Brussels’ perceived over-regulation: the concept of gold-plating helps finding the culprit

Voting
Source: flickr.com/photos/european_parliament

“Brussels” has become a buzzword closely associated with over-regulation and the EU Commission is often perceived as the main culprit. However, the stereotype that some 30+ thousand EU officials are producing regulation after regulation to burden business and entrepreneurs is misleading. The fact is that significant over-regulation happens when European law is transposed into national law.

The practice whereby national governments pass extra regulation exceeding the requirements of the laws adopted in Brussels and Strasbourg has recently been nicknamed “gold-plating.” It is this type of gold-plating which often leads citizens to believe that the European Union over-regulates.

Gold-plating is currently one of the main focal points in the work of the FNF Prague office. FNF supported a comparative study drafted within the 4Liberty.eu network comparing the practice of gold-plating in Slovakia and Lithuania (in English) and a briefing paper describing concrete examples of gold-plating in the Czech Republic (available in Czech only).

To find out more about the concept of gold-plating, FNF interviewed Richard Král, a lecturer at the Faculty of Law at the Charles University, Prague and a member of the Legislative Council of the Czech Government. Král specializes in European law and is the author of multiple books and publications on the transposition of EU directives into national legislations.

Kral-3
Source: FNF Europe

FNF: How would you define gold-plating?
Král: Gold-plating can be described as non-minimalistic transposition of EU directives into national legislation. This can happen in multiple ways:

1) The Member state uses the option to divert from the directive in a stricter way
2) The Member state does not use the option to divert from the directive in a softer way
3) The Member state opts, if there are several possible alternatives of regulating a given issue in a directive, for the option which is the least stringent
4) The Member state extends the application of the rules of a directive to some legal situations which are fully outside the scope of a directive.

FNF: Is gold-plating always negative?
Král: Gold-plating of directives with deregulatory impact is obviously not problematic. Problematic is gold-plating that involves regulatory overburdening. Administration and financial costs rise, the state can put its own people and companies at a disadvantage in comparison to those from other member states, which is basically reverse discrimination.

Thus, gold-plating involving regulatory overburdening should be, in principle, avoided. It should be only exceptionally justified if its overburdening effect can be convincingly offset by national grounds of public policy or interest, such as increased consumer, health, labour or environmental protection, or increased business safety, public security or the need for internal coherence of the national legal system.

FNF: Could you describe an ideal mechanism how to minimize gold-plating?
Král: The transposition manual in each country should be based on the principle of minimalistic transposition. Every non-minimalistic transposition should be convincingly justified by ministries in charge of transposition drafts.

Stakeholders such as unions, companies or the public should be involved in the transposition process with the underlying objective of avoiding the cases of unjustified gold-plating. National regulatory impact assessment (RIA) methodology should explicitly focus on the issue of unjustified gold-plating.

 

Concrete examples of gold-plating

Meat
Source: flickr.com/photos/hand-nor-glove

Lithuania – Making business tough for meat producers

The Lithuanian Meat Processors Association reported in March 2015 the following instances of Gold-plating:

The Rules on Ritual Slaughter, Control, Accounting, Marking, and Realization, adopted by the Minister of Agriculture in 2014, exceeded the minimal requirements set in regulation (EU) No 1169/2011 on the Provision of Food Information to Consumers;

1) the terms „cured meat products“, „preserved meat products“ as specified in regulation (EC) No 1333/2008 on Food Additives were incorrectly translated and incorporated into a local act of Food and Veterinary Service of Lithuania in such a way that they partly acquire the opposite meaning and thus narrow the freedom of action for national producers;

2) For ten years, Lithuanian Standard LST1919:2003 on Meat Products included requirements that discriminated against Lithuanian meat producers as compared with those from other EU member states.

 

 Czech Republic – Contractors need to look into the crystal ball

Construction
Source: flickr.com/photos/vonderauvisuals

Directive 2004/18/EC on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts, Art. 31, paragraph 4 a) limits additional works to a maximum of 50% of the amount of the original contract.

Czech transposition Act no. 137/2006 Coll. on Public Procurement, as amended §23 paragraph 7) a) reduces the limit to 30% of the initial public work contract. Czech legislation puts the contracting authorities under much higher pressure regarding the anticipation of the exact scope of works. In the event of unforeseen difficulties factual and legal complications can be the consequences. If for example the state of the ground is worse than expected and requires more work than anticipated, contractors might have to compete with other suppliers to obtain the right to finish constructions at this site.

Please find the complete comparative study here.

Gabriela Kadlecová and Václav Bacovský