COMMENTARY

Autumn 2009

by Richard Corbett

RELATED ARTICLES:

---

As one would expect from the anti-EU campaign group “Open Europe”, Stephen Booth’s article is one-sided and attempts to place all the blame for the ills of over-regulation on the EU. The reality is, of course, much more complex. Nowhere does he give credit to the fact that the EU’s single market actually cuts costs for businesses. By having common rules for the common market instead of 27 divergent national rules, EU legislation can reduce costs.

A company can register a trademark that is valid throughout the EU without having to go through 27 different sets of form-filling and fee-paying. A truck hauling British exports to, say, Italy used to need over 20 documents to present at frontiers, but thanks to EU legislation this is now down to just one. Recent legislation replaced with a single type-approval certificate for motor vehicles the 50 that had previously existed across Europe. The 2008 Payments Services Directive is expected by the Financial Times to deliver more than €28bn every year in savings to European consumers and businesses on the costs of trans-border transactions. I could go on, but I hope I’ve made my point.

EU legislation mostly seeks to harmonise national rules where these already exist in the member states, but where their divergence causes problems for the internal market. Member states decide to regulate and the EU tries to avoid divergence in regulation from adding to costs. Booth’s attempt to place the whole regulatory cost at the door of the EU – especially when the EU’s actions have lowered those costs – seems wilfully misleading.

Avoiding market fragmentation has helped create the world’s largest free market of over 450m people – a key economic benefit for Europe. Of course, some regulations impose costs, and deliberately so where they either save money in the future or are in the public interest to save lives or protect the environment and consumers. Requiring cigarette manufacturers to warn that smoking kills obviously costs them money and governments their excise revenues, but this is outweighed by the lives it saves and the health costs it reduces.

Open Europe has attacked EU safety legislation as being too costly, highlighting rules on controlling of asbestos, vibration and noise at work. Would they be happier if more people died from asbestos poisoning or suffered industrial accidents? It is breathtaking to see anyone defend the uncontrolled use of asbestos nowadays.

Naturally, if you don’t like a piece of EU legislation, it’s tempting to attack the EU rather than the law itself. You don’t say that you are opposed to better consumer protection – you complain about EU red tape instead.

That is not to say that all EU regulations are good – far from it. The EU, like national and local government, can make mistakes which need to be rectified. But the stereotype of uncontrolled “Brussels bureaucrats” spewing out unwanted regulations is false. Bureaucrats may draft it, but European legislation has to be approved both by the Council and usually by the European Parliament – composed of elected and accountable politicians.

The Council consists of government ministers from each member state, and EU legislation cannot be adopted without the approval of at least a 72% majority of member states’ votes in the Council or, for sensitive matters such as tax, unanimity. There is no question that European legislation can be adopted against the will of the EU’s member states.

Booth’s claim that “EU-sourced legislation now accounts for the bulk of regulatory costs throughout Europe, accounting for an average two-thirds of the total cost of regulations imposed on any of the member states’ economies” is contradicted by the British Chambers of Commerce, who should know a thing or two about how regulation affects businesses, which indicates that EU regulation actually accounted for a tiny 0.1% proportion of regulatory costs on business in 2007-8.