Debate: The EU must slow down its legislative machinery to save the business climate

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It is said that the Americans invent something, the Chinese manufacture it and the Europeans over-regulate it. If the EU wants to change that matter, it also needs to start shaking off the regulation-seeking politics in order to prioritize our business climate and European competitiveness, writes MEP Sara Skyttedal (KD)and Markus Pieper (CDU).Published: 26 December 2022, 19:30 In several areas, it is clear that the problems, additional costs and work efforts that proposed or planned EU directives would give rise to are not proportionate to the problems that these initiatives are supposed to solve. Good intentions notwithstanding, the EU now needs to stop itself, and realize that the cumulative burden of laws and regulations on our businesses is becoming unreasonable. An insight that is particularly significant against the background of the approaching recession. The European Commission promised at the beginning of the mandate period a principle of “one in, one out” with regard to new EU rules that affect our companies. That is to say: if the EU adopts legislation that becomes burdensome, this must be offset by relief in other respects. It is a rather modest ambition to begin with. Of course, the goal should be to reduce the regulatory burden, not to keep it unchanged. But it is also a promise whose full compliance is difficult to control, regardless of how you measure it. There needs to be an awareness that legislation is not always the solution and that other types of measures are available. We also need to give companies and businesses more time than is sometimes the case to live up to new EU regulations. In addition, the member states should refrain from over-implementing EU directives, so-called gold-plating. That the combined burden of EU regulations should not negatively affect Europe’s competitiveness is something that many in theory agree with. Unfortunately, considerably fewer are responsible for this in practice. If we are serious about reducing the regulatory burden on our companies, we must also realize that in practice this means giving up, or de-prioritizing, other worthy objectives. Let us name four current EU proposals that should be reworked, postponed or withdrawn, against the background of this perspective.Firstly: the revision of the REACH regulation. During the next year, the EU Commission is expected to propose a revision of the EU regulation on registration, evaluation, authorization and restrictions regarding chemical substances (Reach). Changing the rules for which chemicals can be used, and how they can be used, is an extremely costly process for many industrial companies. Given this, and given that the EU already has significantly more far-reaching chemical legislation than competing economies, it is reasonable in our opinion to postpone the issue of revision of REACH to the future.Second: the proposed Due Diligence Directive. In February 2022, the European Commission presented a proposal for a directive on due diligence requirements for companies, so-called due diligence. The idea is for companies to take greater responsibility for all or parts of their supply chains. For example, in terms of environmental considerations or working conditions. A laudable ambition – but many questions also arise. Which companies should be covered by these requirements, and how many steps in their supply chains is it reasonable for medium-sized companies to take responsibility for? We are worried about where the upcoming trilogue negotiations on this regulatory framework will go, and what the outcome will mean for European companies. How the regulatory burden affects business and European competitiveness should be at the center of these negotiations, and as a minimum measure the timeline for the implementation of the directive should be brought forward. For the third: the revision of the Energy Performance of Buildings Directive (EPBD). The European Commission briefly proposes new minimum energy performance levels for buildings, which should also apply to the existing building stock. Without going into details, we can state that, for example, the Swedish industry organization Fastighetsägarna warns that “fundamental cost-driving aspects constitute an unacceptable level of risk for the construction and property sector”. Reducing emissions from properties is important, but like everything else must be weighed based on an overall picture. We have therefore demanded that the work on revising the directive on the energy performance of buildings be paused and that a new, more thorough, impact analysis of how the proposal would affect companies and households be drawn up. For the fourth: the regulation on the restoration of nature. This summer, the EU Commission presented a proposal with binding targets for “restoration of different nature types”. It is easy to be positive about the basic approach in the proposal, to benefit biological diversity in Europe. But the proposal is based on the idea of ​​setting static targets for how much land must be “protected”, and thus must not be used for agriculture or forestry. It is both an incorrect perspective and an issue that should clearly fall under national competence. Such requirements would also risk hitting the forestry and agricultural industries hard. The Swedish farmers’ organization, LRF, estimates that the proposal could cost Sweden alone over SEK 350 billion. These four proposals is just a selection of a long line of proposals where we believe that the EU should rethink, with the aim of seriously protecting Europe’s international competitiveness. European companies are going through a difficult time. Global trade is being disrupted, while competition from the outside world is increasing. We have historically high inflation and are also in an energy crisis. On top of all this, the business cycle is now turning downwards. There’s an old truism that goes something like this: Americans invent something, Chinese manufacture it, and Europeans over-regulate it. If the EU wants to change that, it also needs to start to shake up the regulation-seeking policy in order to prioritize our business climate and European competitiveness. And realize that this means that other objectives may have to take a back seat. Sara Skyttedal (KD) MEP, SwedenMarcus Pieper (CDU) MEP, Germany

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