A painful birth for the EC in Brussels

The birth pangs of the new European Commission led by the former Portuguese prime minister Jose Manuel Barroso have, once again, projected a less-than-ideal image of the European Union.

Some seasoned EU supporters have, though, sought to counter this by referring to the benefits for the longer-term ‘maturing’ of the EU political process.

The rejection by the European parliament of the original new commission line-up, so the argument goes, confirms the parliament’s assumption of its rightful place in the EU political pecking order. And in turn, greater profile for the parliament will mean greater participation at the ballot box for European elections. This is indeed a very long-term perspective.

Whether or not such a positive interpretation gains currency in the popular consciousness – which appears far more taken with the pomp and ceremony of the opening of the UK parliament – remains to be seen.

However, the European Union has at least become more visible again in recent weeks. This is no bad thing given the important repercussions that it has for our everyday professional lives.

With the installation in office of president Barroso, the Brussels machinery can now crank back into motion. And about time too. Ever since the European elections at the beginning of May, this machine has been faltering forward, as opposed to firing on all cylinders.

This was necessarily the case as the structures of the EU had to undergo adjustments to take into account the unprecedented enlargement. The commission has, of course, included representatives from the 10 new member states since ‘enlargement day’ on 1 May.

However, these representatives were incorporated as ‘shadow’ commissioners, and only now will we see them stepping firmly into the light to take up real responsibilities, alongside the whole commission team.

So what are the prospects for the Barroso Commission and what impact can we expect where the European accountancy profession is concerned?

Well, in the first place, it is justified to ask whether the new commission will ever be able to come fully out of the shadow of the Romano Prodi commission. After all, the new executive will inherit a very considerable package of existing legislative proposals which, despite the intense law-making record of the Prodi commission, remain unfinished.

The last few months have in fact seen a final flurry of commission proposals – for example dealing with corporate malpractice. While this legacy is probably already more weighty than that taken on by any other incoming commission, there are also further conditioning factors, not to mention ‘constraints’, impinging on the Barroso team.

For some months, there has been a steady build up of political momentum in favour of a scaling down of European Union law-making in order to avoid excessive burdens on business. This found expression at the recent meeting of European ministers last Thursday.

Ministers agreed not only to streamline existing regulations across the whole policy spectrum – including the internal market sphere from where legislation affecting the profession mainly emanates – but also to scrap approximately 100 draft laws currently in the pipeline.

Meanwhile, any new proposals emanating from the commission are to be subjected to a ‘rigorous impact assessment’.

The German industry commissioner Gunter Verheugen, who is now beginning a second term in Brussels, has indicated that the fight against EU bureaucracy will be the ‘personal trademark’ of his mandate.

Both reducing regulatory burdens and the introduction of impact assessments are likely to attract considerable support within the parliament. In addition, the parliament is also demonstrating a greater degree of interest in the implementation and enforcement of existing legislation.

All this is leading some commentators to see the next five years as a period of consolidation, rather than of new departures.

This should not, however, be taken to mean the EU machinery will cease to churn out legislative proposals. It is likely to be more selective, but the prospects of a total freeze on new regulations are remote, if not non-existent.

Where the profession is concerned, we are already in the midst of major legislative initiatives that require a consistent public affairs response.

Given the very broad recognition in Brussels today of the importance of financial reporting for the development of the internal market (and indeed beyond), it is unthinkable that the cull of new EU legislative proposals agreed by ministers will include, for example, the draft proposals to regulate the audit profession.

Similarly, it is inconceivable that the proposals on money laundering, or those on corporate malpractice, will be withdrawn.

Just as over the course of the last few years, the profession should expect to be at the centre of policy makers’ attention in the Brussels arena.

It is certainly the expectation of the ICAEW as its EU Office prepares to celebrate its first 10 years.

Martin Manuzi is director of the ICAEW’s European Union office in Brussels.

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