IREF - Institute for Research in Economic and Fiscal issues
Für wirtschaftliche Freiheit und Steuerwettbewerb
The current political discourse frequently acknowledges the importance of entrepreneurs as the driving force of a developed society. However, policy agendas and regulations already in place are rarely constructed in a way that allows entrepreneurs to thrive, build and innovate. Compulsory certification procedures have increasingly become a burden for companies trying to put new products on the market, without offering something truly useful to consumers in return. The European Economic Area’s CE Marking is one of these compulsory standardisation processes that all producers and distributors within the Single Market must deal with.
This article tries to assess the impact of the CE Marking from the viewpoint of the producer/supplier and of the consumer. By making use of consumer surveys and interviews with producers and distributors, as well of the available data, these conclusions follow:
There is a generalised confusion with respect to CE Marking as far as consumers are concerned. Most of them don’t know what it means and, of those who do, most do not take it into account when making purchasing decisions. However, consumers seem to believe that products should meet high safety, health, and environmental protection requirements. Since the CE Marking is everywhere, it can hardly mean much or make a difference for the consumer. This sentiment is enhanced by the fact that companies from China are often stamping an almost identical mark on products they sell in the European Union, without actually complying with any of the regulations.
Then, many companies also don’t really understand the purpose of CE Marking. Since a lot of the products don’t require third-party testing, producers and distributors will often simply affix the CE Marking on their products, write the Declaration of Conformity required in order to be formally compliant, and then hope for the best.
The red tape in the case of CE Marking has become so complex that it is almost impossible to be fully compliant. CE Marking started from a very good idea – harmonizing standards in order to make trade easier between Member States. In previous times, every country had its own regulations and standardization processes, which made it difficult for a German producer to sell its products on the French market. Harmonizing legislation seemed like a good idea. But with time, over-regulation and over-standardisation have become a burden, the cost of which falls on consumers. The extremely large number of directives and regulations that form the CE Marking framework makes it almost impossible for small firms to keep up with the frequent changes in the law. While bigger companies can often deal with the bureaucracy internally, small start-ups end up buying the services of one of the many CE Marking specialized firms, thus increasing the prices for their products or ultimately forcing them to abandon the sale of certain products on the EU market altogether.
The negative effects of the red tape are not only limited to the costs of the complex procedures distributors and producers need to perform, but also to the governmental expenses related to the high number of notified bodies and authorities in charge of monitoring the certification process and performing inspections on products requiring the CE Marking.
Given the fact that the CE Marking seems to not bring any real benefit to the general public, one should start wondering if there isn’t a better way to ensure easy access to the single market for safe, qualitative products. According to the results of this study, consumers cherish the brand, the company’s reputation or other alternative quality assurance methods more than the CE Marking, which to them is a sign printed on all products, to which they have become accustomed, but which carries no meaning.
With or without the CE Marking, companies would still perform testing and quality checks in order to remain competitive. This is shown by the high number of alternative private certification companies to which manufacturers in fields like industrial machinery or electronics are turning for their services.
The costs of compliance and the disadvantages of its overly-complex conformity assessments largely appear to outweigh the benefits of the CE Marking framework. The CE Marking seems to have become devoid of its fundamental meaning for both consumers and producers. Producers and distributors may still be able to derive some benefits from the harmonisation of standards at the EU level, but these benefits diminish the more the legislation expands in size. Currently, it is perhaps mostly through its failings that the CE Marking benefits European consumers, businesses and the EU economy. In the future, EU legislators need to start looking at ways to simplify the CE Marking framework, bring it closer to the initial idea that triggered its creation, and make it more applicable in real life circumstances.