4 Free movement of products within the
EU
| (28374)
6313/07
COM(07) 36
+ ADD 1
+ ADD 2
| Draft Regulation laying down procedures relating to the application of certain national technical rules to products lawfully marketed in another Member State and repealing Decision 3052/95/EC
Commission staff working document: Impact Assessment of the proposal
Executive summary of the Impact Assessment
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| Legal base | Articles 37 and 95 EC; co-decision; QMV
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| Document originated | 14 February 2007
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| Deposited in Parliament | 19 February 2007
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| Department | Trade and Industry
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| Basis of consideration | EM of 23 February 2007
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| Previous Committee Report | None
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| To be discussed in Council | No date set
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| Committee's assessment | Politically important
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| Committee's decision | Not cleared; further information requested
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Background
4.1 The following provisions of the EC Treaty are relevant to
this proposal:
- Article 14, which provides that the EC's internal market is
to comprise an area without internal frontiers in which the free
movement of goods, persons, services and capital is ensured in
accordance with the provisions of the Treaty.
- Article 28, which (subject to Article 30) prohibits
quantitative restrictions on imports between Member States and
prohibits all measures having equivalent effect.
- Article 30, which empowers Member States to impose
restrictions on imports on certain specified grounds including
public morality, public policy, public security or the protection
of the health and life of humans, animals or plants.
- Article 37, which provides for the establishment
of the Community's common agricultural policy and authorises the
Council to make regulations for that purpose.
- Article 95, which authorises the Council to adopt
measures for the approximation of national laws, regulations or
administrative actions which affect the functioning of the internal
market.
4.2 There is existing EC legislation which requires
all Member States to comply with common requirements ("harmonised
rules") for certain products, such as animal and human food
and railway rolling stock. But most products are not subject to
harmonised rules and each Member State is free to have its own
"technical rules" about, for example, the weight, size,
composition, labelling and packaging of products manufactured
in its area.
4.3 The "principle of mutual recognition"
applies to products manufactured in another Member State. The
principle is based on Articles 28 and 30 of the EC Treaty and
the case law of the European Court of Justice (ECJ). The principle
of mutual recognition is that, unless there are exceptional reasons,
a Member State ("the State of destination")may not forbid
the sale of a product in its territory, even if it is manufactured
according to technical rules that differ from those of the State
of destination, if the product:
- is lawfully marketed in one
or more other Member States; and
- is not subject to EC legislation creating harmonised
rules.
Exceptionally, the State of destination may prohibit
the import if it can show that restrictions on the sale are justified
on the grounds specified in Article 30 or there are overriding
requirements of general public importance recognised by the case
law of the ECJ (such as the prevention of tax evasion or the protection
of the environment).
The Commission's proposal
4.4 The document comprise an explanatory memorandum;
a draft Regulation; an Impact Assessment (ADD 1) which provides
detailed information about what the Commission sees as the defects
in the present arrangements, an analysis of the policy options,
the results of the Commission's public consultations; and a summary
of the Impact Assessment (ADD 2).
4.5 In the Commission's view, there are fundamental
weaknesses in the Community's present arrangements because:
- many businesses and national
authorities are unaware of the principle of mutual recognition
;
- there is legal uncertainty about the products
to which mutual recognition applies;
- there is widespread uncertainty about the burden
of proof — businesses and national authorities often believe
that the onus is on the producer to show that the imported product
affords a level of protection equal to that required for an equivalent
domestic product, whereas the onus is on the national authority
to prove that the restriction on the import is justified; and
- it is difficult for businesses to find out in
advance whether the national authority of another Member State
will apply the principle of mutual recognition to a product.
4.6 In 2004, the Commission consulted Member States,
businesses and consumer organisations about three choices:
- continue the present arrangements
without change; or
- improve the arrangements without new EC legislation;
or
- have a new EC Regulation to clarify the position.
Over 60% of the respondents believed that a new Regulation
is necessary.
4.7 ADD 1 contains the Commission's analysis of the
following policy options:
- Option 1 — do nothing.
- Option 2 — the non-regulatory option (the
Commission would develop a website containing a list of all the
products to which the principle of mutual recognition applies.
The Commission would also screen national technical rules to help
determine how best the movement of goods might be organised through
voluntary action by national authorities).
- Option 3 — the regulatory option (a new
Regulation would list the products to which mutual recognition
applies; define the rights and obligations of national authorities
and prospective exporters; place the onus on States of destination
to justify any restrictions on import; and require Member States
to provide readily available information about their technical
rules through "Product Contact Points").
- Option 4 — a combination of the regulatory
and non-regulatory approaches (the only difference from option
3 is that the list of products to which mutual recognition applies
would appear on a website, not in the Regulation.
The Commission's preference is for option 4.
The main provisions of the draft Regulation
4.8 Article 2 provides that the Regulation is to
apply where a Member State decides, on the basis of a "technical
rule", to ban or require the modification of industrially
manufactured products or agricultural products or fish products
which are lawfully marketed in another Member State. "Technical
rule" is defined as a law, regulation or administrative provision
of a Member State, compliance with which is compulsory for the
marketing of a product in the territory of the Member State, and
which specifies the characteristics required of the product or
imposes any other requirement on the product for the purpose of
protecting consumers or the environment.
4.9 Article 4 requires a national authority which
intends to ban or require the modification of an imported product
to send the producer a notice specifying the technical rule on
which the decision would be based and giving evidence of why the
intended decision is proportionate and why it is justified on
the grounds listed in Article 30 of the EC Treaty or by reference
to another overriding requirement in the public interest. The
producer is given 20 days to comment. The national authority must
then send the producer notice of a firm decision to ban or require
modification of the product and tell the producer how to appeal
against the decision.
4.10 Articles 7 and 8 require Member States to designate
one or more "Product Contact Points". Product Contact
Points would, on request, supply information about national technical
rules; contact details of national authorities; available remedies
in the event of a dispute between producers or distributors and
the national authorities; and details of organisations (other
than national authorities) which can give producers or distributors
practical assistance.
4.11 Article 10 requires Member States, on request,
to send the Commission a report on the implementation of the Regulation
and information about any notices of intention or decision to
ban or require the modification of products. (Article 12 repeals
the existing requirement to report national technical rules.)[12]
Article 10 also requires the Commission to make a report to the
European Parliament and the Council on the implementation of the
Regulation within five years of its commencement.
4.12 The Commission estimates that it would cost
€400,000 to set up the website list of products to which
mutual recognition applies; the running costs would be about €30,000
a year. The Commission also estimates that the Regulation would
not add to the costs of producers or distributors and would increase
the economic growth of the EC. Compliance with the Regulation
would increase the administrative costs of Member States by an
unquantified amount.
The Government's view
4.13 The Minister for Trade, Investment and Foreign
Affairs at the Department of Trade and Industry (Mr Ian McCartney)
tells us that:
"In principle, the Government supports any measure
which aims to facilitate trade within the EU as this will lead
to greater choice and value for consumers, and greater prosperity
for businesses. The Government would like to see the Mutual Recognition
principle being applied correctly and it is clearly preferable
for businesses to have greater certainty about which national
technical rules exist and how they are applied. The Government
therefore supports the principles behind this Regulation.
"However, it is also important for Member States
to be able to take action swiftly, especially when there is a
genuine threat to public safety. Accordingly, more analysis will
have to be carried out in order to ensure that this Regulation
does not undermine these rights. At present, it is not clear how
the provisions laid down in this Regulation, especially with regard
to the procedure that must be followed by authorities and the
twenty-day standstill period, will interact with national measures.
This is an issue which will benefit from further analysis and
from consultation with market surveillance authorities and other
stakeholders. The Government therefore intends to consult on the
proposal."
4.14 The Minister adds that the Government's consultations
are just beginning. The Government's initial view is that the
Regulation would impose no costs on business and should, indeed,
provide substantial benefits to it. For this reason, the Government
will not be completing a Regulatory Impact Assessment of the proposal.
Finally, the Minister tells us that the German Presidency hopes
to obtain agreement to the Regulation at the Competitiveness Council
on 21-22 May.
Conclusion
4.15 We recognise the benefits of reducing uncertainty
about the application of the principle of mutual recognition and
removing unjustified obstacles to the free movement of goods within
the internal market. We understand, therefore, why the Government
supports this proposal in principle. We welcome the Government's
intention of obtaining the views of businesses, consumers' organisations
and others before it reaches conclusions. We also understand why
it believes some aspects of the draft Regulation require further
analysis.
4.16 Accordingly, we shall keep the draft Regulation
under scrutiny pending information from the Minister on:
- the results of the public
consultations;
- the conclusions of the Government's further
analysis of the proposal;
- the progress of the negotiations; and
- information about who will be the national
authorities and Product Contact Points in the UK.
12 Council Decision 3052/95/EC. Back
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