Presentaci

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Prof. RAGNAR LÖFSTEDT Director King's Centre for
Risk Management King's College London
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Prof. Ragnar Löfstedt
The evolving risk management field in Europe
Some insights and speculations
Presented at annual meeting Society for Risk
Analysis December 10th 2002-11-24
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Background (1)
The EU has been concerned about better regulation
Regulatory simplification seen as a pre
requisite for EU enlargement (1985)
Edinburgh 1992 summit - better regulation seen
as a priority
However, not much has happened
This is now changing
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Background (2)
Commission concerned about two areas in
particular
Better regulatory preparation Need to be as
rigorous as possible Based on a minimum standards
of public consultation
Draw in expertise Need to be coherent as
possible Transparent
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Background (3)
Regulation needs to be implemented in the member
state countries (eg EC 1996 Jordan 1999)
No uniform implementation
Growing problem of compliance
Rules implemented slowly
Regulations are too elaborate (and many poorly
conceived)
Laws are not based on consensus
Laws are made too flexible (especially the case
of directives)
Many unrealistic
Little consultation with affected parties
Some unfair (Swedish woodcock hunting season)
Overwhelm national institutions hence some
ignored and others adopted in a nationalistic way
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Present regulation (1)
Better regulation is driven by
Role of competitiveness
Sustainable development
European governance
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Present regulation (2)
Lisbon European Council established
competitiveness as an EU strategic
goal Concern about unemployment rates and slow
growth in the EU EU to become the most
competitive and dynamic based economy in the
world by 2020
To reach this
Set out by 2001 a strategy for further
co-ordinated action to simplify the regulatory
environment, including the performance of public
administration, at both national and Community
levels
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Competitiveness
Need for simplified regulation Removal of
unnecessary regulation Clearer guidelines Uniform
implementation of regulation
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Better governance (1)

• Realisation that consensual style of
  regulation
• is effectively dead

• European regulators not trusted

Food scandals
Cronyism

• Too much of a democratic deficit

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Better governance (2)

• EC White paper in July 2001concluded
• Opening the policy making process to get more
  people and organisations in shaping and
  delivering EU policy
• Simplify further existing EU law
• Define the criteria for the creation of new
  regulatory agencies and the framework in which
  they should operate
• Improve dialogue with governmental and NGO
  actors of third countries when developing policy
  proposals with an international dimension

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Sustainable development (1)
Interest came about following EU signing up
to the Rio Declaration Promise to develop
strategies for SD by the 2002 Summit in
Johannesburg At Gothenburg Summit
2001Results published under title SD
should be the key objective for all policies
considered by the Commission and
therefore careful assessments would be needed to
lay out both good and bad effects of
policies on SD
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The coming together of these 3 EU factors
Commission sees no conflict between SD and
competitiveness The perceived conflict
between environmental protection and economic
competitiveness stems from a narrow view of the
sources of prosperity and static view of
competition. (commonly referred to as the Porter
hypothesis-Porter 1991, Porter and van der Linde
1995) In addition to achieve EU wide SD there
is a need for public and stakeholder involvement
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Regulatory tools (1)
To achieve the 3 above mentioned goals, 2
regulatory tools have been particularly
mentioned
Precautionary Principle
Regulatory Impact Analysis
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Regulatory tools (2)
Precautionary Principle Co-developed by Sweden
and Germany
Sweden very much reversed burden of proof
Germany more cautionary better safe than sorry
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Regulatory tools (3)
PP and the EU
First discussed in the 1982 Charter of Nature
First significant use in relation to the North Sea
Germany played an important role
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Regulatory tools (4)
PP and Europe
Germany lobbied the EU to adopt its version of
the principle as a standard environmental policy
Competitiveness
Fairness
Environment
Leadership
PP now in 14 multilateral agreements
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Regulatory tools (5)
PP at present

• Expresses aversion to health, safety and
  environmental risks
• Shifts burden of proof to industry to show that
  products are safe
• Replaces consensual or industry dominated risk
  management with more adversarial mode
• Enhances regulators credibility

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Regulatory tools (6)
PP at present

• Driven by an erosion of distrust
• Greater citizen access to information
• Regulators and industry faulted in highly
  visible problems
• NGOs sought as source for advice and assurance

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Regulatory tools (7)
History of Regulatory Impact Analysis

• US first used it in 1974
• RIA has a more recent EU history
• UK - 1992 Compliance Cost Assessments
• Other member states made it popular in the mid
  1990s
• Swedish National Audit Office 1995
• Dutch Business effect list 1995
• And the OECD 1997 report
• Regulatory Impact Analysis Best Practices in
  OECD Nations

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Regulatory tools (8)
Use of PP at present
There is no clear definition of PP (see Weiner
and Rogers 2002) Yet PP is growing in
popularity 1994 - 1999 PP was referred to in 27
European Parliament resolutions (Vogel 2002)
Has been used in high level EU-US trade
disputes Bans on hormones in beef GMOs
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Regulatory tools (9)
Is PP a tool for trade protectionism?
Wahlstrom says no We do not spend our days in
Brussles, as some might think, in Machiavellian
plotting to apply precaution to the detriment of
US business
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Regulatory tools (10)
Commission put an official clarification on
it Application of the PP is part of risk
management, where scientific uncertainty
precludes a full assessmet of the risk and when
decisions makers consider that the chosen level
of environemntal protection of human, animal and
plant health may be in jeopardy. (EC 2000)
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Regulatory tools (11)
Communication is now used as a defence of
PP Our aim (of the communication was to
promote transparency in light of public concerns
stemming from BSE and dioxin crises and to
present broader understanding of the EUs
position on the subject. The communication
establishes guidelines for the application of the
precautionary principle. (Wahlstrom 2002)
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Regulatory tools (12)
Is PP Communication followed?
Regulations are frequently based on a hazard
rather than risk assessment EUs cosmetic
directive (based on RM) is challenged by an EU
scientific committee - wants a blanket ban on
reprotoxic, carcinogenic and mutagenic
substances). EUs forthcoming chemical
regs Calls for substances that are persistent,
bio-accumulative or known endocrine disrupters
should be subject to authorization
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Regulatory tools (13)
European Court of Justice (First
Instance) Justifies the use of PP even if
appropriate scientific committees felt that there
was little / no risk When the PP is applied,
the fact that there is scientific uncertainty and
that it is impossible to carry out a full risk
assessment in the time available does not prevent
the competent public authority from taking
preventive protective measures if such measures
appear essential, regard being had to the level
of risk to human health which the public
authority has decided is the critical threshold
above which it is necessary to take preventive
measures in respect of the product.
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Regulatory tools (14)
Present day use of RIA Grew out a need for
better regulation 2001 Governance White
Paper Form of impact assessment also discussed
at Goteborg and Laeken European Councils Seen
as a tool to Promote Transparency Help
measure direct and indirect impacts
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Regulatory tools (15)
Widely advocated in the recent EC Better
Regulation Package Biggest regulatory
initiative in the past 5 years Other issues
discussed Better Law Making Simplifying and
Improving the regulatory environment Towards a
reinforced culture of consultation and dialogue
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Regulatory tools (16)
RIA has not yet been operationalised in the
EU Call for proposals went out in
October Will be phased in incrementally Seen
by some observers Crown jewel in th Better
Regulation package Number of consulting
firms have been set up to deal with future
demand
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Regulatory tools (17)

• RIA and the entire regulatory package has been
  welcomed
• Swedes see it as an important step towards open
  and efficient dialogue
• EU Committee of the American Chamber of Commerce
  sees it as a commitment to ensuring consistency
  and transparency
• UNICE sees it as business friendly
• US government loves it - argues for an
  establishment of an European version of
  OMB
• Something supported by Majone (2001)

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Future of EU regulation - Speculations (1)
Future of Regulation Use of PP has peaked
Little consensus to use PP in a strict as
possible way Not mentioned once in better
regulation package Split in the commission
between DG Enterprise and DG Environment Howeve
r PP has been written into EU law Yet recent
research shows that the term PP is being used
less and less
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Future of EU regulation - Speculations (2)
PP has been used as a tool to rebuild public
credibility French ban on UK beef EU
chemical regulation GMOs A tough regulator -
gains public trust A weak regulator losses
public trust US arguably did the same 30 years
ago
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Future of EU regulation - Speculations (3)
Maybe trust in regulators is now being restored?
Regulators realise that the pendulum toward
pp has swung too far Costs for industry
will be too high RIA is seen as a tool
to re-address this balance
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Conclusions (1)

• The three drivers of present day European
  regulation are competitiveness, sustainable
  development and governance
• The two most talked about regulatory tools are
  the precautionary principle and regulatory impact
  analysis

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Conclusions (2)

• With regard to the precautionary principle, most
  EU regulators and industry accept the use of it
  as defined by the Commissions 2000 communication
• One possible explanation to the changing nature
  of EU regulation is the shift in public trust
  toward regulators.