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02 June, 2016

The EU deregulation agenda disguised

A deregulation agenda is sweeping through the European Commission and member states, particularly pushed by the United Kingdom. If you care about the environment, workers’ rights, or health and well-being you should be concerned about this agenda, because it is abolishing and weakening current rules and preventing new ones from being introduced. In EU circles it’s called ‘Better Regulation’, but in fact it’s rule-making at its worst, putting the interests of big business centre-stage, where those with the most lobby power have the biggest say. And with TTIP, rules to protect the public interest will come under even further assault.

Corporate Europe Observatory

Key points:

  • Whichever way you look at it, deregulation is an agenda of big business interests and they have found a sympathetic ear in London. In 2013, the UK government set up the Business Taskforce to “to get bureaucracy out of the way of business” at both the national and EU levels. Led by six leaders from big business and a government minister, it came up with 30 proposals for where EU regulations should be abandoned, scrapped, or reduced and included a competitiveness test. Many recommendations were adopted at the EU level, including downgrading a proposed regulation on fracking to a light-touch recommendation.

  • ... under political pressure to appease members states such as the Netherlands and right-wing eurosceptics, particularly given the Brexit debate in the UK, and after heavy corporate lobbying, the European Commission, the EU’s executive arm, has gradually moved forward with its ‘Better Regulation’ agenda. And as we shall see, current efforts to deregulate go far further than simply cutting ‘red tape’. Crucially the deregulation agenda has been re-branded as Better Regulation and this masks a serious effort to undermine the implementation of current rules which serve an important social or environmental purpose. Additionally, Better Regulation represents a wholesale revamp of how new regulations are to be made which sees big business given a privileged voice – ahead of elected politicians.

  • Since 2006, the Commission had been seeking agreement on a draft agreement to minimise soil erosion, maintain the organic matter in soils and to prevent soil from being contaminated with toxic substances. Despite the importance of soil to the ecosystem and its role in preventing flooding, the proposed directive was scrapped under the REFIT programme in 2014. This followed years of Council impasse, and lobbying by the UK government and the farming industry, including the UK’s National Farmers’ Union (NFU).

  • Since Jean-Claude Juncker took office as President of the European Commission in November 2014, there has been an even greater deregulation push, not just on specific rules and laws which should be scrapped, but on how decisions are made about future laws. Under Juncker, fundamental changes in policy-making are being introduced which will put major obstacles in the way of new regulations aimed at protecting the environment or improving social conditions. It’s an irony that, while dressed-up as reforms to cut bureaucracy and red-tape, these reforms will add to the length, cost, and complexity of the legislative process. And they effectively put the interests of big business in the driving seat.

  • ... big business systematically ‘cries wolf ’ at the prospect of stricter environmental legislation, arguing that it would harm the economy and lead to a loss of jobs. The New Economics Foundation argues that companies systemically inflate estimates of the cost of new regulations in order to get them weakened or delayed, while targets for reducing costs to business create a direct incentive for lobbyists to provide inflated estimates – since the higher the projected costs, the harder a regulation will be to introduce. This is despite the fact that a 2015 report by ChemSec shows that the benefits of adapting for business are generally underestimated, with the costs for industry to adapt to environmental policies decreasing since the 1990s.

  • Impact assessments fit with the Commission’s emphasis on consultation “at every stage of the process”. The Commission has lauded its Better Regulation package as providing more opportunities for consultation and transparency and accountability of decision-making. But in this context, consultation tends to mean lobbying. At whatever stage of the policy-making process the consultation takes place, big business almost inevitably has more money, resources and capacity to surpass public interest groups and this is a pattern we already see in the Commission’s consultation processes.

  • The deregulation agenda has been around in the UK since the 1980s and the Thatcher government. It picked up pace under New Labour, but the arrival of David Cameron in 10 Downing Street in 2010, coinciding with the wider economic crisis and the implementation of austerity policies, provided it with greater political impetus. In 2010, the UK government introduced a ‘one-in, one-out’ policy ie. for every £1 of additional cost imposed on business by new regulations, the government should save businesses £1 by removing or modifying existing regulations; as of 2016, the policy is now ‘one-in, three-out’.

  • While the UK already has one of the most lightly-regulated labour markets among developed economies, businesses have continued to complain about the costs of complying with labour laws. In another Better Regulation trade off, cost reduction for businesses was prioritised over labour rights for workers by introducing new fees for employees who want to bring an employment tribunal case; doubling the period before employees can be protected from unfair dismissal from one to two years; and halving the minimum consultation period before collective redundancies (100 people or more) can be made from 90 to 45 days.

  • When David Cameron was renegotiating the terms of the UK’s membership of the EU with European Council President Donald Tusk, a greater European emphasis on deregulation was one of the four priority areas. To pile on the pressure, Cameron and the UK government spearheaded an appeal from 18 other member states, demanding quantitative targets, meaning that for every new regulation put in place, a certain number of other regulations should be removed. [...] As presented here, Cameron and the European Commission – together with big business - share a common approach on the deregulation agenda.

  • Not content with giving European big business an enhanced say in EU policy-making, proposals under the EU-US trade deal (TTIP) would seek to extend that to US trade authorities (acting on behalf of US corporations), binding both the EU and the US into this deregulation agenda. Not surprisingly, it was lobby groups on behalf of big business - BusinessEurope and the US Chamber of Commerce - which first lobbied the EU and US authorities to include it.

  • Regulatory cooperation under TTIP is set to have a serious effect in the EU. It will increase the influence of the US trade authorities in EU politics, and it will strengthen the hand of US corporations, often working in tandem with their European counterparts. In practice, the regulatory cooperation agenda and the Better Regulation agenda will work hand in hand and be mutually reinforcing. Both processes are creating obstacles and delays for decision-makers who want to introduce new regulations, and they risk creating “regulatory chill” as law makers are discouraged from introducing new measures in the public interest.

Full report:

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