Economic Policy Review ISSN 1313 - 0544

Gold-plating: how to identify and avoid

Author: IME / 17.01.2022
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Regardless of the numerous attempts to tackle gold-plating, it remains one of the main factors disrupting the EU internal market. Recently the importance of tackling gold-plating was once again reinstated with the EU’s ambition to abolish unjust barriers to the single market. Reflecting on said ambition, the Lithuanian Free Market Institute, in cooperation with IME and several other EU think-tanks, presents its study “Gold-plating: how to identify and avoid”. It analyses the status quo of gold-plating and possible means of tackling it to achieve EU’s goals towards SMEs and ensuring a flourishing and competitive internal market.

Preventing gold-plating is among the top explicit tasks of the EU in its combat against the barriers to the single market. Not only does gold-plating unjustly disadvantage EU nationals, but it also reduced the competitiveness of the EU as a global player.

Research shows that gold-plating is not in line with the EU legislature’s paradigm to keep the single market differences to a minimum. Typically, gold-plating translates into undue and adverse burdens to all. This in turn not only disadvantages locals but also creates a segmented market, which makes the EU less attractive for foreign investments and foreign SMEs. It was found that there have been some efforts to tame gold-plating practices, which showed to be effective. However good practices should be applied by many instead of some.

The study finds that at the EU level it would be most prudent to include gold-plating risk-assessment in the ex-ante and ex-post regulatory impact assessment (RIA). Particular emphasis should be drawn to the fact that due transposition of directives does not automatically imply enacting new laws, but instead, it requires incorporating its requirements into the domestic legal system, e.g., with existing laws or recommendations. This would lead to reduced regulatory inflation and administrative burden as the Member States would be urged to seek alternatives to enacting new laws.

At the Member State level, it is observed that several States have already established guidelines on avoiding gold-plating. However, these recommendations are not paired with enforcement mechanisms thus making them de facto null. The initial step to tackle gold-plating is a government- and parliament-level joint position of acknowledging the implications of gold-plating and entering the commitment to battle it in the government's agenda. It would also be efficient to commit to a state-level priority to protect their nationals in terms of not putting them at a competitive disadvantage and employing all possible means to reduce their administrative burden. Particular significance should be paid to the RIA stage. It would be most prudent to connect the ex-ante and ex-post RIA mechanisms and make it an obligatory cycle of the legislative process.

  Gold-plating: how to identify and avoid