EU Adopts 'Think Small First' Regulation Agenda

by Ulrika Lomas, LawAndTax-News.com, Brussels

22 February 2012

At its meeting on February 20-21, the European Council adopted conclusions on a future smart regulation agenda with a strong end-user focus, in that it will seek wherever possible to exempt small businesses from European Union (EU) legislation, or to introduce special regimes so as to minimise the regulatory burden on them.

In a report to the European Council and the European Parliament (EP) in November last year, the European Commission (EC) had announced stronger means to ensure the input of micro-enterprises and small and medium-sized enterprises (SMEs) to the formulation of new EU initiatives.

The EC emphasized that SMEs play a key role in shaping Europe's economy, accounting for 99% of enterprises, of which 92% are micro-enterprises with less than ten employees and a turnover or balance sheet total equal to or less than EUR2m (USD2.65m). They provide more than two thirds of private sector employment and play a key role in economic growth, employment and sources of innovation.

In its conclusions, the Council emphasized that regulation is necessary for achieving the policy goals of the EU, and that intended regulatory goals should not be jeopardised by the reduction of documentation and reporting obligations. However, it also recognised that sometimes regulation imposes unnecessary burdens on end-users, especially SMEs and micro-enterprises, citizens and consumers.

Therefore, the Council supported the intention of the EC to renew its efforts to avoid and reduce unnecessary burdens on SMEs and microenterprises, for instance through lighter regulatory regimes and risk-based approaches where appropriate, based on a case-by-case assessment, and by involving SMEs and micro-enterprises in the screening of the regulation.

In addition, end-users should be kept in mind during every step of the policy-making process by, for example, consistently applying the ‘Think Small First’ principle; and they should be involved in improving the policy-making process.

The Council also stressed, however, that the agenda for smart regulation needs to be further improved if the EU is to deliver the objectives for sustainable growth set out in the Europe 2020 Strategy, and called on the EC to further concentrate its efforts to reduce the overall regulatory burden.

It suggested that the EC could further improve the smart regulation agenda, by basing regulations on transparent criteria, and by ensuring that evaluations focus on particularly burdensome regulation chosen on the basis of inputs from end-users. The Council also urges the Commission to identify excessive burdens, inconsistencies, and obsolete or ineffective measures, and ensure that relevant and detailed information is publicly and easily available at a single access point.

The EC has previously confirmed that around 200 legal acts, that bring substantial benefits for businesses, have already been adopted with the ‘Simplification Rolling Programme’. With the Action Plan for Administrative Burden Reduction (APABR), the EC also claims to have tabled reduction proposals equal to EUR39bn for businesses.

In response, the Council has called on the EP to adopt the relevant pending proposals in the APABR before the end of 2012 and requested the member states to implement the adopted proposals in a timely fashion. The EC, on the other hand, is to take stock of the results of the APABR and to report on the development and implementation of the future efforts for smart regulation by the end of 2012.

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