© Pexels/Kampus Production

A mandatory competitiveness check for European legislation

The European Economic and Social Committee (EESC) demanded in its recent opinion that EU legislation should take greater account of the competitiveness of European companies. The BDI has taken a closer look at the EESC’s proposals.

For some time now, the business community has been calling for competitiveness to (once again) play an equal role in EU decision-making alongside climate, environmental and social policy objectives. From industry's point of view, many of the more recent legislative projects from Brussels, such as the Fit for 55 package, the EU Corporate Sustainability Due Diligence (CSDD) Act, or the Taxonomy Regulation, have taken too little account of the impact on competitiveness. the latest economic upheavals caused by the Covid pandemic and Russia's war against Ukraine have given new impetus to this debate.

At the request of the Czech Council Presidency in 2022, the EESC has drawn up concrete proposals for how to improve the situation and published them in a recent opinion. This was triggered by the report of the Conference on the Future of Europe. The central demand: the EU should subject all new legislative initiatives to a mandatory "competitiveness check" to strengthen the international competitiveness and resilience of the European economy. Commission President Ursula von der Leyen took up this demand and announced the introduction of a "standard competitiveness check in our regulation". The EESC has now made proposals for its practical implementation.

Need for improvements in impact assessments

In principle, the EU Commission must carry out impact assessments on all legislative initiatives that are likely to have a significant economic, social or environmental impact. The Treaties attach the same importance to economic aspects as to social and environmental ones. In addition, the Commission has an extensive internal "better regulation toolbox" that sets out concrete rules for the preparation of impact assessments.

However, as the EESC rightly points out, there is a need for improvement in the implementation and enforcement of these rules. This has also been confirmed by the Commission's own Regulatory Scrutiny Board (RSB), which checks the quality of impact assessments. Impacts on competitiveness and especially on SMEs are currently not adequately considered.

The EESC's proposals in detail

The EESC therefore proposes the introduction of a competitiveness check at two levels: at the technical or working level through improved impact assessments and at the political level through a "specific EU competitiveness agenda".

Better impact assessments

The EU's competitiveness depends on many different aspects: sectoral competitiveness, SMEs and innovation are among them, as well as competition, the internal market, trade, and investment. Instead of analysing these areas in isolation - as has been the case so far - impact assessments need to look at competitiveness as a whole and further use the full range of better regulation tools available.

Agenda for competitiveness

At the political level, the EESC calls on the EU Commission to develop a specific EU competitiveness agenda to establish a stronger competitiveness "mindset". This agenda should focus on the long-term and should advance the following fundamental priorities:

  1. Develop the internal market and reduce market barriers
  2. Improve investment and access to finance and funding
  3. Facilitate external trade and cooperation
  4. Promote innovation
  5. Top-level human resources and research; improve skills through education, training, and lifelong learning
  6. Speed up approval procedures
  7. Reduce administrative burdens, lowering compliance costs and incentive-oriented tax systems

The BDI supports the EESC's demands

Industry considers the EESC's proposals to be reasonable. Commission impact assessments must capture the effects of EU legislative initiatives on competitiveness in a more systematic and holistic way. The European economy can only remain internationally competitive with intelligently designed legal frameworks. A revision of the instruments for better regulation is therefore necessary. The EESC opinion offers some relevant considerations in this regard.

The idea of subjecting all EU legislative proposals to a political competitiveness check is also in line with BDI’s demands. In addition to the ambitious climate and environmental policy objectives, strengthening competitiveness must (once again) become an overriding political “leitmotif” of European policy. Against the backdrop of current economic developments, this seems more urgent than ever. The agenda proposed by the EESC provides important impulses for implementation.