Prof. RAGNAR LÖFSTEDT Director King's Centre for Risk Management King's College London

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<ul><li> Slide 1 </li> <li> Prof. RAGNAR LFSTEDT Director King's Centre for Risk Management King's College London </li> <li> Slide 2 </li> <li> Prof. Ragnar Lfstedt The evolving risk management field in Europe Some insights and speculations Presented at annual meeting Society for Risk Analysis December 10 th 2002-11-24 </li> <li> Slide 3 </li> <li> 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 This is now changing However, not much has happened </li> <li> Slide 4 </li> <li> 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 </li> <li> Slide 5 </li> <li> Background (3) Laws are made too flexible (especially the case of directives) 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 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 </li> <li> Slide 6 </li> <li> Present regulation (1) Better regulation is driven by: Role of competitiveness Sustainable development European governance </li> <li> Slide 7 </li> <li> 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 </li> <li> Slide 8 </li> <li> Competitiveness Need for simplified regulation Removal of unnecessary regulation Clearer guidelines Uniform implementation of regulation </li> <li> Slide 9 </li> <li> Better governance (1) European regulators not trusted Food scandals Cronyism Realisation that consensual style of regulation is effectively dead Too much of a democratic deficit </li> <li> Slide 10 </li> <li> 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 </li> <li> Slide 11 </li> <li> 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 2001:Results 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 </li> <li> Slide 12 </li> <li> 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 The coming together of these 3 EU factors </li> <li> Slide 13 </li> <li> Regulatory tools (1) To achieve the 3 above mentioned goals, 2 regulatory tools have been particularly mentioned: Precautionary Principle Regulatory Impact Analysis </li> <li> Slide 14 </li> <li> 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 </li> <li> Slide 15 </li> <li> 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 </li> <li> Slide 16 </li> <li> 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 </li> <li> Slide 17 </li> <li> 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 </li> <li> Slide 18 </li> <li> 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 </li> <li> Slide 19 </li> <li> Regulatory tools (7) 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 History of Regulatory Impact Analysis </li> <li> Slide 20 </li> <li> Regulatory tools (8) 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 Use of PP at present </li> <li> Slide 21 </li> <li> 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 </li> <li> Slide 22 </li> <li> 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) </li> <li> Slide 23 </li> <li> 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) </li> <li> Slide 24 </li> <li> 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 </li> <li> Slide 25 </li> <li> 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. </li> <li> Slide 26 </li> <li> 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 </li> <li> Slide 27 </li> <li> 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 </li> <li> Slide 28 </li> <li> 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 </li> <li> Slide 29 </li> <li> 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) </li> <li> Slide 30 </li> <li> 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 However: PP has been written into EU law Yet: recent research shows that the term PP is being used less and less </li> <li> Slide 31 </li> <li> 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 </li> <li> Slide 32 </li> <li> 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 </li> <li> Slide 33 </li> <li> 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 </li> <li> Slide 34 </li> <li> 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. </li> </ul>

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