Brussels and National States Are Responsible for the “Legislative Vortex”

On March 18th 2014, F.A. Hayek Foundation organized an international seminar “The Road to Prosperity – Lowering the Regulatory Burden,” which was supported by Norwegian funds and Friedrich Naumann Stiftung. The seminar was divided into two blocks; one focused on national legislation and regulatory burden, and the second one tried to find an answer to a basic question: “Legislation from Brussels: Helping Hand or Unnecessary Hurdle?”

A legislative vortex is a multitude of regulations. In this case, it is about six hundred regulations a year. It is clear that at this volume, the regulations cannot be of quality,” Ján Oravec – president of the Businessmen Association of Slovakia – said at the conference entitled “The Road to Prosperity – Lowering the Regulatory Burden,” which was supported by Norwegian funds and Friedrich Naumann Stiftung.

With this assertion, he conveyed the mood of most Slovak businessmen, who regularly complain about the pressure of more and more new guidelines. And, although they see Brussels behind them, the participants of the forum agree that it is not so simple. There are at least two reasons why the state, and not only the European bureaucrats, should be blamed for the meaningless regulation.

Politicians are doing surplus labour

The first of them is the way an individual nation state in the European Union approaches regulations. As Mr. Daniel Trnka – an OECD expert in regulatory politics – suggested, countries often do unnecessary surplus labour. They accept the guidelines in a tougher form than the original one and transform the recommendations into binding regulations. In addition, they often complicate their execution. “There is a difference between visiting fourteen bureaus in person and doing everything on the Internet,” Trnka explained with an example.

There is also a problem of when and how to adopt a new regulation from Brussels. If indeed it brings additional costs, it is worth waiting as long as possible and addressing it on a national level. “Slovakia probably achieved a world record when it adopted a new legislation regarding data protection in six days. What can its impact be?” Oravec asked.

However, it isn’t only the Slovak businessmen who feel the need to adopt guidelines from Brussels wisely; it is basically everyone in the EU. Helen McColm, an expert in regulation from Great Britain, who herself worked on dozens of recommendations for the British government, also points out the same problem. “In adopting these regulations, one rule should apply – that the commitments of the country will be subordinate to national goals in the area of business environment building,” she said at the conference.

Governments don’t create; they only criticize

The method of adopting legislation, however, is not the only problem. The second one is the approach of the state to the creation of regulations. In fact, some countries, according to the discussants, ignore the option of influencing a regulation before it is adopted. This is made possible to them via the discussions of task forces at the European Commission, where every country has its team. “Countries come variously prepared. France or Great Britain come with detailed analyses, and present their positions articulately. Smaller countries come unprepared and some would rather wait for the adoption of the regulation, so that they can criticize it afterwards,” Trnka explained.

Yet this is exactly when there is the most space to influence legislation and incorporate one’s own ideas into it. According to Oravec, however, it is politically hardly prestigious. “If a politician says that he improved a regulation, it is less sexy than if he boasts about giving an endowment to a large enterprise and creating two hundred jobs,” Oravec thinks. For this reason, Great Britain, where such attitude is combated more effectively and meaningfully, is a great example to Slovakia. McColm proves this as well. “We seek to enforce a principle, according to which if you adopt one new regulation, at least one or two older ones should expire,” she explains.

Slovakia adopts the EU regulations too fast

Slovakia does not need to adopt European legislation. It needs to evaluate and interpret it in a way that does not harm the business environment. The discussants agreed on this at the conference dedicated to regulation policy in the European Union. “Our ministries need analytical capacities to evaluate regulations. However, they cannot be isolated at bureaus,” said Lívia Vašáková, representative of the European Commission in Slovakia. She also highlighted that the system of adopting regulations in the EU and in Slovakia is in a sharp contrast. “In the EU, adopting [legislations] takes a legislative year, or even more. In Slovakia, it is a significantly shorter period of time,” she added. This is another reason why there is no room for discussion here. “Social dialogue is lead in a trench warfare way. Unionists are in one trench, business associations in the other and, according to who is currently in government, the executive branch joins one of the two,” Oravec added.

The government, however, is aware of the problems. “We established ambitious goals. By 2020, we want to reach the 15th spot on the Doing Business list,” said Peter Ondrejka from the Department of Economic Analyses of the Ministry of Economy. This is the very list about the quality of business environment in which Slovakia fell to the 49th position.

Translated by Robert Cesar, F.A. Hayek Foundation