area concerned, including in terms of their competitiveness effects. 16. In a global economy, differing legislative regimes can give rise quickly to competitive advantage. Recognition of this is fundamental to the idea of competitiveness proofing in the Lisbon context. An outward-looking approach that considers the EU s policy frameworks against those in competitor economies and that takes account of developing international standards - is a key area for development of best practice therefore. 1 See Commission guidelines on Impact Assessment-Technical Annex 5.p /04 DGE/kdv 12

13 17. The Netherlands legislative impact assessment procedure includes a question that focuses on this, and guidance on answering that question. This is attached at Annex A. This is a possible model for the Commission to consider in developing its guidelines though it is essentially descriptive rather than looking at the impacts of different regimes. It could be developed to outline the relative impact in terms of burdens on business. 18. The purpose of the comparison would not be to encourage an approach based on the lowest cost or lowest standard model - a race to the bottom. A wide range of factors can contribute to competitive advantage. Many of the competitor economies concerned will be developed countries that may have found successful competitive approaches. This comparative information is one element in the evidence that needs to be available to inform decision making in the Institutions. Recommendation 2 That the Commission be invited to consider developing its impact assessment guidance to include comparison of the EU policy framework in the area under consideration with those in competitor economies, drawing on the Netherlands model. Comparison of impacts across the 3 pillars arising from the differing regimes might also be considered. In this context, consideration also needs to be given to how a policy proposal would fit with international rules and regulations, including at the industry sector level /04 DGE/kdv 13

14 19. The implications for employment should also be explicitly considered to capture the potential affects of proposals on prosperity more generally. The proportion of the population in work indicates the ability of the economy to generate job opportunities and a higher level of income and output for the economy as a whole. Employment is a key determinant of prosperity, which depends on both the proportion of the workforce that is employed as well as the productivity of these workers. Employment also helps to reduce deprivation by fostering social inclusion. 20. In addition to a stable macroeconomic environment, employment levels are aided by a dynamic, efficient and flexible labour market. It is thus necessary to consider the impact of new and existing regulation on the efficiency and flexibility of the EU's labour markets on both the demand side (the attractiveness and ability to hire labour) and on the supply side (incentives to work, mobility and skills). 21. This should look beyond the short term and allow for positive effects from adjustments. The present guidelines cover this to some extent but the questions might be developed further. Recommendation 3 That the Commission be invited to consider developing its impact assessment guidance to require analysis of short, medium and long term employment effects in the EU that would result from the proposed policy, from an economic point of view, including effects on employment rates, and the responsiveness of labour markets to economic change. 22. Impact assessment should also be used to identify potential overlaps with existing frameworks and ways to avoid these and to look at any scope for their simplification /04 DGE/kdv 14

15 23. Each assessment should set the proposal in the context of this wider framework and also look at the interaction of horizontal and vertical measures where these might duplicate or contradict each other, including in respect of business sectors. There are already examples of good practice here - for instance, the Directive on Eco-Design of Energy Using Products has excluded the vehicles sector recognising that existing measures can deliver the policy goals. Work on sectoral legislative impacts, including the follow up to the Commission s Industrial Policy Communications, can help inform this aspect of assessment 1 2. The proposed Red Tape Observatory could also be a useful tool in this context. 24. Measuring administrative burdens is an effective way to trace accumulations of regulatory requirements for companies. A clear insight in the costs of administrative burdens can facilitate the search for better streamlined, and less burdensome regulation, for instance through harmonisation of definitions. Once a measurement tool for administrative burdens has been developed at the EU level, as was requested by the Spring European Council, this should systematically be used in every impact assessment. Recommendation 4 That the Commission be invited to consider developing its impact assessment guidance to require, when a new measure is being considered, analysis of: the likely interaction with the existing framework in the area concerned; how to avoid overlaps and contradictory effects e.g. through exemptions for business sectors with existing vertical frameworks that deliver, or could deliver, the same policy objectives more efficiently; and the scope for attendant simplification and reduction of the overall administrative burden. Improved transparency in the political decision-making process 1 2 Commission Communication: Industrial Policy in an Enlarged Europe COM(2002) 714 final See also parallel paper from informal Automotive sub-group: Cumulative effects of EU rules on the competitiveness of the European automotive industry /04 DGE/kdv 15

16 25. Again, the Commission is committed to analysing the main alternative policy options 1 in the context of its extended impact assessment. Expert analysis will have provided guidance as to the sectoral impacts (i.e. economic, environmental and social) of each of the alternative policy options. 26. It is the objective of the extended impact assessment to integrate these sectoral assessments into one consistent analytical framework that enables analysis of policy options and identification of trade-offs between conflicting objectives. Hence, the extended impact assessment is intended to make explicit the underlying value judgments on the importance of each of the three pillars of sustainable development 2 and to facilitate the political debate on these In addition, the quantification of costs and benefits enhances transparency and complements qualitative analysis. Wherever possible, politicians should have before them monetised costs and benefits of a proposal. Recommendation 5 That the Commission be invited to: make explicit the analytical framework that has been used to assess and to identify the trade-offs between alternative policy options; specify the method used to compare impacts 4 and the reasoning and implicit value judgments that led to identification of the preferred policy option; and continue to develop its practice in quantifying impacts, including in monetary terms where possible, to enhance the data on the benefits and costs of the proposals See Commission guidelines on Impact Assessment, p.7. See Commission guidelines on Impact Assessment, p.10. See Commission Communication on Better Lawmaking, p.3. See Commission guidelines on Impact Assessment Technical Appendix /04 DGE/kdv 16

17 The competitiveness-proofing process 28. Thorough pre-legislative work can help understanding of the impacts of complex and measures that are likely to be significant in terms of competitiveness The REACH dossier illustrates this well. Some key features of its pre-proposal handling were: full engagement with stakeholders from an early stage; ongoing dialogue with the Council (the Environment and Competitiveness formations); a White Paper; and consultation on the basis of a draft proposal (albeit with a consultation period that was rather short at 8 weeks). Annex C sets this out in more detail Through these various stages it was possible further to explore the potential effects of different approaches to the proposal. On this basis, the impact on competitiveness could be properly analysed and political decisions taken on the basis of this information. Had discussion of the policy only been possible after the proposal stage, it would not have been possible for the competitiveness dimension of the impact assessment to be as well informed, nor for that information to have been used as fully in developing the approach eventually adopted. 1 2 The Irish Presidency Paper Strengthening the functioning of the Competitiveness Council and of the High Level Group for Growth and Competitiveness as its support structure suggests systems for identifying such dossiers in the Commission s longer term work programme. The Commission and the Group agreed that continuing Commission work on the impact assessment after the proposal had been made was not a model for future practice /04 DGE/kdv 17

18 31. The Commission uses Green Papers extensively to air its policy thinking. A Green Paper sets out a range of possible policy options, rather than focusing on a specific proposal. Therefore it allows for discussion of the assessment of general policy choices, rather than specific designs. The general costs to be taken into account, for instance, in choosing one form of intervention (such as a Regulation, a Directive, co-regulation, voluntary agreement etc.) over another can be discussed and a more accurate assessment of each used in the decision as to how to proceed. 32. Clearly, this can have real value in areas that could impact significantly on competitiveness, allowing stakeholders the opportunity to feed in views at an early stage. (There is a role for Member States also at this stage in ensuring their stakeholders take this opportunity.) 33. The Commission could also at this pre-proposal stage make fuller use of existing fora such as the Enterprise Policy Group (including its Professional Chamber) and the Internal Market Advisory Committee to discuss possible competitiveness issues with senior officials from Member States economic departments. 34. If the Commission intends to propose legislation in areas where there are likely to be significant competitiveness implications, a White Paper is the most effective means to explain the intended approach. 35. At this point, the Commission can carry out its regulatory impact analysis according to the revised guidelines, identifying key risks for competitiveness and explaining how significant impacts could be eliminated or minimised. It can also explain what alternatives have been considered and why it is believed that these cannot deliver policy goals. This can inform and accompany the White Paper and, whenever possible, draft legislation - as a basis for consultation. The Commission could use its Business Test Panel most effectively at this stage /04 DGE/kdv 18

19 36. At this stage, discussion of this analysis can help further improvement of the assessment so that the final decision as to whether or not to adopt a proposal, and if so how, is informed by the best available data in a transparent and accountable way. 37. Stakeholder consultation should be open and structured and managed to ensure maximum input on key competitiveness issues. Key economic stakeholders and experts should be identified and targeted, with maximum notice and, time to respond 1. Their input should be published wherever possible and made available to all of the Institutions. 38. Where public debate had already brought out significant competitiveness issues, the Competitiveness Council could also express views at this stage although it could not of course take a formal position. Again, the management of the REACH dossier leading up to the adoption of the proposal, evolved in this direction so that these proposals might be seen as building on developing practice. 39. In this way the competitiveness dimension to impact assessment can be enhanced through greater, and more transparent, discussion of the analysis underlying policy choices at each stage of the policy process. 40. If such a process were made mainstream, it should not greatly slow down decision-making since it would be only making explicit and open the assessments that should already be in place. However, there may be cases where particularly swift action is needed, including for competitiveness-related reasons. In these instances, the benefits in terms of improved impact assessment could be outweighed by a cost in timeliness. 1 Mandelkern Group on Better Regulation Final Report 13 November Executive Summary P.iv /04 DGE/kdv 19

20 41. Therefore the challenge is to strike the right balance. Where proposals are likely to have a significant impact on competitiveness, Green and White Papers, and a suitably extended consultation period, can provide a valuable contribution to understanding that dimension of their impact, without slowing down the process of policy consideration unduly. However, this must be reconciled with the need for faster progress in some circumstances. Recommendation 6 For competitiveness-proofing to work effectively, there needs to be discussion and development of proposals at the pre-legislative stage. Therefore, for policies likely to have significant competitiveness implications, the Commission should be invited to set out at an early stage: how it can ensure systematic stakeholder involvement before a decision is taken to develop draft legislation; and in particular: how Green and White Papers can be used to allow the fullest assessment of the impact of different policy options, so that the competitiveness dimension can be factored in to decision-making on a well-informed basis. If the impact of major proposals on competitiveness is properly to be understood, they should proceed through these stages; how consultations, targeting key economic stakeholders and experts for input on competitiveness-related issues can help shape the proposal allowing the fullest possible time period for formal consultations on major proposals; in cases of unusual urgency, where this combination of methods may not be possible or desirable, setting out clearly for stakeholders how they propose to strike the optimum balance between speed and consideration; and how Member States can be kept informed of the way such major proposals were developing /04 DGE/kdv 20

21 Handling in the Council 42. An enhanced focus on competitiveness at the pre-proposal phase will clearly help the Competitiveness Council identify those formal proposals that it needs to follow most closely or engage using its cross-cutting remit. It will allow the Member States to begin their own work on potential impacts in good time for Council discussion. 43. This focus should also enable other formations to develop proposals in their policy areas with due regard to competitiveness impacts already identified. Coreper is looking at a more systematic approach to use of impact assessments in the Council and to addressing quality issues. The Competitiveness and Growth Working Group is helping to develop ideas on this and there will be some read across to the thinking in this paper. 44. This systematic approach will be important to ensuring that all aspects of impact assessment are properly addressed by lead formations. (In the case of REACH, the Italian and Irish Presidencies have elected to take work forward with a Competitiveness Council lead, though the lead had been with Environment. An Ad Hoc Group with experts from both areas is now handling this. This is one model for future work but could be impractical for all such dossiers.) 45. The High Level Group on Competitiveness and Growth Group will have a role in preparing discussion in the Competitiveness Council on dossiers with significant competitiveness implications, working through Coreper. Its Working Group formation will in turn help prepare its work. Informal groups of volunteer Member States could be mandated to map the competitiveness issues in individual dossiers out to help facilitate work in the formal group structure /04 DGE/kdv 21

22 46. This work would draw on the Commission s Extended Impact Assessment and factor in Member State impact analysis as this became available. For consistency, it would be based on the same economic and employment drivers as used in the Commission s impact assessment including the comparison of competitors regimes, and the employment and simplification assessments, as well as on wider environmental and social factors where Commission or Member State work had highlighted these. 47. A review of such dossiers at pre-proposal and legislative stages - could become a regular agenda item for each Council meeting. Competitiveness Council discussion would focus on areas of potential concern identified by the Working Groups and Coreper. 48. The Council s assessment of competitiveness implications of a proposal (and of its amendments to a proposal) could go forward with the proposal when it went to the Parliament as part of the Statement of Council s reasons - and underpin the Council s assessment of any amendments proposed by the Parliament. It would need to be updated for such amendments where these could significantly impact on competitiveness. The Parliament should, in keeping with the Inter-Institutional Agreement, do its own analysis on these. 49. To highlight instances of good practice, and to help mainstream the process of competitiveness proofing, the Competitiveness Council would report regularly probably on a six-monthly basis on Council work in this area /04 DGE/kdv 22

23 Recommendation 7 That the Competitiveness Council play its horizontal role by: identifying items of particular interest from the Council s work as a whole; systematic examination of such dossiers in the formations of the Competitiveness and Growth Working Group to inform work in Coreper and the Council; establishing groups of volunteer Member States to analyse the competitiveness implications of these proposals to inform policy work in these formal Groups and in Coreper placing review of dossiers as a regular item on all Competitiveness Council meetings; and reporting on a regular basis to the Council as a whole on its work in this area. Recommendation 8 That the Council makes explicit how it has assessed and managed competitiveness issues in its work on dossiers, setting this in the wider Lisbon context, and that this forms part of the statement of reasons that accompanies proposals when they go to Parliament /04 DGE/kdv 23

24 ANNEX A Competitiveness Test from Netherlands Impact Assessment Guidelines 4.5. QUESTION 5: COMPETITIVENESS TEST What is the current situation regarding legislation in the policy field concerned in countries that for the business community in the Netherlands are the most relevant competitor countries? Importance of this question The growing international convergence of economic activities (globalisation) means the economic consequences of differences in legislation between countries become noticeable more quickly and more intensively. This applies to a relatively large degree in a small, open economy like the Netherlands. Conversely, if foreign competitors are confronted by similar legislation and ensuing effects, the position of the Dutch business community will not be burdened to a greater extent, relatively speaking. The Foreign test is relevant not only to proposed legislation that applies to companies that export a lot, but also to proposed legislation that covers a situation where the Dutch business community experiences competition in the domestic market from foreign competitors. To assess the necessity and proportionality of proposed legislation, you also need to know whether in the field of business concerned the competitor foreign countries: - have legislation in the same field and what it implies; - are preparing legislation and what it will look like, insofar as it is possible to say; - the authorities use alternatives to legislation and, if so, which alternatives /04 DGE/kdv 24 ANNEX A DG C II EN

25 How to answer the question It is impossible to provide a picture of the relevant legislation in all countries. You need only make a selection of the countries from which the Dutch business community concerned experiences the heaviest competition (either in the export market, or in the domestic market). This may be a single country, but there could also be three or four. This question is not about the consequences for the competitive position of Dutch companies in relation to companies in other countries. This matter is dealt with in question 8, socio-economic consequences. Rather, you will generally need a qualitative comparison of legislation. Information sources You can obtain information about legislation and proposed legislation in foreign countries by approaching embassies and organisations that have an international platform or foreign sister organisations, like international trade associations and employers' associations. Also use contacts with EU Council and Commission working groups /04 DGE/kdv 25 ANNEX A DG C II EN

26 ANNEX B REACH KEY DATES IN DEVELOPMENT OF THE PROPOSAL April 1998 An Informal Council of Environment Ministers debated the existing chemicals regime and provided a steer to the Commission. November 1998 The Commission made a commitment to review the existing regulations and adopted a report in November December 1998 Environment Council welcomes Commission report February 1999 Brainstorming session with 150 stakeholders organised by Commission. June 1999 Council adopted Conclusions, basis of White Paper. February 2001 Commission White Paper published, setting out REACH regime. Autumn 2001 Commission set up various working groups to look into details. Background to this process not clear, but it merits further consideration as a means of pre-legislative scrutiny. Should look carefully at the process for future groups /04 DGE/kdv 26 ANNEX B DG C II EN

27 June 2002 Assessment of the Business Impact of New Legislation in the Chemicals Sector published. May-July 2003 Progress Report to the Competitiveness Council (May 13) and discussion. Commission publish draft proposals for Internet consultation. September 2003 Competitiveness Council - Commission presentation following internet consultation. October 2003 Commission adopts amended REACH proposals /04 DGE/kdv 27 ANNEX B DG C II EN