It may not appear so, with an avalanche of EU regulations being announced on a daily basis, but the point of the European Union is to open up trade between EU member states, and between the EU and the rest of the world.
Of course, the European Commission justifies coming up with ever new harmonization of regulation as a method to open up trade between member states. However, it thereby omits that there are other ways to do so. The most important way is simply to arrange that EU member states recognize and accept each other’s regulations as equivalent. At the end of the day, trade is about trust. German architects and corresponding regulations should be trusted in Romania, a Croatian car should be trusted in Ireland, and Romanian meat should be trusted in Sweden. Voluntary industry standardization and companies protecting their brand can go a long way towards addressing legitimate concerns here.
Sure, some EU coordination may be needed now and then, and in some instances, a single piece of regulation for the whole EU makes sense, but often, that’s not the case.
One problem when opting for the method of harmonization is that it is hard to avoid a ‘one size fits all,’ or rather ‘one size fits none’ approach. A second big disadvantage is that it is much harder to get rid of an EU rule than it is to get rid of a national one.
Neglecting the core business
To be fair, in the past, the European Commission has basically recognized that its regulatory machine is out of control: for example, when it launched its so-called “better regulation” agenda in 2014. Interestingly, Dutch EU Commissioner Frans Timmermans, now known for his climate zealotry, was the driver behind this agenda, proposing that “sunset clauses” be added to regulation—clauses foreseeing an automatic ending date for a certain regulation, organizing reviews to cut EU red tape, and incentivising member states not to “gold plate”—thereby imposing excessive national requirements.
Nothing much came out of this, apart from perhaps a temporary drop in the pace of new EU lawmaking. The EU Commission does subject its regulations to “regulatory impact assesments,” but according to an analysis by think tank ECIPE, “indirect and long-term costs are often neglected, marginalised or entirely ignored” during this exercise.
An investigation by the Financial Times now finds that the EU Commission of Ursula von der Leyen is also dropping the ball when it comes to the EU’s core business. According to the newspaper, “EU Commission action against internal market infringements by member states fell 80% from 2020 to 2022, the first three years of von der Leyen’s term as president, when compared with the corresponding period under her predecessor Jean-Claude Juncker.” It also notes that “Barriers to retail businesses have increased in countries including Hungary, Germany, Belgium & Poland since 2018, with France having the most restrictive conditions. These include extra hurdles on sourcing goods from other member states.”
This should perhaps not surprise, given that von der Leyen also wants to water down EU state aid policing, in response to the American “Inflation Reduction Act,” which grants fiscal support for companies that make “sustainable” investment.
Out of control EU regulation
One aspect of the EU’s regulatory approach which it is not abandoning is the so-called “precautionary principle,” which is even enshrined in the EU Treaties. The principle foresees that, as the EU Commission itself puts it, “where scientific data do not permit a complete evaluation of the risk, recourse to this principle may, for example, be used to stop distribution or order withdrawal from the market of products likely to be hazardous.”
Of course, in practice, there is never complete certainty about risk. As a result, the principle can be used to ban just anything. Coming up is a large update of EU chemical regulations. The EU Commission is keen to introduce a much more restrictive approach, basically lumping chemical substances together in groups, abandoning the current approach of scrutinising substance after substance, which it considers to be far too relaxed, even if it imposes a massive compliance cost on industry.
The European Environmental Bureau (EEB), an EU-funded green lobby group which has been pushing for this approach, estimates that 2,000 substances may ultimately fall within the scope of the new proposal, which would constitute the world’s “largest ever ban of toxic chemicals.”
One consequence is that it would hit more than a quarter of the chemical industry’s annual turnover of around €500 billion per year, but another is that other economic sectors would also be hit, such as the sector of natural, non-industrial products. In particular, natural oil industries with lots of small companies that are crucial for the economy of some of Europe’s rural regions may be affected. The effects would then trickle down to Bulgarian rose harvesting for rose oil, Italian Bergamot oil production, Spanish lemon oil production, and most prominently, France’s famous lavender oil sector.
The industries fear that the new EU approach may force them to impose bold black-and-red warning labels on their products. French lavender producers can see the logic of mentioning things like potential allergy risk, but they refuse to put the kinds of dire labels that are also carried by cleaning products. The new approach could also see essential oils, like lavender oil, be labelled endocrine disruptors, which disrupt the body’s normal hormone patterns. This is being challenged as lacking “solid scientific criteria” by the European Federation of Essential Oils.
Particularly in the French region of Provence, people are up in arms against these plans, especially as local lavender farms have already been struggling financially for several years now. As a result, the French Senate has urged to protect essential oils from becoming “collateral damage” of the EU’s chemical regulation overhaul, requesting more scientific evidence. French Senator Jean-Michel Arnaud, who comes from the Provence region himself, considers 70% of Provence’s lavender production to be in danger if this is passed, and even warned that in a “worst-case scenario,” synthetic lavender derived from crude oil may end up overtaking the sale of natural oils. In sum, instead of combating supposedly harmful ‘chemicals,’ the EU’s brash approach may end up boosting their use.
Lack of flexibility
One solution, as requested by the sector, could be simply to requalify lavender and other natural products as agricultural products. EU regulators, however, rigidly disagree and want to register them as chemicals.
Fundamentally, the core of the problem is the EU’s adherence to the precautionary principle, which comes with a deeply unscientific intolerance for any risk. Peter McNaughton, a professor of pharmacology at the University of Cambridge, thinks that aspirin would not have been allowed back in the day if this principle had been applied to the matter, stating: “This drug has considerable adverse side-effects, and would never be licensed today. The benefits, however, are enormous and growing.” Unfortunately, this overly careful approach does not just threaten innovation, but also threatens the existence of trusted natural products that have been used since ancient Rome.
This is only one case of EU overregulation, but new statistics confirm how the EU regulatory machine really is getting ever more out of control. During the pandemic, EU law added an annual compliance burden of €550 million on companies, according to the German Regulatory Control Council. A BusinessEurope survey among global firms in 35 countries found that 90 percent of them consider the European Union to have become a less attractive place to invest than three years ago, blaming continuously high energy prices and increased regulation. The European Commission is very much in the driver seat here. Perhaps next year, EU leaders must reflect about all of this before reappointing the figurehead of the current EU approach, Commission President Ursula von der Leyen.
As the EU Neglects Its Core Business, EU Regulation Gets Out of Control
It may not appear so, with an avalanche of EU regulations being announced on a daily basis, but the point of the European Union is to open up trade between EU member states, and between the EU and the rest of the world.
Of course, the European Commission justifies coming up with ever new harmonization of regulation as a method to open up trade between member states. However, it thereby omits that there are other ways to do so. The most important way is simply to arrange that EU member states recognize and accept each other’s regulations as equivalent. At the end of the day, trade is about trust. German architects and corresponding regulations should be trusted in Romania, a Croatian car should be trusted in Ireland, and Romanian meat should be trusted in Sweden. Voluntary industry standardization and companies protecting their brand can go a long way towards addressing legitimate concerns here.
Sure, some EU coordination may be needed now and then, and in some instances, a single piece of regulation for the whole EU makes sense, but often, that’s not the case.
One problem when opting for the method of harmonization is that it is hard to avoid a ‘one size fits all,’ or rather ‘one size fits none’ approach. A second big disadvantage is that it is much harder to get rid of an EU rule than it is to get rid of a national one.
Neglecting the core business
To be fair, in the past, the European Commission has basically recognized that its regulatory machine is out of control: for example, when it launched its so-called “better regulation” agenda in 2014. Interestingly, Dutch EU Commissioner Frans Timmermans, now known for his climate zealotry, was the driver behind this agenda, proposing that “sunset clauses” be added to regulation—clauses foreseeing an automatic ending date for a certain regulation, organizing reviews to cut EU red tape, and incentivising member states not to “gold plate”—thereby imposing excessive national requirements.
Nothing much came out of this, apart from perhaps a temporary drop in the pace of new EU lawmaking. The EU Commission does subject its regulations to “regulatory impact assesments,” but according to an analysis by think tank ECIPE, “indirect and long-term costs are often neglected, marginalised or entirely ignored” during this exercise.
An investigation by the Financial Times now finds that the EU Commission of Ursula von der Leyen is also dropping the ball when it comes to the EU’s core business. According to the newspaper, “EU Commission action against internal market infringements by member states fell 80% from 2020 to 2022, the first three years of von der Leyen’s term as president, when compared with the corresponding period under her predecessor Jean-Claude Juncker.” It also notes that “Barriers to retail businesses have increased in countries including Hungary, Germany, Belgium & Poland since 2018, with France having the most restrictive conditions. These include extra hurdles on sourcing goods from other member states.”
This should perhaps not surprise, given that von der Leyen also wants to water down EU state aid policing, in response to the American “Inflation Reduction Act,” which grants fiscal support for companies that make “sustainable” investment.
Out of control EU regulation
One aspect of the EU’s regulatory approach which it is not abandoning is the so-called “precautionary principle,” which is even enshrined in the EU Treaties. The principle foresees that, as the EU Commission itself puts it, “where scientific data do not permit a complete evaluation of the risk, recourse to this principle may, for example, be used to stop distribution or order withdrawal from the market of products likely to be hazardous.”
Of course, in practice, there is never complete certainty about risk. As a result, the principle can be used to ban just anything. Coming up is a large update of EU chemical regulations. The EU Commission is keen to introduce a much more restrictive approach, basically lumping chemical substances together in groups, abandoning the current approach of scrutinising substance after substance, which it considers to be far too relaxed, even if it imposes a massive compliance cost on industry.
The European Environmental Bureau (EEB), an EU-funded green lobby group which has been pushing for this approach, estimates that 2,000 substances may ultimately fall within the scope of the new proposal, which would constitute the world’s “largest ever ban of toxic chemicals.”
One consequence is that it would hit more than a quarter of the chemical industry’s annual turnover of around €500 billion per year, but another is that other economic sectors would also be hit, such as the sector of natural, non-industrial products. In particular, natural oil industries with lots of small companies that are crucial for the economy of some of Europe’s rural regions may be affected. The effects would then trickle down to Bulgarian rose harvesting for rose oil, Italian Bergamot oil production, Spanish lemon oil production, and most prominently, France’s famous lavender oil sector.
The industries fear that the new EU approach may force them to impose bold black-and-red warning labels on their products. French lavender producers can see the logic of mentioning things like potential allergy risk, but they refuse to put the kinds of dire labels that are also carried by cleaning products. The new approach could also see essential oils, like lavender oil, be labelled endocrine disruptors, which disrupt the body’s normal hormone patterns. This is being challenged as lacking “solid scientific criteria” by the European Federation of Essential Oils.
Particularly in the French region of Provence, people are up in arms against these plans, especially as local lavender farms have already been struggling financially for several years now. As a result, the French Senate has urged to protect essential oils from becoming “collateral damage” of the EU’s chemical regulation overhaul, requesting more scientific evidence. French Senator Jean-Michel Arnaud, who comes from the Provence region himself, considers 70% of Provence’s lavender production to be in danger if this is passed, and even warned that in a “worst-case scenario,” synthetic lavender derived from crude oil may end up overtaking the sale of natural oils. In sum, instead of combating supposedly harmful ‘chemicals,’ the EU’s brash approach may end up boosting their use.
Lack of flexibility
One solution, as requested by the sector, could be simply to requalify lavender and other natural products as agricultural products. EU regulators, however, rigidly disagree and want to register them as chemicals.
Fundamentally, the core of the problem is the EU’s adherence to the precautionary principle, which comes with a deeply unscientific intolerance for any risk. Peter McNaughton, a professor of pharmacology at the University of Cambridge, thinks that aspirin would not have been allowed back in the day if this principle had been applied to the matter, stating: “This drug has considerable adverse side-effects, and would never be licensed today. The benefits, however, are enormous and growing.” Unfortunately, this overly careful approach does not just threaten innovation, but also threatens the existence of trusted natural products that have been used since ancient Rome.
This is only one case of EU overregulation, but new statistics confirm how the EU regulatory machine really is getting ever more out of control. During the pandemic, EU law added an annual compliance burden of €550 million on companies, according to the German Regulatory Control Council. A BusinessEurope survey among global firms in 35 countries found that 90 percent of them consider the European Union to have become a less attractive place to invest than three years ago, blaming continuously high energy prices and increased regulation. The European Commission is very much in the driver seat here. Perhaps next year, EU leaders must reflect about all of this before reappointing the figurehead of the current EU approach, Commission President Ursula von der Leyen.
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