Prime Minister M. Topolánek's address to a business forum in Spain on 18 September 2008
Today I would like to focus on a topic I believe will be of interest to you. That is regulation or over-regulation. European integration is manifesting itself in two main directions. The first is presented by the common market or unified internal market. The other is "common" directives, orders and decisions. While we are all getting richer faster because of the unified internal market, we're not getting rich all that fast because of the other thing, the bureaucracy.
I'm sure I don't have to convince you about the specific advantages of the common market. I think the Czech Republic is not a negative example. It should suffice to look at the development of Czech-Spanish economic relations, as the chairman has already discussed. Since our entry to the EU in 2004, the turnover of mutual trade exchange has doubled in 3 years, and I would say that it by far has not reached its potential. Spain has jumped from the 15th-largest investor and foreign investor to 4th place, and this is not only due to Telefonica. Only the Netherlands, Germany and Austria are before it.
While I do not have to defend the market, because every success brings praise upon itself, it is more necessary to discuss the things that are not quite going as well. And that is the unbelievable level of regulation of literally anything possible. Since signing the Treaty of Rome, the volume of valid legislation has grown at an exponential tempo. The inconspicuous growth at the beginning of the curve started to skyrocket, especially in the last 10 years. The summary of valid norms in 2005 came to more than 22 thousand … pages.
Even the European Commission itself recoiled from such an astounding mountain of bureaucracy and it announced a program to fight unnecessary regulations. José Barroso has requested a moratorium on the creation of new directives. And the Commission has announced the goal of decreasing regulations by one-quarter. We're very successful in this, and the decreasing is going so well, that it is increasing by several percent per year, which means, I think, that it is really good. The Czech government has proudly endorsed this conclusion and I think that we are among the leaders in EU countries in breaking down regulations.
At the same time, roughly half of regulations are coming directly from Brussels, and national governments and parliaments are responsible for the other half, which means that we are fighting bureaucracy on two fronts. Only some of the eurodirectives, regulations and decisions are being reduced. As well as their implementations into national legislation and the creation of new, clearly domestic regulations or the possible extension of the European ones. The latter would like to hide behind the former. Governments hide their own bureaucratic ideas in the harmonization of legislation with European law with the frequent argument that "Europe wants this from us."
We are trying to end or resolve this practice. Immediately after its formation, my government accepted the principles of RIA (Regulatory Impact Assessment) evaluations. Every norm presented by cabinet ministers must contain an evaluation of its regulatory influence on citizens and companies. We are trying not to accept any norm that increases this regulatory burden for citizens and companies. We are trying to clean up our national legislation, and I have given out the task not to knock ourselves out creating new laws, but to knock ourselves out cancelling the existing ones. I'm not saying that we've had 100 % success.
It's more complicated with laws where the changes have to be pushed through parliament. It's going slower there, but we're making gradual progress. The new trades law - and some of you may have registered this – limited the regulation environment quite significantly. Instead of an unbelievable 125 trades, there is now one. Instead of concessions and various certified trades, of which there were 136, there are now 94. Here I would say that it remains in the middle of the road. The paperwork has been sharply decreased, which saves time and, with that, money. We have shortened the registration questionnaire from 18 pages to 2 and I could go further.
We are also trying to decrease the number of state officials. Spain is one of our examples for this, where despite strong decentralisation and many levels, public administration still has a leaner bureaucratic apparatus than we do.
Limiting regulation is in direct correlation or corresponds with the motto of the Czech EU presidency, which is: "Europe without barriers." So the European Commission will have very strong support during our presidency for its anti-bureaucratic plans.
I think that we must all think very seriously about how much regulation we truly need, and whether it wouldn't be better to liberalise European trade more and strengthen the first component of European integration – the market. In many cases, a functioning market solves things better than the bureaucrats trying to resolve things from a green table in Brussels. The common market, not regulation, is the main achievement of European integration. The market, with its four basic freedoms, is the motor of European prosperity. And not the other way around.
The sad irony is that as a result of unnecessary bureaucracy, the market does not function correctly and does not achieve the intended results. This can be clearly demonstrated on the food market and on the energy market. Instead of officials admitting their errors and cancelling regulations, they are requiring different, better regulations, and this goes on and on.
The functioning of this bureaucratic perpetual motion machine is also the reason why we do not completely endorse the official European slogan of "better regulation." What is better regulation? Doesn't that sometimes mean more regulation, or stricter regulations? I would rather say "no regulation" than "better regulation" because "no regulation is definitely not only better, but the best regulation."
