Industry voices concerns over co-regulation

Date: 26/10/00

By Peter Chapman

INDUSTRY has voiced concern that European Commission plans to give EU companies a greater role in the regulatory process could be undemocratic and result in extra burdens on business instead of less.

President Romano Prodi and a trio of Commissioners are working on separate proposals which would shift the emphasis from EU legislation towards industry self-regulation and non-binding recommendations.

The move follows calls at the Cardiff and Lisbon summits for law-makers to consider more flexible ways of policing industry. The Commissioners also argue that greater regulatory freedom is needed for business to thrive in the new high-tech global economy.

One key concept attracting growing support within the institution is for the EU to rely more on 'co-regulation', a system under which stated policy goals such as privacy or consumer protection are achieved through voluntary schemes devised by industry. These are backed up by political oversight, with legal sanctions only invoked if things go wrong. One example of this approach is the deal struck with the car industry two years ago under which manufacturers pledged to cut carbon dioxide emissions from their vehicles.

Enterprise Commissioner Erkki Liikanen and consumer affairs chief David Byrne's proposals are the furthest advanced, with single market supremo Frits Bolkestein's lagging slightly behind.

In an internal policy paper, Liikanen says co-regulation is a key option "to be explored", pointing out advantages of this approach in areas where pure self-regulation may not work or where binding legislation may take too long to adopt or be too unwieldy.

Industry groups, including European employers' federation UNICE and the American Chamber of Commerce (Amcham), which represents US firms in the EU, have generally welcomed this approach, pointing out that companies have been working hand-in-hand with governments in many sectors for years. But they warn that co-regulation, if abused, could result in new requirements being foisted on firms before they have been subjected to a formal review process.

Miguel Pestana, chairman of Amcham's task force on alternative regulation, insisted there must be formal "processes" established at the EU level to ensure all sides in any given regulatory debate, from industry to MEPs and governments, have a voice. "We recognise that alternative approaches to regulation have validity on a case-by-case basis. But we want to see a discussion at this stage on the issues that need to be addressed. If this issue is solved it will enhance their credibility and viability in the future," he said.

Industry groups are far less enthusiastic about a separate co-regulation scenario being developed by Byrne. He wants to establish guidelines for member states on how Internet-based firms could devise voluntary codes of conduct to boost consumer confidence, and has set up a core group of specially-invited firms and consumers to discuss the details of the proposal.

Byrne describes the system as "innovative and pioneering" and European consumer group BEUC has welcomed the move, arguing that it will add extra credibility to industry's own plans. But firms complain that the Commission has had too much influence over the shape of the guidelines, and that participation in the process has been limited to a small, unrepresentative number of interest groups.

They also question the need for EU-level or national interference in cases where industry is trying to seek solutions applicable on a global level. "More and more, industry is opposed to this scheme," said Hans Glatz, a senior member of the Global Business Dialogue on Electronic Commerce, an international forum of top firms.

Industry has voiced concern that European Commission plans to give EU companies a greater role in the regulatory process could be undemocratic and result in extra burdens on business instead of less.