The bumpy road to better EU policies

The EU’s system for balancing economic, social and environmental factors in legislative proposals has received poor marks in a new assessment. François Le Goff asks whether the process can ever be made fully transparent or objective
EU policy making has a reputation for being opaque and undemocratic with non-elected officials taking important decisions behind closed doors.
In 2003 the European commission introduced a new procedure intended to counter these charges. Henceforth, its proposals would be backed by extensive impact assessments, providing greater transparency and coherence for legislative and non-legislative EU decision-making (see figure 1).
The idea behind impact assessments is to evaluate a range of scenarios to determine the most cost-effective policy option for each proposal. They are also meant to strike a balance between economic, social and environmental impacts.
But an EU study carried out by consultancy The Evaluation Partnership shows that after four years and more than 150 impact assessments, including 21 for environmental proposals, the new procedure has not achieved what it was set up to do.

The study reviewed the procedure from its inception until the end of 2006. Interviews with officials from the commission, member states and the European parliament reveal a “widespread lack of trust” in the objectivity of assessments. They say assessments are too often biased and their quality is unsatisfactory.
The problem is that the process is often launched only after important decisions on the preferred policy option have already been taken internally, the study shows. And assessments are seen within the commission as a bureaucratic requirement primarily aimed at justifying whatever it is that officials want to propose (see figure 2).
An analysis of 20 assessments carried out since 2003 shows mixed results. Half of them show some deficiencies, often analysing in detail only the preferred option.
It says the commission’s analysis of economic, social and environmental impacts is balanced. But because of the difficulty quantifying environmental impacts, the economic analysis is often more developed and concrete (see figure 3).
The study also found a significant difference in quality depending on proposal type. Assessments of legislative proposals and action plans tend to be more thorough than for non-legislative proposals or spending programmes, it says.
On the other hand the study says its findings must be taken with a pinch of salt as the new impact assessment procedure is still at an early stage and final judgments about its success or failure cannot be made yet. “New tools and processes are not introduced overnight and building up the necessary capacity to use them effectively takes time”, it says.

Stakeholders agree with the study’s criticisms of the impact assessment process but also believe things are beginning to improve. Representatives of some of the main groups with an interest met in Brussels to discuss the study on 28 June.
For environmental groups the main priority is to strengthen impact assessments’ environmental element, which originate from the sustainable development strategy agreed by EU leaders in Gothenburg in 2001.
But industry groups think the procedure should be primarily a safety catch for avoiding unnecessary or unjustified costs and administrative burdens on businesses, in line with the EU’s better regulation drive.
John Hontelez, secretary general of green group EEB, says the commission is more sensitive to industry arguments about costs than environmental considerations. This is because economic impacts are more easily quantifiable, he says. It also reflects the great emphasis given to competitiveness issues in the Lisbon agenda for growth and jobs.
The EU thematic strategy on air quality proposed in 2005 is a perfect example, Mr Hontelez says. The impact assessment presented three policy scenarios with different levels of ambition. All showed a clear net benefit to society, but the commission decided in favour of a less ambitious scenario after industry complained about costs, he says.
“Costs are often vastly exaggerated”, Mr Hontelez says, citing a study that evaluated retrospectively several impact assessments in the US. The study shows that costs had been over-estimated in two thirds of cases.
EU business associations insist that precisely the opposite is the case: costs are neglected in impact assessments, they say. There is a lack of reliable data in this area, particularly regarding scenarios other than the commission’s preferred ones. “Whether or not we agree with alternative scenarios it is good to have facts”, says Erik Berggren of the trade association Business Europe.
For Sigrid de Vries of carmakers’ association Acea, the commission must be more transparent about the way the data is compiled, where it comes from and how it is used.
Ms de Vries cites commission proposals for stricter Euro 5 and 6 emission standards for cars approved in May. She says the assessment’s cost estimates were unrealistic and the commission did not explain how it came to its result. There are only a few research institutes in Europe that can produce such data but it did not come from one of them, she says.
Environmentalists make similar criticisms on this point. EEB noted a “severe lack of transparency” regarding the thematic strategy on waste. Many policy options were ignored and their rejection was based on “unjustifiable assumptions”, it says. There has never been a full impact assessment of what was proposed against the existing baseline, it adds.

The commission is showing readiness to improve its impact assessments. It has already taken steps in this direction. In 2005 it published new guidelines and there have been additional changes since.
This includes a further update in 2006 introducing among other things new requirements on the assessment of administrative costs. An impact assessment board made up of commission officials was also set up to oversee quality. But there are concerns over how independent this board really is.
Looking ahead, a strategic review of the EU’s better regulation drive is due in early 2008 and will be discussed by EU leaders in March. It will contain an evaluation of impact assessments and measures to achieve further improvements in this area.
Commission secretary general Catherine Day told stakeholders in June that possible measures include extending assessments to certain regulatory decisions adopted through so-called “comitology” procedures.
These decisions approved by committees of member state experts – not EU law makers – can have significant economic, social and environmental impacts, the commission says. The most high-profile case involves a move to exempt the brominated flame retardant decaBDE from a ban under rules restricting certain hazardous substances in electronics.
The commission is also considering carrying out assessments at the start of the policy making process so they can have more influence on the outcome, Ms Day said. Other possibilities include improving checks performed by the impact assessment board.
But delivering these improvements will be a significant challenge because impact assessments are embroiled in politics. The commission might aim for objectivity and transparency but in reality assessments are drawn up by officials serving specific agendas and political ambitions.
Like stakeholders, the commission is divided over whether assessments should be used primarily to reduce burden on industry – a view represented by its enterprise directorate – or to deliver sustainable development. And this divide is likely to remain. This means that certain policy options will continue to be emphasised more than others.

In future, officials might have even more discretion over what options should be looked at in impact assessments, according to David Wilkinson of the Institute for European environmental policy (IEEP). The commission could opt to give officials greater flexibility in this area to cut paper work, he says.
Mr Wilkinson is also sceptical about the commission’s willingness to put the resources required to deliver further improvements. So far the commission has not shown an interest in providing appropriate funds for impact assessments, he says.
Improvements will not stop controversies over proposals such as the EU’s chemical policy reform Reach. The commission published six assessments during preparations for Reach. And yet in the end stakeholders remained split on how the findings should be interpreted.
Environmentalists claimed vindication after the last assessment was issued in 2005. It confirms Reach is not bad news for industry, they said. But business officials insisted a close reading showed it posed significant threats.
Stakeholders accept that there will always be winners and losers of EU policy making. What they want is reliable data in order to fight their corner with the best chances of success. The commission’s strategic review due next year will take steps to address their demands.

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