ECCJ: Could you please give readers some background information on the European Commission’s (EC) Better Regulations agenda?
Paul de Clerck: The EC began working on what is now called the Better Regulation (BR) agenda about ten years ago. The process started with focusing on reducing unnecessary administrative burdens, but over time shifted towards reducing regulatory burdens. What we now see is that it has developed into a full blown attack on potentially every new piece of regulation, from the perspective that it could bring an added cost for business and the EC is now testing almost all regulatory processes and initiatives with impact assessments. Performing impact assessments would make sense, and lead to actual better regulation, if they were done in a nonbiased way, looking at the social, environmental and financial costs altogether. But the EC is only looking at the cost for businesses, and if this cost is considered too high, the regulation is redrawn or weakened.
Furthermore, the BR agenda has a set of processes in place, one being the Refit process, or Refit work plan, that’s basically fitness checks on existing regulation: every year the EC looks at 100-150 pieces of regulation and starts a process to see what needs to be adapted. In principle there is nothing wrong with looking at regulations once in a while, because they can become outdated and then they need adapting, but what we see is that this is again done from a perspective of reducing costs for businesses. Unfortunately, the Refit process has already led to a number of regulations, from environmental areas for example, being weakened or redrawn.
ECCJ: How does Better Regulation impact CSR?
Paul de Clerck: BR impacts CSR indirectly, because CSR itself is usually not resulting from regulation at EU level, and most CSR policies of the EC are voluntary. The indirect impact is quite big though, because what the EC calls a better regulation approach we see as a deregulation approach. And deregulation can take place in different ways, it can mean retracting regulation or weakening it, but it can also mean replacing it with voluntary policies. Currently, the EC is proposing more and more voluntary guidelines for business sectors, under the BR agenda, which only reinforces this voluntary CSR approach.
ECCJ: What about its impact on corporate accountability?
Paul de Clerck: Let’s take Non-Financial Reporting (NFR) for example, the most significant piece of corporate accountability regulation we achieved over the last years: with the new BR agenda, I highly doubt this would have been possible.
The EC now has a Vice President on BR, Commissioner Timmermans, next to Junker the most powerful Commissioner, and he basically has to approve every new initiative. What’s more, the whole structure of the Commission is now much more centralised, with five Vice Presidents approving what the other Commissioners are doing. With this new structure in place, what happened in the case of NFR, when Barnier (former EC Vice-President for Internal Market and Services) decided to go ahead even though other Commissioners did not agree, is not possible anymore.
If we were trying to get NFR passed right now, the directive would need approval from a higher level first, and from the start the extra costs it brings to businesses would be discussed. Of course NFR leads to higher costs because companies have to closely monitor their human rights impacts and report on them. Thus from the very start of the process, NFR would have been much harder to pass, and even if it would have passed during the current Commission, it would have been weakened even further.
The EC now has a work-plan of ten priorities announced at the launch of the Juncker Commission. Things like corporate accountability are not among these priorities, and if your issue is not among them, it is very difficult to get any new legislative proposal through. Again, these ten priorities are based on the BR agenda (Juncker said the EC should do big things, while small things should be left to the EU Member States), where regulating companies and their environmental impacts is clearly not included as a priority.
To give one example, relevant for both human rights and environmental issues, when the EC announced its work plan for 2015 a year ago, one issue which was in the pipelines for EU institutions at the moment, with the European Parliament already working on it, was stricter limits for cars emissions. This is something that would prevent tens of thousands of people from dying. For some reason the new EC does not see this as an important issue, and as a consequence the initiative has disappeared completely. On the other hand, the Volkswagen scandal is all about companies violating the existing limits for NOx emissions, so we can clearly see how BR, which stopped stronger limits being set in place, is also detrimental to the environment and people’s health - which is a human rights violation.
ECCJ: How does the BR agenda affect the power relation between the EC and the European Parliament?
Paul de Clerck: In May (2015), The EC made a proposal for an interinstitutional agreement with the Parliament and the Council of the European Union as part of the BR agenda. In reality, with this proposal, the EC is trying to takeover power from the Parliament and Council.
Normally, the EC has legislative initiative, sending proposals forward to the EP and Council. The latter two bodies have to agree on these proposals, but they can also change, strengthen or weaken them. This means that once a proposal is being launched, it is out of the hands of the EC. What the EC now wants though, is to increase its level of control. In order to achieve this, it reduced its work-plan, together with the number of proposals they are making, pulled-out legislation already being discussed (like they did with the emissions limits last year), and proposed that whenever the Council or the Parliament make changes to a proposal, the EC has the right to perform an impact assessment. This impact assessment would look into additional costs for companies created by the proposed changes.
If this becomes a reality, we will be in a situation where the Parliament and Council, the two democratically elected institutions, would reach a compromise, but have to send legislation back to the EC and its impact assessment board, an unaccountable bureaucratic institution. In my view this would undermine the democratic functioning of the EU, because the Parliament and Council are the democratically appointed bodies and not the impact assessment board. It’s good to do an impact assessment at the begging of the process, but the EC wants to have continuous impact assessments to avoid any added costs for companies.
ECCJ: Won’t constantly sending back legislation to the impact assessment board bring with more bureaucracy?
Paul de Clerck: It does bring more bureaucracy, it does make the process slower, but it also stops regulation. And it’s not just the impact assessments, the EC also wants to have consultations at all levels of the process. Of course, in essence, consultations are good, but when you are having them this often, the only ones who will be able to follow up - and thus influence the legislative process - are the business lobby groups. Civil society will focus on a specific legislative proposal, campaign around it and possibly have an impact, but they do not have the capacity to follow up across the board.
What we are also witnessing, after only a year of the Junker Commission, is that Commission DGs (Directive Generals) are just sitting on their hands, because they don’t know what they can do. When their work area is not among the ten priorities, they do not have the OK to develop legislation. And this is why on a lot of issues, including health issues, chemical issues or consumer protection issues, initiatives which were already started, have now been stopped.
Civil servants from DGs are starting to complaint and say: we’re just sitting here and we can’t do anything. The Parliament is complaining: we can’t do anything, we are making own-initiative reports all the time, because there are no legislative proposals coming. Thus, different institutions are clearly signalling that this Commission is either stopping or slowing down a lot of measures necessary to protect citizens, to protect the environment, to protect workers, to protect people’s health. And that is very closely related to the BR agenda and to the political culture established by it: one in which governments should do less and leave it up to companies to regulate themselves.
ECCJ: What should we be on the lookout for in the near future?
Paul de Clerck: Well, for instance, there’s the NFR Directive. It was only established recently and it will be already subjected to a review in the next year, so there is a risk that it might be weakened, even if it is not yet being transposed in most of the countries.
Another thing is the interinstitutional agreement between the EC, the Parliament and the Council. Negotiations are on-going and it’s still difficult to predict how long they will take. Their initial intention was to finish before the end of the year, but that’s not very likely anymore. It’s looking more like negotiations will end during the first half of 2016. When that happens, the Parliament and the Council will need to vote on the proposed negotiated deal. And that’s something I think we need to look into because we will then be able to see what kind of elements were introduced and how dangerous they are for environmental protection, corporate justice, or development issues.
One of the things in the EC’s proposal that is very dangerous is that the Commission wants to exclude small and medium sized enterprises from almost all new standards. And small and medium sized enterprises are 80-90% of all our companies. So that basically means they want to exclude the majority of companies from upholding new standards, for example, on the use of chemicals, or food safety, or workers’ rights. But when you buy a product in a shop and it has chemicals in it, you don’t care whether it is produced by a big chemical company or a small one, the impact on your life, or your body is the same. What’s worse, when the vast majority of companies will be exempted, what will the big companies say? They will say this is unfair competition, so we will need to bring down standards for big companies as well to level the playing field. We again see how the BR mechanisms work to actually bring down standards and prevent any kind of better standards from being installed.
ECCJ: How could ECCJ members get more involved in monitoring or opposing the Better Regulation agenda?
Paul de Clerck: There are several things that ECCJ members could do, and I think it is important to get involved, even if it’s not the core business of ECCJ groups.If the BR agenda is implemented, ECCJ members will not be successful in their core business anymore, which is supporting regulatory human rights standards for companies. That will simply not be possible because the EC will consider them too expensive for companies, and they will insist on letting companies take a voluntary approach.
At a European level what we’ve done last spring is initiate the Better Regulation Watchdog Network. The network is now comprised of 16 European and national organisations, working together in showing what the BR agenda is really about, and trying to stop its harmful impacts. The network includes all the major trade unions, a lot of the big environmental organisations, development groups and corporate accountability organisations (ECCJ among them).
So joining or supporting the Better Regulation Watchdog is one way to contribute, but what’s even more important is to work at national level, because the BR agenda is reflected at national level as well. In some countries, like the UK or the Netherlands, BR is very strong; in fact, the UK and the Netherlands are some of the countries pushing the EC on this matter. Right now, in a lot of Member States the argument of BR and creating less administrative burdens for companies is used to justify a lack of state regulation for companies anymore.
Lastly, I think there is a very close link between BR and the TTIP negotiations. TTIP contains an element called regulatory cooperation, which is closely linked to BR. TTIP’s regulatory cooperation comprises of the same kind of arguments like BR: enhanced impact assessments, looking at what impacts any new regulatory proposals have on companies, setting all kinds of obstacles for new regulation etc. And if all these elements are part of the negotiations with the US, then opposing TTIP is a way ECCJ members can fight against the broader dangers brought on by Better Regulation.
Paul de Clerck is Head of the Economic Justice Team in Friends of the Earth Europe, an ECCJ and Alter-EU Steering Group member and a leading member of the Better Regulation Watchdog
Better Regulation Watchdog website: http://www.betterregwatch.eu/