The EU's deregulation frenzy: what's at stake?

Double deregulation, competitiveness checks, rule of law or the omnibus law, it can all sound like technocratic gibberish, but they are all pieces of the downward spiral in social standards that are in immediate risk. But this social dumping is not the only challenge ahead, the same applies to environmental protection. This episode takes us beyond these unpronounceable words to discuss what is really at stake and what civil society should do about it.

Welcome to a brand new episode of EU Watchdog Radio, where Joana Louçã talks to Kenneth Haar and Olivier Hoedeman about what we already know of the plans the European Commission has for the coming five years. 

Who we are

This podcast is produced by CEO and Counter Balance. Both NGOs raise awareness on the importance of good governance in the EU by researching issues like lobbying of large and powerful industries, corporate capture of decision making, corruption, fraud, human rights violations in areas like Big Tech, agro-business, biotech & chemical companies, the financial sector & public investment banks, trade, energy & climate, scientific research and much more…

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Transcript of the episode (there might be slight changes to the final audio version)

“Of the three coalitions, if you would ask me which one of the three have come out as the big victor, the big winner, I would say the Antwerp Declaration”  Kenneth Haar

“it's really important that the European Parliament's becomes aware of these dangers and that they use their powers to prevent a weakening of social and environmental standards” Olivier Hoedeman

Hi, welcome to a new episode of EU Watchdog Radio! I’m Joana Louçã, comms officer at Corporate Europe Observatory and today I’ll be talking to my colleagues Kenneth Haar and Olivier Hoedeman about what we already know of the plans the European Commission has for the coming five years. I know the topic sounds dry, and we will have to use words that are even drier, such as double deregulation, competitiveness checks, rule of law or my personal favourite, the omnibus law. But despite this apparent dryness, it is important and if you want to read about it, check out our long article called “ ‘Competitiveness': inside the troubling corporate blueprint for the coming Commission”.

Let’s zoom out for a second and consider a hypothetical worker from Carrazeda de Ansiães, a small town in the North East of Portugal, let’s call her Maria. Maria gets sent by her company to work in Silly, Wallonia in Belgium. Maria is happy, the prospect of a change of scenery and a Belgian working contract are somewhat appeasing and might even diminish the saudades she’ll feel from being in such a different country. However, she then is informed that her contract will remain the same, her salary will remain the same, her benefits, or lack thereof, will remain the same. Maria is now feeling silly, she’s no longer happy, and even though she’s fictional, neither are we. 

This is an example of what something called the Posted Workers Directive would look like in practice. It is part of the downward spiral in social standards that are in immediate risk. But this social dumping is not the only challenge ahead, the same applies to environmental protection. But I’ve kept you long enough, let’s go to Kenneth Haar, who analised the political guidelines Von Der Leyen announced for the next five years of the European Commission.

Let’s start by talking about what is not in the document.

First is when we had the guidelines five years ago, so with the first commission of Von Der Leyen. It was guidelines that focused a lot on climate change. Back then she announced a series of initiatives on climate. And it would be a mistake to say that it's been five years of success on climate policies. Lots of defeats and lots of half-baked measures. But what we're looking at now is practically zero initiatives on climate change, except for one big topic, and that's about clean technologies, where the commission say they intend to take a   series of measures to help industry in particular, industry in general, energy-intensive industries in particular, go through a transition to a more cleaner way of production. I think that should be taken with a big grain of salt in that we've seen for many years technologies being portrayed as very clean, that in the end are not really. So a long story short, on climate, it's a small disaster.

And we're talking about the five years that will take us to 2030, which was always supposed to be a crucial phase in the fight against the disastrous climate change. And I think there's a very real risk that the European Union will go almost into reverse.

Last point on social and labour issues. It's practically empty. It's full of vague statements about doing better for workers and for the poor segments of society, but it's very vague. It's not very concrete. And on that point, it's even much less ambitious than what we saw five years ago. So, I mean, for us and CEO, what we see is the embodiment of the results of a long time of very intense corporate lobbying to influence the next five years in the European Union.

And Kenneth went through the guidelines and compared them with the demands from three separate business groups to see who actually put the biggest fingerprint on the text. The first one is the European RoundTable, a club for the CEOs of some of the biggest companies in Europe.

They are regarded by the president of the commission, so Von Der Leyen, as advisors that can step in when something very important comes up. They are equally powerful today as they were when they were formed back in the 80s. And this time around, a lot of the proposals on competitiveness come mainly from the European RoundTable. 

Influencer number two is the Employers Association BusinessEurope, who’s particular obsession is the single market, especially what they refer to as gold plating, which happens when a member state implements a law that goes further than EU law.

Gold plating has become a slogan that is used against almost any kind of regulation in member states that is more ambitious than what is required by the EU law. It does not mean necessarily that it is strictly unlawful under EU law, but it's something that's being chased by business anyway. And it's often, very often, it's measures against climate change, it's measures to protect the environment that come under fire. 

Finally, the most effective group was a coalition called the Antwerp Declaration that joins the companies that more aggressively attacked EU climate policies in particular since mid-2022. It's spearheaded by the energy intensive industries, such as chemicals, paper, steel, cement and the like. And their agenda is clearly to fight back any regulatory measures that would force them into producing in a more sustainable manner.

In early February, those companies gathered at a meeting in Antwerp and drew up a list of 10 demands that they would push with the European Commission and with the Council. If you look at the guidelines, as far as I can tell, of those 10 demands, only one of them has not been fulfilled yet. 

The one not covered, by the way, is to have an Industrial Deal Commissioner, which is in some ways a rather symbolic thing.

So of the three coalitions, if you would ask me which one of the three have come out as the big victor, the big winner, I would say the Antwerp Declaration. I think if we went back five years, if someone told us that the energy intensive industries would take charge of EU climate policies, we would probably think that would be overstated and unrealistic. They've been a stone in the shoe of European initiatives for a very, very long time, for decades. They've been handed over big subsidies in the form of free quotas under the emissions trading scheme and what have we. But their opposition to concrete, enforceable, effective climate policies has never been appeased at all. 

We at CEO organised a webinar on all of these issues with a lot of NGOs and trade unions represented. The discussion zoomed in on what my colleague Olivier Hoedement refers to as a double deregulation push by the EU institutions. And it’s double because it is happening not only on the EU level, but also on the national level. Here’s Olivier.

The EU level deregulation, which is in the form of so-called better regulation, all kinds of impact assessments and competitiveness checks and all kinds of procedures to scrutinise new legislation and weaken it, is basically based on this idea that regulation is bad for business and competitiveness.

And then the other dimension of this double deregulation push is one national level laws. And there it's the single market's enforcement framework that's used. So yeah, there will be new initiatives in that field that basically could weaken or limit the space that governments have to introduce new progressive legislation. 

On the EU level, this obsession with competitiveness was certainly present in the political guidelines presented by Von Der Leyen. 

It's not a very detailed document. I would say though that the one part that has taken first place is about the competitiveness of European businesses, which is not a new theme in the European Union. It's been a recurring theme for the past 25 years. I would say though that this time around, it does take the first prize. So much so that it is repeated practically on each and every page. 

One of the examples of this deregulation agenda on the EU level regarding new legislation is particularly worrisome.

One of the things that was highlighted as something new and very problematic was that Von Der Leyen proposed that the other EU institutions, including the European Parliament, should also start doing the same kind of impact assessments that the Commission does. So that would mean looking at all amendments agreed in the European Parliament and assessing how they impact competitiveness of industry.

Another side to this that would impact not new legislation, but all - and you heard me right, really all EU legislation is something called the omnibus law, one of the complicated words I mentioned at the beginning of the episode and if you’re wondering where it comes from, the answer is easy.

The omnibus law is a proposal that actually it's the number one proposal from the Antwerp Declaration. It's kind of an old theme of CEO because it was first tabled by the European Round Table 12 years ago. And this is what it's about. It's about going through the whole EU Acquis, all European laws and checking them for their effect on competitiveness. And the next step, obviously, would then be to change them all, or neutralise them in some way. 

And it's not... It was tabled in the debate on the next term in February with the Antwerp Declaration, and it very quickly became a big issue. It was supported by the French and the Italian and the German government shortly after, which is a first, you would normally not see the French and the German government support radical proposals like that, but this time around they did. That was a big step back because I mean, the first time it was tabled by the ERC 12 years ago, it was not really taken seriously by anyone. So at least at this stage, it looks as if there is a real risk that the proposal for an omnibus law will materialise at some level. We don't know to what extent or when or how radical it will be, but it's in there. 

Is potentially a very drastic measure. Because again, it means that business interests will be favoured over other interests in society. So we will see a more single-minded commission in the coming five years.

On the national level, we can go back to what Kenneth explained to be a demand of the employers association BusinessEurope, whenever a country has more progressive legislation than EU law, what they refer to as gold plating. For example, France, as a means to mitigate CO2 emissions tried to ban short distance flights when there were train alternatives, the airport lobby did not receive this well and complained to the European Commission that the ban violated “the freedom to provide services” and therefore was infringing on the single market legislation. And this is one of many examples.

When governments introduce new laws or new policies and industry thinks that they are harming the single market and their possibilities to do business, they can complain to the European Commission, and the Commission will then investigate if that law or policy is allowed or not.

And in practice, it's interpretations of EU law, so sparked by these complaints by industry and often by parts of the Commission that are very neoliberal. It's ideology based, so it's not real. I wouldn't call it a strictly legal assessment. It's quite political. 

Still, businesses are complaining that the investigations take too long or governments don't fully comply.

So now that the Commission is proposing that all of this enforcement stuff around the single market should be put in under the rule of law procedures, and it would be given a whole different type of sanction possibilities. So that rule of law so far used in attempts to to avoid undermining democracy and in Hungary and Poland.

And that makes a lot of sense. But then this type of challenge to national level legislation, very often environmental, social protection, I think that's not something that should be moved into the rule of law procedures, but that's on the table, too. So those are just a couple of examples of that. They're really trying to move the yardsticks very far.

We’re almost at the end of this episode, and to finish off, as for next steps, Olivier described the conclusions from the webinar as three different  branches. The first one is the concrete actions that MEPs can now take.

It's really important that the European Parliament becomes aware of these dangers and that they use their powers to prevent a weakening of social and environmental standards. And that is something that they should do in the next weeks and months when all the candidate commissioners come to the Parliament and they go through this approval hearing. And that's where MEPs should really stand up for the public interests and grill the candidate and the Commissioners on how they will safeguard social and environmental standards. 

And then it's crucial to look at really specific examples of legislation that will be targeted and we need that because, of course, deregulation sounds very abstract and all of this sounds very technocratic and bureaucratic and far away.

But if you zoom in on what is really at stake, you can give some examples of what's at stake for ordinary people. Then it becomes real. And for example, there's talk of simplification, of REACH, of the chemicals legislation. Now that is about toxic chemicals that impact our health in the workplace, in our daily lives. So that's an example.

Lastly, the hegemonic narrative around regulation should be contested.

In the last few years, both from business lobby groups and from right wing and far right political forces, regulation has been framed as something that's burdensome, that's costly, that's useless, that's holding us back. Whether it's farmers or it's small businesses. So that whole discourse has become very strong and probably has impacted the thinking of many people.

And of course, that thinking is largely wrong. I mean, anyone would be against senseless bureaucracy, but these regulations are basically protections for working people, for all of us against toxic chemicals and so on. So it's really important to develop a strong counter frame, a positive frame around regulation. And that's where we have some work to do and to develop the right frame and to popularise it.