Universit

Slide 1:Università di Siena

European Consumer Policy  Secondo Tarditi www.unisi.it/aep Facoltà di Economia – Dipartimento di Economia Politica Centro Interuniversitario di Politica Agro-alimentare-ambientale (CIPAS) www.unisi.it/cpc www.unisi.it/cipas

Slide 2:010 Introduction

Official EU languages: English, French, German (all official documents and most research papers are available in English) In EU internet sites available translations are accessible by choosing the appropriate language in the top right side of the web page. Approach, could be mainly descriptive (historical, institutional), or mainly analytical: mainly positive (more scientific?) or normative (political?), more descriptive or quantitatively oriented We will preferably follow an analytical, normative approach, based on welfare economics, quantitative when possible. a) Objectives of the Economic Policy will be identified (on grounds of evidence, general consensus, statements in the Treaties) b) Existing (or planned) economic policies will be described c) The present (or resulting) status of EU economy will be matched with objectives d) Appraisal on EU policies will be drawn, based on the attainment of objectives and consequent recommendations will be formulated Questions or critical issues are welcome Intermediate mid-semester test and written paper are optional

Slide 3:020 Consumer policy

Article 153 of the Treaty establishing the EC 1. In order to promote the interests of consumers and to ensure a high level of consumer protection, the Community shall contribute to protecting the health, safety and economic interests of consumers, as well as to promoting their right to information, education and to organise themselves in order to safeguard their interests. 2. Consumer protection requirements shall be taken into account in defining and implementing other Community policies and activities. 3. The Community shall contribute to the attainment of the objectives referred to in paragraph 1 through …... measures which support, supplement and monitor the policy pursued by the Member States. According to the Treaty Establishing the EU, consumer economic interests should be protected and national policies should be monitored. Consumer Policy becomes co-responsible of the waste of economic resources involved by present EU policies

Slide 4:030 Horizontal consistency

Criteria for appraising sector policies: Transparency (Research, information policies) Efficiency (Internal market, competition policies) Stability (Macroeconomic, monetary policies) Equity (Fiscal, cohesion policies) Sustainability (Environmental policy) Safety (Health policy) Security (Defence, social security policies) Consistency (among EU policies, levels of government) Alternative approaches to the debate: Consistency with economic theory (consensus is not always general, not all conditions are fulfilled) Consistency with ethical principles (some are not generally or globally shared) [Presentando la nuova Commissione al Parlamento europeo il 21 luglio scorso, il Presidente dell’Unione europea Romano Prodi, ha dichiarato che la nuova conferenza intergovernativa "non dovra’ semplicemente fare un po’ di ordine per preparare l’Unione all’allargamento, ma che e’ necessaria una piena riforma istituzionale affiche’ l’allargamento funzioni". Il Presidente della Commissione ritiene che lanciare al prossimo summit di Helsinki una conferenza intergovernativa con poteri limitati sarebbe "un errore di proporzioni storiche". Prodi has nominato un comitato di tre esperti investiti del compito di lavorare sui possibili contenuti della prossima riforma del Trattato. Le ONG aspirano ad avere un articolo nel Trattato che costituisca una base legale per il dialogo civile tra le ONG sociali e le Istituzioni dell’Unione europea.] Solidar Settembre 1999 Alternative approaches to the debate: Consistency with economic theory (consensus is not always general, not all conditions are fulfilled) Consistency with ethical principles (some are not generally or globally shared) [Presentando la nuova Commissione al Parlamento europeo il 21 luglio scorso, il Presidente dell’Unione europea Romano Prodi, ha dichiarato che la nuova conferenza intergovernativa "non dovra’ semplicemente fare un po’ di ordine per preparare l’Unione all’allargamento, ma che e’ necessaria una piena riforma istituzionale affiche’ l’allargamento funzioni". Il Presidente della Commissione ritiene che lanciare al prossimo summit di Helsinki una conferenza intergovernativa con poteri limitati sarebbe "un errore di proporzioni storiche". Prodi has nominato un comitato di tre esperti investiti del compito di lavorare sui possibili contenuti della prossima riforma del Trattato. Le ONG aspirano ad avere un articolo nel Trattato che costituisca una base legale per il dialogo civile tra le ONG sociali e le Istituzioni dell’Unione europea.] Solidar Settembre 1999

Slide 5:040 Vertical consistency

International (UN, WTO, OECD, IMF) European Union (Community) National (Italian) Regional (Tuscany) Local - Province, Municipality (Siena) (Interactions between domestic and supranational arenas)

Slide 6:050 International impact

Geographic areas where EU policies may impact: European Union (EU-15) Central and Eastern European Countries (CEECs) Mediterranean countries Less developed countries (LDCs) Developed countries (DCs)

Slide 7:Financial sources of the European budget

Slide 8:Development of the EU Budget by economic branches

Slide 9:Development of Community expenditure

Slide 10:Per cent share

Slide 11:EU budget expenditure in 2006 (commitment appropriations)

Slide 12:Financial perspectives (2006 prices)

Slide 13:Ripartizione delle spese della UE (Bilancio 2006) (En)

Slide 14:Prospettive finanziarie (prezzi 2006)

Slide 15:Dettagli del bilancio (risorse umane e finanziarie)

Slide 16:The CAP in the EU-15 budget (€bn 95.6)

Slide 17:100 CONSUMER POLICY IN THE EU

110 Motivations 120 Developments 130 Present policy 140 Analysis and appraisal 150 Perspectives 160 Strategies References: EU DG Health and Consumer Protection EU Commission: Consumer Affairs

Slide 18:110 Motivations

111 Market Failures 112 Government Failures 113 Lobbies 114 Policymakers 115 Institutions

Slide 19:111 Market failures

Market Failures In a perfectly competitive market without externalities and public goods, economic (consumer) policy would be necessary mainly in order to redistribute income Market imperfections, Non-competitive markets Monopolies oligopolies etc. (e.g. European airlines, railways, cellular telephones) Higher market prices, lower consumption, resource misallocation, inefficiency Monopolistic rents, worse income distribution, inequity Externalities (spill-over effects), occur when people impose costs (or benefits) on others without paying the proper cost (or receiving the proper payment) (e.g. water pollution, food pollution) Positive (e.g. landscape improvement) Negative (e.g. water, air, soil pollution) Public goods (e.g. public security, safety) indivisible external consumption effects on more than one individual (e.g. landscape degradation, public health, food security) Information failure: incomplete or/and distorted Unfair income distribution Not related to contribution to production Not related to individual and social needs Need for collective action, government

Slide 20:111b Disadvantaged areas

E.g. Disadvantaged areas (some mountain areas, hilly peripheral areas) Why disadvantaged: higher transport costs, living costs (heating in winter); worst infrastructural network, services (schools, electricity, gas, etc); lower soil fertility, bad sun exposition, higher slope ? lower yields per ha; Why market failures: Negative externalities on landscape, intra- and inter-regional transport Lower consumer welfare for citizens spending week-ends, summer holydays Non-optimal allocation of available resources, inefficiency Low average income levels in disadvantaged areas, inequity

Slide 21:112 Government failures

If goverments were performing at best (i.e. were always attaining efficient, equitable and sustainable policies), offsetting market failures, Consumer policy would not be needed. Government failures: - Bad performance in offsetting market failures - Direct creation of inefficient, inequitable, non sustainable policies, preventing a higher welfare of citizens Resource allocation, e.g. policies generating: Distorted prices Production quotas Land set aside Income distribution, e.g. policies generating: Rents on land Rents on production rights (quotas) Sustainable development, e.g. policies damaging environment Natural environment (e.g. water, soil , air pollution) Social environment (e.g. fraud consequent to bureaucratisation) Safety, security, e.g. failure in providing appropriate public goods

Slide 22:112a e.g. Land set-aside

E.g. Agricultural policy: land set-aside In order to reduce domestic supply and maintain higher agricultural prices EU pays farmers about €mn 1800 per year to keep about 10% of arable land idle, not cultivated Why government failure EU citizens pay €mn 1800 per year as taxpayers and probably a larger amount of money as consumers, due to higher food market price as a consequence of increased agricultural prices in the EU domestic market Benefits for farmers are much smaller, consequently a large loss in national income and in social welfare is generated by such manifest inefficient policy Higher food prices are equivalent to an income regressive tax on consumers and to an income progressive subsidy to produces, on the whole income redistribution is worsened, this is clearly inequitable policy

Slide 23:113 Why government failures: lobbies

Pressure groups are organised groups of citizens (e.g. producers) attaining better their interests by influencing the policy-making decisional process. Lobby organisations have increased spectacularly in the EU, from 167 in 1960 to 3500 in 1995, in the early 35 years of EU As a general ranking, the action of pressure groups may be: Fully legitimate (fair) i.e. consistent with the stated objectives of the government (maximization of social welfare) (e.g. improving information and providing technical support to policy makers) Detrimental to social welfare (unfair) if their action generates benefits for their particular group of citizens lower than the benefits accruing to society as a whole. In other words if, the resulting policy measures benefit some citizens but the rest of society bears an unjustufiable much larger cost. Countervailing “horizontal”, i.e. action of pressure groups aiming at “general”, not at “particular” welfare improvements in policy-making. They can offset the detrimental impact of unfair pressure groups claiming unwarranted benefits for their member in the policy-making process.

Slide 24:113a EU Commission vs. lobbies

The Commission is open to outside inputs, it aims at an open and structured dialogue with interest groups. A policy on openness so as to encourage a real public debate on its activities Joint code of conduct adopted by Council and Commission providing for the widest possible access to internal documents Development of active and citizen-friendly information policy and increased participation by special interest groups in the preparation of Commission decision and legislative proposals The Commission is frequently contacted by the representatives of special interest groups. These groups can be divided into non-profit making organizations (European and (inter)national associations/federations) and profit making organizations (legal advisers, public relations and public affairs firms, and consultants). http://europa.eu.int/comm/sg/sgc/lobbies/en/communication/groupint_en.htm

Slide 25:113b Quantitative features

In year 2000 there are thought to be approximately 3 000 special interest groups of varying types in Brussels, with up to 10 000 employees working in the lobbying sector. Within this total there are more than 500 European and international federations In addition, there are 50 offices in Brussels representing Länder, regional and local authorities (some of which may of course participate in the institutional framework of the Community) There are more than 200 individual firms with direct representation, and about 100 consultants (management, and public relations) with offices in Brussels and many others dealing with Community affairs. There are 100 law firms in Belgium specializing in Community law and many more in other countries (both Member States and beyond). http://europa.eu.int/comm/sg/sgc/lobbies/en/communication/groupint_en.htm

Slide 26:114 Countervailing power: NGOs

Consumer organisations deal mainly with the security and safety aspects of the CAP. The impact of CAP on consumer economic interests has rarely been a key issue for consumer organisations The Consumer Committee of the EU Commission adopted an opinion on the reform of the CAP, (8-12-98) internet site http://europa.eu.int/comm/dg24/policy/committee/cc06_en.html Need of a countervailing power facing sector (farm in our case) lobbies in order to defend the interest of society as a whole Responsibility for government failures in the CAP are shared between: farm lobbies manipulating policies beyond the limits of an equitable and legitimate defence of sector interests NGOs and consumer organisations not defending consumer economic interests on mass-media and at all policy decision-making levels

Slide 27:114b Role of NGOs

Non-governmental organisations (NGO) (unions, professional associations, etc.) Lack of countervailing power in the policy-making arena E.g. farm organizations Strong, wealthy (part of farm subsidies), well organised, high specific knowledge on food and agricultural issues E.g. consumer organisations Many, ill-financed, badly organised (360° front), low specific expertise Decision-making paradox (minority vested interests prevail) E.g. CES decisions on farm policy Rent-seeking strategy vs. financing NGO direct and indirect subsidies + bureaucratic apparatus, generate income. Policy action maintains subsidies + bureaucratic apparatus and income. Leading to numerous government failures in policy making

Slide 28:115 Why government failures: policymakers

Policy makers and administrators: Sometimes do not care of social welfare in practice as much as they claim to do when making public statements Sometimes have difficulty in perceiving the hidden economic or social costs of special policy measures Sometimes the risk of loosing a policy battle on farm policy is too high, given the strength and good organisation of farm lobbies and the large administrative network involved in the CAP at regional, national and EU level Sometimes the personal cost and commitment to engage in such a risky adventure is just too high as compared to the expected results Sometimes the easiest way of living for policy makers and administrators is just to operate compromises between the strongest lobbies dealing with specific issues (farm lobbies, processors, input producers, large retailers, etc. ) Sometimes conflicts of interests exist when policy makers or administrators are personally involved in managing farms or farmers organisations, or are largely dependent on farm organisations for their re-election or career

Slide 29:115b Government self-monitoring

Effective power of elected policymakers Dependent on their constituency Dependent on information on specific policy issues Dependent on lobbies and vested interests Institutions may favour minority groups’ interests e.g. EU Council of Ministers (uniform interests favour sector interests) vs. National Councils of Ministers (plurality of interests favouring social welfare) Conservation instinct of policymakers E.g. resignation of the Santer Commission Rare inter-DGs criticism or debates on efficient administration Self-controlling approach E.g. EU Agricultural policy evaluation Olive oil subsidies on quantities produced

Slide 30:116 Why gov. failures: Institutions

Sector-oriented origin of the EEC EC EU Sector-homogeneous Council of ministers Democratic paradox in decision making (e-g-CES decision-making procedure) Transparancy in specialised technical issues (e.g. CES tobacco)

Slide 31:120 Developments

121 Early developments 122 The Santer Commission (1995-1999) 123 The Prodi Commission (2000-2004) 124 The Barroso Commission (2005- ) References Bonino E. (1998)  Quale politica per i consumatori?, Diritti e Mercato, ETAS, Milano. (file .doc) EU Commission (1999) Consumer Policy Action Plan 1999-2001 EU Commission (2002) Consumer Policy Strategy 2002-2006 EU Commission (2003) Review of Consumer Policy Strategy 2002-2006 EU Commission (2005) Consumer Policy Strategy: impact assessment

Slide 32:121-a Early developments

Consumers are mentioned only three times in the Treaty of Rome: twice concerning the Common Agricultural Policy (CAP) and once dealing with the competition policy.[1] [1] (1) article 39, n.1, e - an objective of the Common Agricultural Policy was “to ensure supplies to consumers at reasonable prices”; (2) article 40, n.3 - in which the common organisation of agricultural markets “shall exclude any discrimination between producers or consumers within the Community”; (3) article 86, b - prohibiting “such improper practices [as] ... (b) the limitation of production, markets or technical development to the prejudice of consumers”. Sicco Mansholt, commissioner for agriculture, convened first in 1961 the representatives of consumers' organisations in order to discuss some features of the Common Agricultural Policy 1968 a 'Unit for consumer protection' was established at the Directorate General for Competition. Consumer interests were directly associated with the dismantling of imperfections and monopolistic rents in the internal market 1981 a 'Service for consumer policy' was established at the Directorate General for Environmental Protection, stressing the importance of the non-economic components of social welfare such as safety, health protection and environmental externalities

Slide 33:121-b Seventies and Eighties

A 'Consumer Consultative Committee' including representatives of consumer organisations was instituted in 1973 and in 1975 the 'First Programme for a Consumer Protection and Information Policy' was adopted, followed by a Second Consumer Programme in 1981. With the Single European Act in 1987, consumer protection became an official objective of the EU as stated in article 3 In 1988 the 'Consumer Policy Service' became independent from specific Directorates General, and a first 'Three-years Action Plan for Consumer Policy in the EEC (1990-92)' was approved in 1990, followed by a 'Second Commission Three-years Action Plan (1993-95)' The coincidence of general interests with consumer interests is mentioned in the introduction of the First Action Plan: "it is important to pay attention to consumer interests not only for their own sakes, but also for the benefits of producers, distributors and enterprise in general" "Consumer interests should also be reflected in the establishment of other Community policies (i.e. environment, industrial, agriculture, transport and social policy)." The European Union officially established a specific and independent policy for consumers in the Maastricht treaty of 1993. The Maastricht Treaty included a new title for consumer protection (i.e. title XI) Four main areas of consumer policy are identified: information, representation, security, and transactions in the market, later qualified as 'protection of consumer economic interests'.

Slide 34: Il primo ‘Piano di Azione’ (1990-92)

Interesse dei consumatori coincide con l’ interesse generale Rappresentanza dei consumatori Informazione dei consumatori Sicurezza dei consumatori Sicurezza dei prodotti Responabilità civile per danni Certificazione dei prodotti Sorveglianza Transazioni commerciali (Politica economica) Maggiore potere contrattuale dei consumatori nei confronti dei produttori e intermediari Maggiore concorrenza nel mercato unico Omogenoeizzazione delle normative nazionali nel contesto del mercato unico

Slide 35:Il secondo ‘Piano di Azione’ (1993-95)

Trattato di Maastricht (7-2-92) art. 129a: “Tutelare la salute, la sicurezza e gli interessi economici di consumatori e garantire loro una idonea informazione” Priorità: informazione dei consumatori migliorare la concertazione (specialmente in Irlanda e nei Paesi mediterranei) Tutela degli interessi dei consumatori in tutte le politiche comunitarie Stanziamento di bilancio 16 mn ECU (PAC 40 bn Ecu) 0,5 per mille

Slide 36:122-a Santer Commission (1995-1999)

the institution of the Consumer Policy Directorate General in 1995 and the following ratification of the Amsterdam treaty of 1997 The main achievement was the creation of the Consumer Policy Directorate General, DGXXIV, whose tasks were: “A) Propose and monitor legislation to protect the consumer in the internal market; B) Reinforce market transparency; D) Improve consumer confidence, especially by more complete and effective information From 1997 it became the Directorate General for Consumer Policy and Consumer Health Protection. The mission of the DG24 was to “develop a consumer policy and contribute to consumer health protection and food safety at the level of the European Union”. It thus highlights its internal split between consumer policy and consumer protection, where the former relates to actions towards the workings of the market and towards supporting consumer interests within other EU policies. The Amsterdam Treaty signed in 1997 enhanced the legal status of consumers. In Article 129A consumer protection becomes an independent objective of the EU, which shall support and supplement the policies implemented by Member States, according to the principle of subsidiarity.

Slide 37:122-b DG XXIV

The mission of DG XXIV "Consumer Policy and consumer health protection" is to: Develop a consumer policy and contribute to consumer health protection and food safety at the level of the European Union; 1. Consumer Policy propose and monitor legislation to protect the consumer in the internal market ; reinforce market transparency ; improve consumer confidence, especially by more complete and effective information and education ; ensure that the interests of consumers are given due consideration in the development of other European Union policies. 2. Consumer Health Protection manage the European scientific committees concerned with consumer health whose work is based on the principles: evaluate and assess possible risks to consumer health in a forward looking way contribute to the safety of consumer products and services in the European Union. Http://europa.eu.int/comm/dg24/general_info/mission_en.html In the last paragraphs of the Action plan 1999-2001: The Commission will seek to integrate consumer concerns into the Agenda 2000 reform of the Common Agricultural Policy. To pursue this, the Commission will examine the impact of the CAP on consumer’s economic interests, notably price, choice and access to essential foods at reasonable prices.

Slide 38:123 The Prodi Commission (2000-2005)

2002 Consumer policy strategy (2002-2006) Three key objectives "A high common level of consumer protection". This means harmonising, by the most appropriate means (e.g. framework directive, standards, best practices), not just the safety of goods and services, but also those economic and legal interests that will enable consumers to shop with confidence anywhere in the EU and by whatever means. "Effective enforcement of consumer protection rules". There is no good law if it is not properly enforced. In practice, consumers should be given the same protection throughout the EU, and also in an enlarged EU. "Proper involvement of consumer organisations in EU policies". For consumer protection policies to be effective, consumers themselves must have an opportunity to contribute to the development of policies that affect them. Consumers and their representatives should have the capacity and resources to promote their interests on a similar footing as other stakeholders. The main actions consist of a review of mechanisms for consumer organisations to participate actively in EU policy making and to the setting up of education and capacity-building projects.

Slide 39:130 Present policy

131 Ten principles 132 Strategy Programme: Health and Consumer Protection2007-13 133 Basic principles 134 Information 135 Representation 136 Safety and security 137 Economic interests 138 Perspectives 139 Strategie References: EU Commission (2005) Consumer Protection: 10 principles, DG SANCO EU Commission (2005) Health and Consumer Programme 2007-13 Parlamento e Consiglio UE (2005) Programma Sanità e Consumatori 2007-13 EU Commission (2005) Strategy Programme: Impact assessment

Slide 40:130-a SANCO Organigramme

Slide 41:130-b Priorities

Building on solid foundations, three main strategic priorities appear to be central for the new Commission: Better health and health outcomes (beat back obesity, tobacco use and alcohol-related harm, reduce HIV/AIDS, maximise health benefits of other policies (environment, social policy, internal market), strengthen defences against emerging diseases and malicious pathogen releases, deal with anti-microbial resistance, improve safety and quality of health services); particular emphasis should be given to prevention, as well as to protecting Europe’s youth from such threats; Empower consumers to feel more confident in the enlarged single market by strengthening consumer networks, raising awareness and rigorous oversight of transposition, and enforcement of existing legislation and prosecution of infringements; Maintain high levels of food safety at manageable cost, by ensuring effective implementation of the legislation within the EU and help raise health and food standards and practices in third countries. Source: SANCO

Slide 42:131 Ten principles

Commissioner Markos Kyprianou Three policy areas: Food safety, Public health, Consumer protection Focus on consumer protection and on market failures. Reduced attention on government failures 10 basic principles (.pdf) 1. Buy what you want, where you want 2. If it doesn’t work, send it back 3. High safety standards for food and other consumer goods 4. Know what you are eating 5. Contracts should be fair to consumers 6. Sometimes consumers can change their mind 7. Making it easier to compare prices 8. Consumer should not be misled 9. Protection while you are on holiday 10. Effective redress for cross-border disputes

Slide 43:132 Strategy programme

EU Commission (2002) Consumer Policy Strategy 2002-2006

Slide 44:132a Impact assessment

EU Commission (2005) Consumer Policy Strategy: impact assessment EU Commission (2003) Review of Consumer Policy Strategy 2002-2006

Slide 45:133 Basic principles

Information Representation Safety and security Economic interests

Slide 46:134 Information

Undistorted and complete information is a fundamental need for the good social and political functioning of a country. If the perception of reality is distorted the door is open to injustice and endemic quarrelsomeness between social groups. According to a well-known saying, 'truth is the first victim of wars'. When relationships, even between social groups, worsen, everyone tends to interpret facts in a more self-centred, biased way, reducing the possibility of reaching a quick and pacific compromise between diverging points of view. Consumers end up with having to pay for the bad functioning of the market and of public administration E.g. The cost for consumers due to the increased market prices of farm products is totally ignored by the Commission, although, according to OECD estimates, such a burden is larger than the burden on taxpayers (45% of EU Budget) . How could the Council of EU Agricultural Ministers evaluate correctly the impact of their decisions on farm prices if 60% of the cost of price support burdening households is just overlooked? Such distorted information is also diffused in various brochuresprepared for the general public stating that the cost of the CAP is ECU 100 per citizen per year, € 2 per week, without quoting any statistical source. OECD publishes annually a large analytical study, detailed for all OECD countries and for most agricultural commodities, where agricultural policies in the EU are estimated to cost ECU 315 per capita. This amounts to a transfer of ECU 14960 per full time farmer equivalent and ECU 762 per hectare of agricultural land. These more documented figures would communicate a rather different message to the reader. Budgetary costs vs. economic costs

Slide 47:135 Representation

Individual consumers are systematically at a disadvantage in terms of bargaining power with respect to goods and services suppliers. Rarely can a consumer stand the financial burden necessary to promote a court case to protect his rights against a car manufacturer, for example, or against a multinational insurance company When decisions are taken concerning administered prices, implying income transfers from consumers to producers for example, horizontal organisations should be represented in the same proportion as their counterpart, whose economic interests are opposite. At present producers lobbies are usually much better represented and much more effective in supporting their issues. Consumer representatives are usually under-represented and often cannot be as good as producer representatives in dealing with specific topics. The staff of consumer organisations is very limited compared with that of producer organisations and obviously their policy analysts cannot be as well documented on specific technical issues. Compare, for example, the staff of the BEUC (about thirty people) , representing consumer organisations dealing with all issues, with the staff of COPA and COGECA (over three hundred people) representing farm organisations and cooperatives, dealing only with farm policy problems.

Slide 48:136 Safety and security

The basic motivation that guided Community legislation in the field of non-economic issues such as consumer health and security is the improvement of the quality of life. Consequently action is taken to promote consumer health and safety, protecting citizens from buying and consuming defective or harmful goods. The same approach is used for services that do not fully guarantee consumer safety. (e.g. toys, pesticides on fruit) At present most of the financial and human resources involved in consumer policy are spent on heath and safety issues. in the field of preventive legislation, the directive 92/59 on general product safety and the related Rapid Exchange System (REIS), are characterised by a horizontal approach. They go beyond the existing specific regulations for various products and establish new general principles in the field of the liability of supply of services. Consequently they are not only a reference point for legislation on product security, but also a model for future initiatives in other fields.

Slide 49:137 Economic interests

Most of the market failures which worsen the allocation of economic resources are paid by consumers as they are the last link in the industry chain: producers of raw materials, manufacturers, wholesalers, retailers, consumers. Moreover, some policy failures increase the economic burden on households through policy measures leading to higher market prices for goods and services and higher taxation, e.g. when budget expenditure is used for producer subsidies distorting markets and investments. An effective consumer policy, strongly supported by consumer organisations is probably the most promising instrument capable to improve the economic performance of present market economies. It could monitor a transparent and correct implementation of economic policies favouring the combined action of honest policy makers and 'horizontal' pressure groups. Unfortunately the potential of consumer policy in protecting consumer economic interests is not yet fully perceived, neither by policy makers nor by consumer organisations. The minimal share of financial resources allocated to consumer policy proves this lack of perception at a European level. The EU expenditure for consumer policy accounts for 0,025 % of the EU budget.

Slide 50:138 Perspectives

Economic interests of consumers have been recently overlooked Monitoring other economic policies with special reverence to their economic performance in maximising social welfare has never been effectively done In order to fulfil the aims of EU Treaties, such trends and perspectives should be changed

Slide 51:123-a Policy integration, monitoring

Horizontal integration As well as specific consumer protection rules, consumers are also affected by other important EU policies such as the internal market, environment and sustainable development, transport, financial services, competition, agriculture, external trade and more. Consumer policy as such cannot be developed in isolation without taking into account other areas that have an impact on consumers. Systematic integration of consumer concerns into all relevant EU policy areas is essential. Vertical integration Consumer policy is an area where the EU can add value. It is a shared responsibility between the EU and national public authorities. EU rules are enforced at the national level. Integration of consumer interests into all policies can only be effective if there is a similar approach at national level. This means that consumer policy is a collective endeavour of all European Union policy sectors and at all levels, regional, national and European. Monitoring the horizontal and vertical consistency of policies implemented in the EU is needed. Should be done by institutions independent from the EU Commission and Council