Scope:

Evaluation of the application of the principle of mutual recognition in goods in the non-harmonised area and of the Mutual Recognition Regulation (EC) No 764/2008

Evaluation findings:

In terms of effectiveness, the evaluation concluded that, despite the existence of the principle and the adoption of the Regulation, free movement of goods in the non-harmonised area remains problematic (as opposed to the sectors which are covered by EU product rules, which represents a large majority of the goods sector – see below). Businesses are still facing difficulties with regard to market access, even if their products are already lawfully marketed in other Member States. Thus, they often adapt their products or give up entering a new market.

Mutual recognition remains relevant however, as it aims to achieve a deep market integration while respecting diversity and regulatory autonomy among Member States.

Finally, the evaluation showed a general consensus among stakeholders that mutual recognition brings added value to the EU. It allows the possibility to market products in a Member State that are already lawfully marketed in another Member State, while maintaining the Member States' regulatory autonomy and diversity. It is widely acknowledged that the objectives it sets out can be met only by acting at EU level.

Estimated savings and benefits

As regards efficiency, as being the main aspect linked to burden reduction and simplification, the findings of the evaluation are mixed. While national authorities tend to agree that the costs are proportionate to the benefits, businesses mostly disagree. They consider that the costs are significant, while the benefits were not achieved. The comparison of the value of the intra EU exports with domestic consumption shows that for harmonised products, the value of intra EU exports is 55% of the domestic consumption, while for the non-harmonised and partially harmonised goods it represents only 35%. This shows that, due to the problematic application of mutual recognition, there is less trade in the non-harmonised area.

The evaluation carried out shows that there does not seem to be any inconsistencies between mutual recognition and other EU policies for achieving the internal market and facilitating the free movement of goods in the EU.

Which objective(s) does the Commission pursue?

With this proposal, the Commission aimed at improving the functioning of mutual recognition (both principle and Regulation) thereby decreasing the costs associated to lost opportunities, delayed entry on the market and adaptation by:

• Increasing awareness of mutual recognition.

• Increasing legal certainty for businesses and national authorities on when the mutual recognition principle can be used.

• Increasing legal certainty about the application of mutual recognition; both business and national authorities should know what they can reasonably expect when mutual recognition is, or ought to be, applied. This will reduce the risk for businesses that their products will not get access to, or will have to be unjustifiably withdrawn from the market.

• Enhancing communication, cooperation and trust among national authorities, so that they can act as a facilitating tool to ensure the functioning of mutual recognition.

The overall objective was to achieve a fairer and deeper single market for goods through a higher level of and better mutual recognition.

Estimated savings and benefits

The proposal was expected to lead to a better functioning of the Single Market for non-harmonised products through more and better mutual recognition. Due to the lack of quantified data (e.g. variety of products and sectors involved, lack of precise data related to the occurrence of market denial), the benefits were assessed from a qualitative point of view only. A study done for the European Parliament ("The Cost of Non- Europe in the Single Market") shows that a reduction of barriers to trade could lead to an increase in intra-EU trade of more than EUR 100 billion per year.

Shortcomings in mutual recognition are de facto regulatory burdens triggering barriers to trade. The corrective actions foreseen by the Commission were expected to improve the functioning of mutual recognition and thus result in simplification for businesses, notably better market access.

Outcome of legislative procedure

The adopted Regulation retains all the main elements of the Commission Proposal. It started to apply on 19 April 2020 and improves the following:

• Legal certainty for businesses and national authorities: The term of ‘lawfully marketed’ is for the first time defined in the EU secondary legislation in relation to non-harmonised goods;

• Assessment procedure: Introducing the mutual recognition declaration facilitates the assessment procedure for both, economic operators and competent authorities; setting out mandatory elements of the administrative decisions ensures that the authorities carefully consider all the elements important for the assessment of the goods;

• Transparency: Information and Communication System on Market Surveillance (ICSMS) is used for the first time in the area of non-harmonised goods. The competent authorities are notifying their decisions based on Regulation (EU) 2019/515 via ICSMS to the Commission and other Member States (instead of sending them by email to the Commission, as earlier). The decisions are accessible to all competent authorities registered in ICSMS and PCPs in the Member States;

• Communication and administrative cooperation: PCPs and competent authorities in the Member State of destination may verify the information they receive from the economic operators contacting the authorities/PCPs via ICSMS in the Member State of origin;

• Enhanced role of Product Contact Points: Product Contact Points have to provide information in relation to mutual recognition on their websites and reply to questions of economic operators concerning mutual recognition in 15 working days;

• Alternative problem solving procedure: A new SOLVIT problem solving procedure has been introduced, with the possibility to request the Commission’s Opinion.

Estimated savings and benefits

Most of the costs of the competent authorities carrying out the assessment of non-harmonised goods are borne by Member States. There are no additional costs than administrative costs for businesses: the voluntary mutual recognition declaration may facilitate the assessment procedure, it can be communicated to the authorities online; the SOLVIT problem-solving procedure does not bear any costs for the businesses. Costs incurred by mutual recognition competent authorities may vary considerably based on the types of goods and Member States. An accurate analysis of those costs and potential savings was not possible due to limited data availability both in terms of completeness and comparability.

Commission Implementing Regulation (EU) 2020/1668 of 10 November 2020 specifying the details and functionalities of the information and communication system to be used for the purposes of Regulation (EU) 2019/515 of the European Parliament and of the Council on the mutual recognition of goods lawfully marketed in another Member State (OJ L 377 of 11.11.2020, page 7) sets out the details necessary to adapt Information and Communication System for Market surveillance (ICSMS) for the purposes of mutual recognition .

ICSMS is used for the following:

• notifications of administrative decisions (Article 5);

• notifications of temporary suspensions (Article 6);

• notification of the Commission’s opinion to all EU countries (Article 8);

• exchange of information between the competent authorities of the Member States verifying data and documents supplied by the economic operator during an assessment (Article 10).

The Commission participated in workshops organised for economic operators on mutual recognition as part of the action to raise awareness about this topic.

Trainings on mutual recognition and ICMS were organized in 2022 for the competent authorities appointed for various sectors and registered in ICSMS.

An expert group on mutual recognition of goods was created in 2020 with mission to develop the cooperation mechanisms between Member States. A meeting of the expert group was held in October 2022. A program of exchange of national officials will be organised in 2023. Two videos raising awareness about mutual recognition of goods will be ready by March 2023.

On 30 September 2021, the Commission issued its first opinion following a request from a SOLVIT Center relating to a national decision to reject an application for marketing of a non-harmonised food supplement lawfully marketed in two other Member States. A second opinion was issued in January 2022. Three other opinions are expected to be adopted in January 2023.

By 20 April 2025 and every four years thereafter, the Commission shall carry out an evaluation of the Regulation. The first evaluation will start in 2023.