Study On The Costs and Benefits of The Revision of-ET0118118ENN-1

Study on the costs and
benefits of the revision of the

Mutual Recognition Regulation
(EC) No 764/2008
Service Request No
567/PP/GRO/IMA/16/1133/8852
Written by EY with the support of Tech4i2, Time.lex, and CEPS
August 2017
EUROPEAN COMMISSION
Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs

Directorate B — Single Market Policy, Regulation and Implementation
Unit Β.1 Single Market Policy, Mutual Recognition and Surveillance
E-mail: GROW-B1@ec.europa.eu
European Commission
B-1049 Brussels
EUROPEAN COMMISSION
Study on the costs and benefits

of the revision of the Mutual
Recognition Regulation (EC) No
764/2008
Service Request No
567/PP/GRO/IMA/16/1133/8852
Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs
2018
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Luxembourg: Publications Office of the European Union, 2018
ISBN 978-92-79-80002-3
doi: 10.2873/360259
© European Union, 2018
Reproduction is authorised provided the source is acknowledged.
Study on the costs and benefits of the revision
of the Mutual Recognition Regulation (EC) No 764/2008
LIST OF ABBREVIATIONS
BIS Business Innovation & Skills

CSES Centre for Strategy & Evaluation Services
DG Directorate General
EC European Commission
EEA European Economic Area
EFTA European Free Trade Association
EU European Union
FCM Food Contact Material
IA Impact Assessment
ICT Information & Communication Technologies
IMI Internal Market Information System
JRC Joint Research Centre
MR Mutual Recognition
MS Member States
OECD Organisation for Economic Co-operation and Development
OJ L Official Journal of the European Union
SFMR Suboptimal Functioning of Mutual Recognition
SITC Standard International Trade Classification
SME(s) Small and Medium Enterprises
ToR Terms of Reference
TRIS Technical Regulations Information Systems
TFEU Treaty on the Functioning of the European Union
LIST OF COUNTRIES
AT Austria
BE Belgium
BG Bulgaria
CY Cyprus
CZ Czech Republic
DE Germany
DK Denmark
EE Estonia
EL Greece
ES Spain
FI Finland
FR France
HR Croatia
HU Hungary
IE Ireland
IT Italy
LT Lithuania
LU Luxembourg
LV Latvia
MT Malta
NL The Netherlands
PL Poland
i
PT Portugal
RO Romania
SE Sweden
SI Slovenia
SK Slovakia
UK United Kingdom
ii
Table of contents
EXECUTIVE SUMMARY ......................................................................................... IV
RÉSUMÉ EXÉCUTIF ............................................................................................. VI
ZUSAMMENFASSUNG ........................................................................................ VIII
1 INTRODUCTION .......................................................................................... 10
1.1 Objectives and scope of the Study ................................................................... 10
1.2 Structure of the report ................................................................................... 10
2 METHODOLOGICAL APPROACH ......................................................................... 12
2.1 Methodology ................................................................................................. 12
2.2 Tools for data collection .................................................................................. 17
2.3 Main limitations and mitigating measures ......................................................... 18
3 THE STATE OF PLAY OF MUTUAL RECOGNITION ...................................................... 20
3.1 Size of the market for mutual recognition ......................................................... 20
3.2 The implementation of mutual recognition ........................................................ 29
4 ESTIMATING THE MAGNITUDE OF THE PROBLEM .................................................... 43
5 PROBLEMS AND OPTIONS IN PRACTICE: THE MUTUAL RECOGNITION IN FIVE SECTORS........ 56
6 THE WAY FORWARD: ASSESSMENT OF THE POLICY OPTIONS ...................................... 89
6.1 Effectiveness of the policy options in enhancing the functioning of the mutual
recognition ........................................................................................................... 89
6.2 Effectiveness of the policy options in reducing costs for economic operators .......... 95
6.3 Cost effectiveness of the policy options based on cross case study analysis ........... 96
6.4 Assessment of the most effective options.......................................................... 98
7 CONCLUSIONS AND RECOMMENDATIONS............................................................ 103
8 ANNEXES ................................................................................................ 108
8.1 Harmonised, Non-Harmonised (or partially) harmonised sectors. Classification used
in the market analysis (Sectorial Level) .................................................................. 108
8.2 Products classified as non or partially harmonised in the market analysis (Product
level) by sector ................................................................................................... 113
8.3 Detailed methodology and assumptions for the estimation of the magnitude of the
problem.............................................................................................................. 116
8.4 Sensitivity analysis ...................................................................................... 119
8.5 Analysis of stakeholders’ sentiment on proposed policy options ......................... 121
8.6 Stakeholders involved in the case studies ....................................................... 130
8.7 Information sources ..................................................................................... 135
iii
Executive Summary
Regulation (EC) 764/2008 (‘the Mutual Recognition Regulation’), laying down procedures
relating to the application of certain national technical rules to products lawfully marketed in
another Member State and repealing Decision No 3052/95/EC, aims at strengthening the
functioning of the internal market by fostering the free movement of products. 1
The principle of mutual recognition, embedded in Articles 34 and 36 of the TFEU, applies to
all products that are not subject to EU harmonisation legislation (i.e. for which there are no
harmonised essential requirements), and for which different national technical rules continue
to co-exist within the Single Market. Mutual recognition is one of the means of ensuring the
free movement of goods through the elimination of technical obstacles that may hamper such
a free movement across Member States.
Previous studies highlight how the current functioning of mutual recognition is not
optimal. Shortcomings and limits exist in the implementation, including, for instance,
difficulties for stakeholders in understanding if and when mutual recognition may apply,
missed application due to lack of awareness or reliability on the principle, lack of
communication among stakeholders involved. Consequently, additional (and non-justified)
costs may be sustained by companies when trying to enter a new market. All these costs and
difficulties may even lead to companies missing out on market opportunities.
To this end, the Commission saw the need to revise the application of the principle and
the implementation of the Regulation,2 with the objective of ensuring a better mutual
recognition, achieving a fairer and deeper Single Market for goods. A series of policy options
were drafted, envisaging different levels of modifications to the Regulation and existing
instruments to apply mutual recognition, as well as introducing new tools and procedures.
Within this framework, the purpose of this study was to collect data to identify the economic
value of non (or partially) harmonised products, the most significant impacts of the different
options envisaged for the revision of the Regulation, their benefits and costs, providing input
for the Impact Assessment undertaken by the Commission and accompanying the revision.
The assessment relied on both desk and field research, combining different methods and tools,
to provide an analysis of the market, to estimate the magnitude of the problem relating to a
sub-optimal application of mutual recognition, and to compare the options, trying to quantify
their impact.
To identify the market value of non (or partially) harmonised products, the study combined
analyses in terms of both sectors (considering the number of active economic operators and
the share of non (or partially) harmonised sectors on the overall EU manufacturing sector)
and products. From 2008 to 2015, the (average) annual value of intra-EU exports of non
(or partially) harmonised products has been equal to €335 billion, representing 18% of the
overall value of intra-EU exports and around 23.7% of the yearly added value created in the
manufacturing sectors. The analysis highlighted how non (or partially) harmonised sectors
and products employ more than 8 million people (roughly over 30% of the EU manufacturing
employment), mainly in micro and small/medium enterprises, contributing to almost 60% of
the value added produced by the non (or partially) harmonised sectors. Intra-EU trade
1 And subject to Article 28 of the Treaty on the Functioning of the European Union (TFEU).
2Communication from Commission to the European Parliament, the Council, the European Economic and Social
Committee and the Committee of the Regions, Upgrading the Single Market: more opportunities for people and
business, COM 2015 550/2.
iv
represents only 35% of domestic consumption of non (or partially) harmonised products,
potentially signalling a sub-optimal free movement of such products across Member States.
The magnitude of the problem, in terms of costs associated with sub-optimal functioning
of mutual recognition, is estimated by considering a number of costs identified for a product.
On average these are estimated to be transaction costs of €4,800 (per product), delayed entry
into a new market (€65,600), compliance costs to adjust a product to comply with national
requirements (€37,600) and lost opportunity costs for those not introducing new products
(€57,400).
Based on stakeholders’ input, the analysis identified four ‘preferred policy options’ to be
potentially effective in modifying and improving the current application of mutual recognition.
Coherently with the main difficulties highlighted, the ‘preferred options” focus on the
improvement in free movement introducing the compliance to European standards as a
reinforcement to the compliance of goods. They also focus on the increased transparency of
the process and the administrative decisions taken by national authorities, the acceleration of
the process and specifically of the appeal and judicial procedures, and the strengthening of
administrative cooperation among Member States.
The options identified tackle major practical problems. However, there are other elements to
be considered for effective implementation. Such elements include the need to pay attention
to, and balance the differences across sectors, products and countries that constitute the basis
for the complex environment where stakeholders operate.
To this end, a series of recommendations is provided, with the objective of providing insights
on how to implement future actions. Recommendations include the need to further detail and
clarify the options in order to reduce any room for interpretation; to provide more legal
certainty around the options as a basis for their implementation; and to specify procedures
and instruments to be used to implement them, such as incentives for national authorities to
ensure a proper implementation. Finally, while each option brings important elements to
improve the functioning of mutual recognition, a mix of such options could probably be more
effective in pursuing this objective.
v
Résumé exécutif
Le règlement (CE) n° 764/2008 (ci-après dénommé «règlement de reconnaissance mutuelle»)
établissant les procédures relatives à l'application de certaines règles techniques nationales à
des produits commercialisés légalement dans un autre État membre et abrogeant la décision
n° 3052/95/CE, vise à renforcer le fonctionnement du marché intérieur, en favorisant la libre
circulation des produits.3
Le principe de reconnaissance mutuelle, énoncé dans les articles 34 et 36 du TFUE, s'applique

à tous les produits qui ne sont pas soumis à des règles communes de l'UE et qui sont
totalement ou partiellement non-harmonisés. , et pour lesquels différentes règles techniques
nationales continuent à coexister dans le marché unique. La reconnaissance mutuelle est l'un
des moyens pour assurer la libre circulation des marchandises entre les États membres à
travers l'élimination des obstacles techniques qui peuvent l’entraver.
Des études précédentes soulignent que le fonctionnement actuel de la reconnaissance

mutuelle n'est pas optimal. Des lacunes et des limites existent dans l’application. Par
exemple, les difficultés des parties prenantes à comprendre si et quand la reconnaissance
mutuelle s'applique; la non application en raison d’une sensibilisation limitée ou d’une manque
de fiabilité du principe; le manque de communication entre les acteurs. Par conséquence, les
entreprises peuvent soutenir des coûts supplémentaires (et non justifiés) lorsqu'elles tentent
d'entrer sur un nouveau marché. Ces couts peuvent même conduire à la perte des
opportunités de marché pour certaines entreprises.
Dans ce contexte, la Commission a identifié la nécessité de réviser l'application du principe

et du règlement,4 pour assurer une meilleure reconnaissance mutuelle, et obtenir un marché
unique des biens plus équitable et développé. Plusieurs options politiques ont été élaborées,
qui envisagent différents niveaux de modification du règlement et des instruments existants
pour appliquer la reconnaissance mutuelle, ainsi que l'introduction de nouveaux outils et
procédures.
Dans ce cadre, la présente étude a pour objectif de recueillir des données pour identifier la
valeur économique des produits non (ou partiellement) harmonisés, les impacts les plus
importants des options politiques envisagées pour la révision du règlement, leurs avantages
et coûts. L’étude fournit les informations pour l'évaluation d'impact de la UE qui accompagnera
la révision du règlement pas la Commission.
L'analyse combine différentes méthodes et outils de recherche documentaire et sur le terrain,

finalisés à l’analyse du marché, l’estimation de l'ampleur du problème lié à l’application sous-
optimale de la reconnaissance mutuelle et la comparaison des options politiques, en essayant
de quantifier leurs impacts.
Pour identifier la valeur de marché des produits non (ou partiellement) harmonisés, l'étude
a combiné des analyses des secteurs (en considérant le nombre d'opérateurs économiques
actifs et la part des secteurs non (ou partiellement) harmonisés sur l'ensemble du secteur
manufacturier de l'UE) et des produits. De 2008 à 2015, la valeur annuelle (moyenne) des
exportations intracommunautaires de produits non (ou partiellement) harmonisés a été
égale à 335 milliards d'euros, représentant 18% de la valeur globale des exportations
intracommunautaires et environ 23.7% de la valeur ajoutée annuelle créée dans les secteurs
3 Et sous réserve de l'article 28 du Traité sur le fonctionnement de l'Union européenne (TFUE).

4Communication de la Commission au Parlement européen, au Conseil, au Comité économique et social européen et
au Comité des régions. Améliorer le marché unique : de nouvelles opportunités pour les citoyens et les entreprises,
COM 2015 550/2.
vi
manufacturiers. L'analyse a mis en évidence que les secteurs et les produits non (ou
partiellement) harmonisés emploient plus de 8 millions de personnes (environ 30% de l'emploi
manufacturier de l'UE), principalement dans des micros, petites/moyennes entreprises, qui
ont contribué à près de 60% de la valeur ajoutée produite par les secteurs non (ou
partiellement) harmonisés. Le commerce intracommunautaire ne représente que 35% de la
consommation domestique des produits non (ou partiellement) harmonisés, ce qui pourrait
signaler une libre circulation sous-optimale de ces produits entre les États membres.
L'ampleur du problème, en termes de coûts associés au fonctionnement sous-optimal de la
reconnaissance mutuelle, est estimée en considérant un certain nombre de coûts identifiés
pour un produit. En moyenne, il s’agit de coûts de transaction de 4,800 euros (par produit),
d’une entrée retardée dans un nouveau marché (65,600 euros), de coûts de conformité pour
adapter un produit aux exigences nationales (37,600 euros), et de coûts d'opportunité
manquée pour les entreprises qui n’introduisent pas de nouveaux produits (57,400 euros).
Selon l'analyse des contributions des parties prenantes, quatre «options politiques
préférées» ont été identifiés comme étant potentiellement efficaces et ayant un impact sur
l'application actuelle de la reconnaissance mutuelle. En cohérence avec les lacunes et des
limites identifiées, les «options préférées» mettent l'accent sur l'amélioration de la libre
circulation, introduisant la conformité aux normes européennes. Elles mettent également
l'accent sur la nécessité d’améliorer la transparence du processus et des décisions
administratives des autorités nationales, l'accélération du processus et plus précisément des
procédures d'appel et judiciaires et le renforcement de la coopération administrative entre les
États membres.
Les options identifiées abordent les principaux problèmes pratiques. Cependant, ils existent
d'autres éléments qui doivent être pris en compte pour une application efficace. Ces éléments
incluent la nécessité de faire attention et équilibrer les différences entre les secteurs, les
produits et les pays qui caractérisent l'environnement complexe où les parties prenantes
opèrent.
À cette fin, une série de recommandations est fournie, pour guider l’identification des actions
futures. Les recommandations incluent la nécessité de mieux détailler et de clarifier les
options, afin de ne pas laisser des marges d’interprétation; de fournir plus de certitude
juridique autour des options comme base de leur application; et de préciser les procédures et
les instruments à utiliser pour la mise en œuvre, tels que les incitations aux autorités
nationales à assurer une application correcte. Enfin, bien que chaque option apporte des
éléments importants pour améliorer le fonctionnement de la reconnaissance mutuelle, une
combinaison de ces options pourrait probablement être plus efficace dans la poursuite de cet
objectif.
vii
Zusammenfassung
Die Verordnung (EG) Nr. 764/2008 (‘Verordnung über die gegenseitige Anerkennung’) zur
Festlegung von Verfahren im Zusammenhang mit der Anwendung bestimmter nationaler
technischer Vorschriften für Produkte, die in einem anderen Mitgliedstaat rechtmäßig in den
Verkehr gebracht worden sind, und zur Aufhebung der Entscheidung Nr. 3052/95/EG, zielt
darauf ab, die Funktionsweise des Binnenmarktes zu stärken, indem sie den freien
Warenverkehr fördert.5
Das in Artikel 34 und 36 des AEUV enthaltene Prinzip der gegenseitigen Anerkennung gilt für
all jene Waren, welche nicht unter die EU-Harmonisierungsrechtsvorschriften fallen (d.h., für
die keine Mindestharmonisierungsmaßnahmen gelten), und für die innerhalb des
Binnenmarkts nach wie vor verschiedene nationale technische Vorschriften gelten. Durch die
Beseitigung technischer Hindernisse ist die gegenseitige Anerkennung eines der Prinzipien,
die einen freien Warenverkehr zwischen den Mitgliedstaaten gewährleisten.
Frühere Studien zeigen auf, dass die bisherige Funktionsweise der gegenseitigen
Anerkennung nicht optimal ist. Die Umsetzung weist Schwachpunkte und Engpässe auf,
zum Beispiel mit Hinblick auf Schwierigkeiten der Stakeholder, zu verstehen, ob und wann die
gegenseitige Anerkennung anzuwenden ist, auf versäumte Anwendung aufgrund fehlender
Kenntnisse oder mangelnder Zuverlässigkeit des Prinzips, oder auch mit Hinblick auf
Kommunikationsdefizite zwischen den verschiedenen Akteuren. Folge dessen bestehen für
Unternehmen, die in einen neuen Markt einsteigen, zusätzliche (und nicht gerechtfertigte)
Kosten. Komplikationen dieser Art können für gewisse Unternehmen sogar zum Verpassen
von Marktchancen führen.
In diesem Sinne erkannte die Kommission di Notwendigkeit, die Applikation des Prinzips
und die Umsetzung der Verordnung zu überarbeiten 6, mit der Absicht, eine bessere
gegenseitige Anerkennung zu garantieren und einen vertieften und faireren Binnenmarkt für
Waren zu schaffen. Eine Serie von grundsatzpolitischen Optionen wurden entworfen, welche
sowohl verschiedene Abänderungsniveaus der Verordnung und weiterer bestehender
Maßnahmen in Betracht ziehen, als auch die Einführung von neuen Verfahren und
Instrumenten.
In diesem Rahmen hatte diese Studie die Absicht, Daten zu erheben, um den
wirtschaftlichen Wert von nicht (oder nur teilweise) harmonisierten Waren und die
bedeutendsten Auswirkungen der verschiedenen ausgearbeiteten Revisionsoptionen und
deren Vorteile und Kosten zu identifizieren, und dadurch zu dem die Überarbeitung
begleitenden Impact Assessment beizutragen.
Die Auswertung beruhte auf Desk- und Field-Research, und kombinierte verschiedene
Methoden und Instrumente miteinander, mit dem Ziel, eine Marktanalyse vorzulegen, das
Ausmaß einer nicht optimalen Anwendung der gegenseitigen Anerkennung zu berechnen, und
die verschiedenen Optionen anhand einer Quantifizierung ihrer Auswirkungen zu vergleichen.
Um den Marktwert von nicht (oder nur teilweise) harmonisierten Waren zu ermitteln, hat die
Studie sowohl Produktanalysen als auch bereichsbezogene Analysen (unter Berücksichtigung
5 Unter Berücksichtigung von Artikel 28 des Vertrags über die Arbeitsweise der Europäischen Union (AEUV).
6 Mitteilung der Kommission an das Europäische Parlament, den Rat, den Europäischen Wirtschafts- und
Sozialausschuss und den Ausschuss der Regionen, Upgrading the Single Market: more opportunities for people and
business, COM(2015)550/2.
viii
der Anzahl der aktiven Wirtschaftsakteure und des Anteils an nicht (oder partial)
harmonisierten Sektoren im EU-weiten
Produktionssektor) miteinander kombiniert. Der Jahresdurchschnittswert der Intra-EU-

Exporte von nicht (oder nur teilweise) harmonisierten Waren im Zeitraum 2008 – 2015 betrug
335 Mrd. Euro, was 18% des Gesamtwertes der Intra-EU-Exporte und ca. 23,7% des jährlich
im Verarbeitenden Gewerbe geschaffenen Mehrwertes entspricht. Die Studie hob hervor, dass
die nicht (oder nur teilweise) harmonisierten Bereiche und Waren mehr als 8 Mio. Personen
beschäftigen (rund 30% der Beschäftigung im Verarbeitenden Gewerbe), hauptsächlich in
kleinsten und kleinen/mittleren Unternehmen, die zu circa 60% des in nicht (oder nur
teilweise) harmonisierten Bereichen geschaffenen Mehrwertes beitrugen. Der Intra-EU-Handel
stellt nur 34% des Inlandskonsums von nicht (oder nur teilweise) harmonisierten Waren dar,
und signalisiert somit möglicherweise einen sub-optimalen freien Handel von derartigen
Produkten zwischen den Mitgliedstaaten.
Die kostenbezogene Tragweite einer sub-optimalen Funktionsweise der gegenseitigen

Anerkennung wurde anhand einer Anzahl der für ein bestimmtes Produkt identifizierten Kosten
festgelegt. Im Durchschnitt gelten als solche 4.800€ an Transaktionskosten (pro Produkt),
Kosten für eine verspätete Einführung in einen neuen Markt (65.600€), Befolgungskosten, die
anfallen, um Produkte nationalen Vorschriften anzugleichen (37.600€) und Kosten für das
Verpassen von neuen Markteinführungsgelegenheiten (57.400€).
Die Studie hat auf Grund der Inputs der Stakeholder vier „bevorzugte Grundsatzoptionen’
identifiziert, welche die bisherige Umsetzung der gegenseitigen Anerkennung potentiell am
erfolgreichsten abändern. In Übereinstimmung mit den hervorgehobenen Kernpunkten zielen
die „bevorzugten Optionen’ auf eine Verbesserung des freien Warenverkehrs ab, indem sie die
Einhaltung von europäischen Standards als Verstärkung der Waren-Compliance einführen.
Zudem befasst sich die Studie mit der zunehmenden Transparenz der Prozesse und der
Verwaltungsentscheide der nationalen Autoritäten, mit der Beschleunigung des Prozesses und
im Besonderen der Berufungs-und Gerichtsverfahren, und nicht zuletzt mit dem Ausbau der
Zusammenarbeit der Verwaltungsbehörden der einzelnen Mitgliedstaaten.
Die von der Kommission ausgearbeiteten Optionen behandeln wesentliche praktische
Problemstellungen. Dennoch müssen für eine wirksame Umsetzung einige zusätzliche
Elemente berücksichtigt werden. Dazu zählt die Notwendigkeit, die Unterschiede zwischen
Bereichen, Produkten und Staaten, welche die Grundlage des komplexen Handlungsfelds der
Stakeholder bilden, in Betracht zu ziehen und deren Gleichgewicht zu wahren.
In diesem Sinne werden eine Reihe von Empfehlungen geliefert, um Einblicke darüber zu
bieten, wie zukünftige Maßnahmen umgesetzt werden können. Die Empfehlungen betreffen
die Notwendigkeit, die Optionen weiter zu detaillieren und klarzustellen, um keinen
Interpretationsspielraum zu bieten; größere Rechtssicherheit was die Optionen betrifft zu
schaffen, als Grundlage für deren Umsetzung; und Umsetzungsverfahren und –instrumente
vorzugeben, wie etwa an die nationalen Behörden gerichtete Anreize für eine
vorschriftsmäßige Umsetzung. Während schließlich jede Option wichtige Elemente für eine
Verbesserung der Funktionsweise der gegenseitigen Anerkennung festlegt, könnte ein Mix
dieser Optionen möglicherweise zu einer effektiveren Verwirklichung dieses Ziels beitragen.
ix
1 INTRODUCTION
This Report responds to the request for services for providing a study on the costs and benefits
of the revision of the Mutual Recognition Regulation (EC) No 764/2008. The request for
services was issued by the European Commission, Directorate-General for Internal Market,
Industry, Entrepreneurship and SMEs (DG GROW) unit B1.
The study was led by EY with the support of Tech4i2, Time.lex, and CEPS.
1.1 Objectives and scope of the Study

The overall objective of the study is to provide inputs for the Impact Assessment (IA)
accompanying the revision of Regulation (EC) No 764/2008 (‘the Mutual Recognition
Regulation’). The specific inputs requested are the collection of data to identify the economic
value of non (or partially) harmonised products, the most significant impacts of the different
options envisaged for the revision of the Regulation, and their main costs and benefits.
The revision of the Mutual Recognition Regulation has the objective of achieving a fairer and
deeper Single Market for goods through more and better mutual recognition. The specific
objectives of this intervention are as follows:
 Increase legal certainty for businesses and national authorities when using the mutual
recognition principle;
 Improve communication and cooperation among users and strengthen the role of
Product Contact Points;
 Reduce the risk for businesses to see market access denied.
The subject of this study is Regulation (EC) No 764/2008 of the European Parliament and of
the Council of 9 July 2008.
The scope of the study was defined as follows:
 Legislation: Regulation (EC) 764/2008 (‘the Mutual Recognition Regulation’) laying

down procedures relating to the application of certain national technical rules to
products lawfully marketed in another Member State and repealing Decision No
3052/95/EC (Text with EEA relevance), OJ L 218 of 13.8.2008, p. 21-29;
 Timeframe: The study covers a time period from 2006 until June 2017;
 Territory: the 28 EU Member States, and where appropriate EFTA and third countries;
 Stakeholders:
o Product Contact Points;
o Responsible national authorities dealing with mutual recognition principle;
o National business networks/associations;
o Other economic operators (i.e. businesses).
1.2 Structure of the report

Considering the objectives of the Study, this report includes:
 The scope and objectives of the study in Chapter 1;
 The methodology and tools used to perform the tasks and the main limitations
encountered in Chapter 2;
10
 The presentation of the state of play in Chapter 3, including the estimated market size
of mutual recognition, its implementation process , the main problems identified and
the policy options drafted by the Commission;
 The estimation of the magnitude of the problem in Chapter 4, detailing the costs
caused by a sub-optimal functioning of mutual recognition;
 The presentation of five cases of practical application of mutual recognition in different
sectors in Chapter 5;
 The comparison and assessment of the policy options in Chapter 6, based on multi
criteria analysis;
 Conclusions and recommendations in Chapter 7.
Additional relevant information is provided in the Annexes, namely:
 The classification of harmonised, non-harmonised (or partially) harmonised sectors

used in the market analysis (Annex 8.1);
 The list of non-harmonised (or partially) harmonised products included in the market
analysis (Annex 8.2);
 The detailed methodology used for the estimation of the magnitude of the problem
(Annex 8.3) and sensitivity analysis (Annex 8.4);
 The analysis of stakeholders’ sentiment on the policy options, collected through the
online survey (Annex 8.5);
 The list of stakeholders involved in the case studies (Annex 8.6);
 Bibliography and relevant databases used (Annex 8.7).
11
2 METHODOLOGICAL APPROACH
This section presents the methodology used to estimate the market value and the magnitude
of the problem, collect information from stakeholders, assess and compare policy options, as
well as the tools used for data collection including their main limitations.
2.1 Methodology
2.1.1 Methodology for the market analysis
The approach for the market analysis is based on the identification of non-harmonised (or
partially) harmonised products in a ‘residual way’ (e.g. excluding all sectors/products for which
EU harmonised product rules exist, hereafter harmonised sectors). A two-stage approach has
been followed, including:
 An analysis at the sectorial level oriented towards the macro-dimension of the market
for non (or partially) harmonised sectors, focusing on:
o The number of economic operators that are active within the economic sectors
for which EU harmonised product rules do not exist - hereafter non (or partially)
harmonised sectors;7
o The current contribution of the non (or partially) harmonised sectors to the EU
manufacturing economy.
 An analysis at the product level focused on the value of non (or partially) harmonised
products that are traded within the EU Single Market.
Results from the analysis at the sectorial and product levels have been combined to identify
the sectors for which the value of trade of non (or partially) harmonised products is more
relevant.
Furthermore, in order to identify the variables to be included in the analysis, the research
team has identified available statistics that are useful for the scope of the study. The data
used in this study have been extracted from two databases:
 Structural business statistics (SBS)8 provided by EUROSTAT. This source has been
utilised to describe the structure of non-harmonised (or partially) harmonised sectors
and measure their economic performance;
 EU trade since 1988 by Standard International Trade Classification (SITC) 9 provided
by EUROSTAT. This source has been utilised to estimate the value of intra-EU trades
in non-harmonised (or partially) harmonised products.
More in detail, the followed approach consisted of the following steps:
 Step 1. Identification of EU legislative acts introducing harmonised product rules (i.e.

harmonising legislation);
 Step 2. Review of EU legislation introducing harmonised product rules;
 Step 3. Identification of the corresponding NACE Divisions (DIGIT 2) and NACE groups
(DIGIT 3) that are impacted by the EU Regulation (i.e. harmonised sector) and that
are excluded from the analysis;
7
Each time “non-harmonised products/sectors” is mentioned, it includes partially harmonised sectors/products.
8
http://ec.europa.eu/eurostat/web/structural-business-statistics
9
http://ec.europa.eu/eurostat/web/international-trade-in-goods/data/database
12
 Step 5. Identification of the NACE Divisions (DIGIT 2) and NACE groups (DIGIT 3) for
which harmonised product rules do not exist (i.e. non or partially harmonised sectors)
and that are included in the analysis;
 Step 6. Selection of the most appropriate products (NACE group – DIGIT 4) for which
no harmonised product rules exist and that are included in the analysis.
Figure 1: Methodological approach. Example for ‘medical devices’
Results from this exercise are presented in annexes 8.1 and 8.2:
 Annex 8.1 presents the list of harmonised, non-harmonised (or partially)

harmonised economic sectors (as per NACE DIGIT-3 classification) that have been
used for the analysis at the sectorial level;
 Annex 8.2 presents the list of products (as per NACE DIGIT-4 classification) that have
been considered as non (or partially) harmonised for the analysis at product level.
 Due to the difficulties in identifying non (or partially) harmonised products within the
Food and Drink sector, Box 1 presents the approach followed.
13
Box 1: Food and drink products
The food and drink industry is the EU's biggest manufacturing sector in terms of employment and
value added. It is a vital asset in trade with third countries. The EU boasts an important trade surplus
in this sector. In the last 10 years, EU food and drink exports have doubled to over €90 billion, resulting
in a trade surplus of nearly €30 billion.
The EU food legislation is highly harmonised, and the sector significantly benefits from the
opportunities offered by the EU Single Market. At the same time, however, there are some EU
legislative acts that imply the application of the mutual recognition principle, for example:
 Food contact materials (FCM) (Regulation (EC) No 1935/2004). Materials and articles intended
to come in contact with food fall under a framework regulation that establishes the principles
of safety assessment and management regarding the risk of transfer of chemicals from such
materials into foods. While some materials are covered by EU-wide specific measures, others10
remain overseen by national rules and depend on mutual recognition, raising concerns that
inconsistencies can affect safety and trade;
 Food supplements11 (Directive 2002/46/EC) and labelling, presentation and advertising of
foodstuffs (Directive 2000/13/E). Although the EU legislation harmonised various aspects
(definition of food supplements, composition, specific labelling requirements, etc.) some non
(or partially) harmonised areas remained (for instance the maximum amounts of vitamins and
minerals, other substances than vitamins and minerals, obligation for product registration at
national level).
Thus in the scope of the analysis:
 Concerning FCM some specific products have been identified within the following sectors;
 Manufacture of paper and paper products;
 Manufacture of rubber and plastic product;

 Manufacture of other non-metallic mineral products.
Concerning the food supplements and foodstuffs, some specific products have been identified within
the sector ‘Manufacture of other food products’.
For the complete list of products that are considered as non (or partially harmonised) within the scope
of this study please refer to 8.2.
2.1.2 Methodology for the estimation of the magnitude of the problem
Section 3.1 provides an analysis of secondary data to estimate characteristics of the market
for intra-EU trade in non (or partially) harmonised products falling under the mutual
recognition principle. These insights to the value of trade and numbers of enterprises in
different non (or partially) harmonised NACE sectors are utilised in Chapter 4 to develop a
model to estimate costs associated with the sub-optimal functioning of mutual recognition.
The model is based on a decision tree representing the main options (and subsequent steps)
that need to be considered by an enterprise contemplating intra-EU exports of non (or
10
The materials covered only by national measures are adhesives, printing inks, coatings, glass, ion exchange resins,
waxes, metals, cork, wood, paper and board, silicones, rubber, textiles and combinations of materials.
11
Food supplements are foodstuffs that are meant to supplement the normal diet and which are concentrated sources
of nutrients or other substances with a nutritional or physiological effect. These can be found alone or in combination,
marketed in dose form, namely forms such as capsules, pastilles, tablets, pills and other similar forms, sachets of
powder, ampoules of liquids, drop dispensing bottles, and other similar forms of liquids and powders designed to be
taken in measured small unit quantities. Moreover nutrients could be vitamins, minerals, herbal extracts and other
ingredients.
14
partially) harmonised trade. The decision tree represents a simplification of the more
comprehensive process of mutual recognition, presented in section 0.
Figure 2 Decision tree diagram used in chapter 4 to develop a model to estimate costs associated with
the sub-optimal functioning of mutual recognition
Real-world inputs about the activities and costs involved in successfully exporting products in
the EU were provided by stakeholders and study participants. These insights are used as
evidence-based assumptions in various components of the model. The range of views
suggested by enterprises is used to undertake sensitivity analysis in the model.
The detailed methodology for the estimation of the magnitude of the problem and the related
sensitivity analysis are presented in Annex 8.3 and Annex 8.4 respectively.
2.1.3 Methodology for case studies
Five case studies were foreseen and carried out during the project. The objective of the case
studies is as follows:
 To ensure a higher level of detail, beyond desk research and online surveys, on specific
topics that can improve the understanding of the impacts and problems in the
application of mutual recognition and of the options envisioned;
 To provide an enriched and more robust estimation of the costs and benefits of
problems encountered in the application of the mutual recognition principle and of the
options under analysis;
 To illustrate in practical terms the implication and impacts of specific issues in the
application of mutual recognition.
Case studies were carried out through:
 Desk research to provide an overview of products and to collect economic data and
information on the market size and relevant practices relating to mutual recognition;
15
 Interviews to collect information on the implementation of mutual recognition in the

sector – and in the specific Member States, including main costs and potential benefits
of the proposed policy options, involving both:
o Relevant national authorities, to understand the actual implementation of
the Regulation, the main procedures at place and the possible revision that
could be made in light of the proposed options;
o Economic operators – businesses and business associations – active in the
relevant sector, to collect information on the actual problems/obstacles faced
and costs incurred when trying to enter the relevant market, as well as
understand the impact the proposed policy options would have in addressing
them.
Case studies are presented in Chapter 5.
2.1.4 Methodology for the assessment of the policy options
To assess the potential performance of policy options, the following steps have been
performed:
 Identification/screening of the most significant impacts and overall ranking of policy
options based on information collected through field research;
 In-depth analysis of the preferred options using an expert panel.
A preliminary ranking was created in accordance to the principles and the methodologies
included in the ‘Better Regulation Toolbox’ presented in SWD (2015) 111.12
Specifically, due to the types of information and data gathered thus far, the Multi Criteria
Analysis (Tool #57 within the ‘Better regulation Toolbox’) has been identified as the most
appropriate tool for comparing the policy options.
The following steps have been performed:
 Step 1. For each sub-policy option, the following performance criteria (PC) have been
identified as important in determining an overall ranking of policy options:
o PC1. Effectiveness of the policy option in enhancing the functioning of the
mutual recognition, namely:
 PC1.1. Effectiveness of the policy option in increasing the
awareness about the mutual recognition principle and
Regulation;
 PC1.2. Effectiveness of the policy option in reducing the legal
uncertainty as regards the scope of the mutual recognition principle
and Regulation;
 PC1.3. Effectiveness of the policy option in removing the practical
obstacles relating to the application of the mutual recognition
principle and Regulation;
 PC1.4. Effectiveness of the policy option in avoiding delayed
market access.
o PC2. Effectiveness of the policy option in reducing costs for economic operators,
namely:
 Transaction costs;
 Costs relating to litigation or adjudication (court proceedings);
 Costs relating to lost opportunities of entering a new market.
12
http://ec.europa.eu/smart-regulation/guidelines/docs/br_toolbox_en.pdf
16
o PC3. Effectiveness of the policy option in the five specific sectors selected for
case studies (see Chapter 5).
 Step 2. Comparison and ranking of the sub-policy options in respect to each PC and
each type of stakeholder (e.g. National Authorities and Economic Operators);
 Step 3. Comparison and ranking of the policy options based on the aggregate
performance of each sub-policy option.
As a final step of the study, the research team considered how the policy options identified as
most relevant would modify and affect the current application of mutual recognition.
To this end, the study team discussed the general overview of the process of mutual
recognition with a panel of experts (as presented in Chapter 3.2) as it applies today,
identifying the main activities, associated costs and the main stakeholders involved.
The purpose of the panel was to discuss potential impacts of the four different policy options
on the general process, in an attempt to identify parameters to quantify such impacts, with
the ultimate objective to estimate the impact of policy options in terms of costs and benefits
for all actors involved. The panel discussion was attended by representatives from both
industry and National Authorities.
2.2 Tools for data collection

Data collection was based on desk and field research.
2.2.1 Desk research

An extensive review of existing databases, studies and other secondary sources was carried
out (see Annex 8.6). In-depth desk research focused on the identification of:
 Products not subject to Community harmonisation legislation;
 Relevant indicators that could constitute the fundament for the estimation of the
market value of current intra-EU trade in non-harmonised products falling under the
mutual recognition principle based on data availability (ideally for all the products
falling under the mutual recognition principle, for the EU-28 for the entire period from
2006 – to June 2017);
 Potential costs triggered by the suboptimal functioning of the mutual recognition
principle (either the result of not applying the mutual recognition principle or of the
inefficient application of it);
 Details of sectors targeted by case studies, including market data, relevant legislation
and the implementation of mutual recognition.
2.2.2 Field research

Stakeholder consultations for evaluation began in December 2016 and continued throughout
the project. The field research collected inputs from different stakeholders through surveys
and in-depth interviews. A final roundtable with experts (in videoconference) was held for the
validation of conclusions and quantification of the impact of policy options.
Survey
The online surveys, launched on 14 December 2016 via the Internet based-tool ‘EY eSurvey’,
included customised questions to address different categories of stakeholders (such as
Member State authorities and economic operators). The surveys took into account
respondents’ different experiences with the Regulation. The survey had two objectives:
 Collecting information on the actual implementation of mutual recognition, with
insights into the main issues and shortcomings, as well as estimating costs sustained
by economic operators in the process;
17
 Providing an understanding of stakeholders’ perceptions of the policy options

proposed by the Commission to address the sub-optimal functioning of mutual
recognition.
By the closing of the survey, 100 respondents accessed the survey (40 businesses, 38 national
authorities, and 22 business associations). However, only half of them answered the
questionnaire to an extent that may be considered satisfactory. 13
Results of the online survey as reported in Annex 8.5.
Interviews
In parallel with the survey, 25 interviews were conducted with Member State authorities
(dealing with mutual recognition) and economic operators (operating at both the EU and
national levels), in order to gather detailed information about the implementation of mutual
recognition and the presented policy options.
In a similar fashion, interview questions were customised to target both categories of
stakeholders. Interviews aimed at discussing and collecting information that is more detailed
to the application of mutual recognition and the ability of policy options to address the main
problems encountered.
In terms of geographic coverage, all Member States were targeted, however, in this phase,
answers were collected only from 16 Member States (i.e. BE, CZ, DK, EE, EL, FR, IT, LT, LV,
NL, PL, PT, RO, SI, UK)
In the second phase of the study, 25 additional interviews with Member State authorities and
economic operators were carried out to collect specific information for the development of
case studies.
Roundtable with stakeholders
A final event with a select group of stakeholders presented the conclusions drawn from the
study, and provided a platform to discuss the quantification of the potentially most effective
policy options identified during the analysis.
The event was organised as a videoconference, with input provided both by Member State
authorities and by economic operators (operating at both the EU and the national level).
2.3 Main limitations and mitigating measures

This section presents the main problems encountered, particularly issues regarding data
limitations relating to the desk and field research.
Table 1: Main limitations and mitigating measures
Task/activity Limitation Mitigating measure

Desk research highlighted the lack of an updated
list. In order to address this, a ‘residual approach’
 Finding consistent
has been used: sectors falling under the directives
information to determine
that introduced harmonised products rules were
the exact list of the non
identified and excluded from the analysis. The
(or partially) harmonised
Estimate the remaining products were considered as a proxy for
products
market size non (or partially) harmonised products for the
purpose of analysis
 The use of 2-Digit and 4 Results were checked with previous estimations
Digit NACE statistics might and were refined during the analysis with additional
lead to an over estimate of sources from field research.
the market value of non-
13
Please consider that evidence provided in this report is gathered on the actual number of answers received per
each question, thus excluding answers that did not provide any information or cases when the respondent decided to
skip the question.
18
Task/activity Limitation Mitigating measure

(or partially) harmonised
products
 Limited availability of data

The lack of primary data was addressed by using
to estimate the magnitude
Eurostat data and robust research to underpin the
of the sub-optimal
proposed model.
functioning.
Online sources sometimes presented different –
and conflicting – figures concerning the trade of
 Finding consistent figures harmonised (and non-harmonised) products,
to determine the amount creating potential issues in the analysis. In order to
of non (or partially address this and avoid any differences and
harmonised) products and discrepancies in the overall analysis, the available
trade. information used for the market analysis was used
Estimate the as a source, providing a basis for the estimation of
magnitude of the magnitude of the problem.
the problem The complex nature of the problems and difficulties
in obtaining a sufficiently large and representative
sample of stakeholders provided difficulties in
robustly developing the sub-optimal functioning of
the Mutual Recognition model (henceforth called
 Limitations of the model in the SFMR model). The model therefore contains
providing a full and assumptions that are based on feedback from
detailed evaluation stakeholders. To mitigate the potentially
unrepresentative nature of feedback for the
different assumptions in the model sensitivity
analysis was undertaken to examine the
assumptions (these were used as default values in
the model).
In order to tackle the low response rate for the
online survey, interviews were structured to
 Limited responses to the
support the collection of similar information. These
online survey
were also used to confirm and validate some of the
input from the online survey.
Case studies focused specifically on sectors
 Lack of information on deemed particularly interesting to assess the
Field research
specific sectors relevant to current implementation of mutual recognition and
the analysis to examine how policy options could work in
practice
Additional stakeholders were contacted, in addition
 Limited responses from
to those already contacted during the study, to
stakeholders on case
provide further insights and knowledge about
studies
sector and products.
 Incomplete information on
A roundtable with experts – all knowledgeable
organisational and legal
about mutual recognition – was organised to collect
Quantification aspects relating to the
additional information on the application of the
of the costs implementation of the
options, to identify possible impacts relating to
and benefits of policy options limited the
their execution and to provide a qualitative analysis
policy options possibility to perform a
of the options perceived as the most effective
quantitative analysis of the
according to stakeholders
policy options
19
3 THE STATE OF PLAY OF MUTUAL RECOGNITION
This chapter provides an overview of the current situation in the markets where mutual
recognition may apply. It also considers the issues associated with implementation, key
problems identified in research and policy options drafted by the Commission.
3.1 Size of the market for mutual recognition

This section provides an estimate of the market value of current intra-EU trade in non
(or partially) harmonised products falling under the mutual recognition principle in order
to understand the size of the EU market currently affected by the Regulation. Market analysis
adopts a two-fold approach.
 An analysis at sectorial level oriented towards the macro dimension of the market for
non (or partially) harmonised products;
 An analysis at product level focusing on the value of non (or partially) harmonised
products that are traded within the EU Single Market.
3.1.1 Analysis at the sectorial level
For the analysis at sectorial level, the following data was extracted from SBS:
 Business demographics;
 Input related;
 Output related.
The analysis has been undertaken on the indicators detailed in the table below.
Table 2: List of indicators for the sector-level analysis
Dimension Indicator Definition

Business Number of Number of active enterprises
demography enterprises
Input Number of Number of persons aged 15 and over (or 16 and over in IE) who
persons worked - even if just for one hour per week - for pay, profit or
employed family gain.
Output Value added The value added at factor cost is the gross income from operating
at factor cost activities after adjusting for operating subsidies and indirect
taxes.
The value added at factor costs is calculated "gross" as value
adjustments (such as depreciation) which are not subtracted.14
Turnover ‘Turnover’ comprises the totals invoiced and corresponds to
market sales of goods supplied to third parties.15
http://ec.europa.eu/eurostat/ramon/nomenclatures/index.cfm?TargetUrl=DSP_GLOSSARY_NOM_DTL_VIEW&StrN
14
om=
CODED2&StrLanguageCode=EN&IntKey=16619885&RdoSearch=BEGIN&TxtSearch=value%20added%20at%20fact
or%20cost&CboTheme=&IsTer=&IntCurrentPage=1&ter_valid=0
15
It includes all duties and taxes on the goods or services invoiced by the unit with the exception of the VAT invoiced
by the unit vis-à-vis its customer and other similar deductible taxes directly linked to turnover.
It also includes all other charges (transport, packaging, etc.) passed on to the customer, even if these charges are
listed separately in the invoice. Reduction in prices, rebates and discounts as well as the value of returned packing
must be deducted.
20
The economic sectors (i.e. sectors identified with a 3-digit NACE code) that are potentially
impacted by the Regulation and for which the mutual recognition principle should be applied
(see 8.1) were identified.
With regard to the sectorial analysis it is important to underline that:
 Data is only available at NACE Digit 3 level for the period 2012 – 2014. Thus, it is
difficult to robustly identify long-term trends.
 All results should be considered as an upper estimate because some economic
sectors might refer to one of more products for which harmonised product rules exist.
As shown in Figure 3, during the period from 2012 and 2014, around 0.99 million
enterprises were operating within non (or partially) harmonised sectors, representing
more than 50% of the total number of active enterprises in the manufacturing economy
(around 2 million active enterprises are operating under Section C of NACE classification
named Manufacturing).
Annex 8.1 presents the list of NACE DIGIT-3 codes and the way they have been considered in
the analysis (i.e. harmonised or non (or partially) harmonised).
Figure 3: Number of active enterprises: non (or partially) harmonised sectors vs overall manufacturing
sectors (EU28, 2012 – 2014), NACE Digit-3 level
Source: Structural Business Statistics, Annual enterprise statistics by size class for special aggregates of activities
(NACE Rev. 2) (sbs_sc_sca_r2), EUROSTAT (2016)
It is very important to underline that around 87% of the enterprises operating within the non
(or partially) harmonised sectors are micro enterprises (i.e. with less than ten employees)
and around 11% are Small and Medium Enterprises (i.e. with a number of employees
between 10 and 250). Compared to the harmonised sectors, the proportion of micro
enterprises in non (or partially) harmonised sectors is higher.
Income classified as other operating income, financial income and extra-ordinary income in company accounts is
excluded from turnover. Operating subsidies received from public authorities or the institutions of the European Union
are also excluded.
21
Figure 4: Size of enterprises operating (2012 – 2014, EU 28), NACE Digit-3 level
Furthermore, at the EU28 level more than 8 million people are employed within the non
(or partially) harmonised sectors (i.e. around 31% of all person employed in the
manufacturing sectors), with no significant variation over the period considered.
Figure 5: Number of persons employed: non (or partially) harmonised sectors vs overall manufacturing
sectors (2012 – 2014, EU28, millions)
The magnitude of the non (or partially) harmonised sectors can be also appreciated if wealth
creation (i.e. added value and turnover) is considered. In particular, the value added
produced in non (or partially) harmonised sectors decreased by 15% during the
period 2012-2014 (from €360 to €305 billion) and its contribution to the overall value added
of the manufacturing sector declined from 24.4% in 2012 to 22.9% in 2014.
22
Figure 6: Value added at factor cost: non (or partially) harmonised sectors vs overall manufacturing
sectors (2012 -2014, EU28), € billion
Also in this case, considering the period 2012–2014, micro enterprises and SMEs
contributed to the 59.5% of the value added produced operating in non (or partially)
harmonised sectors (i.e. €200.2 billion out of €336.5 billion). This corresponds to the 14.1%
of the overall added value produced in the manufacturing sectors (€1,417.2 billion).
Table 3: Value added at factor cost per size of enterprises: non (or partially) harmonised sectors vs
overall manufacturing sectors (average 2012-2014, EU28), € billion
Non (or partially) Harmonised Manufacturing Non (or partially)

Size of enterprises
Sectors Harmonised. /
Manufacturing
Total % Total % (a)/(b)

(€ Million) (€ Million) %
(a)
Micro 43.158 12.8% 104.026 7.3% 3.0%

(< 9 employees)
Small
70.528 21.0% 219.824 15.5% 5.0%
(between 10 and 49
employees)
Medium
86.528 25.7% 339.206 23.9% 6.1%
(between 50 and 249
employees)
Large 136.272 40.5% 754.117 53.2% 9.6%

(>250 employees)
336.485 100.0% 1,417.17 (b) 100.0% 23.7%

Total
23
Finally, further relevant results emerged concerning the turnover of these sectors. The
figure below shows that enterprises operating within non (or partially) harmonised sectors
contributed around 20% of the total value of market sales of manufacturing sectors (€1,158
billion out of €5,690 billion, corresponding to the overall turnover produced within the
manufacturing sectors).
Figure 7: Turnover: Non (or partially) harmonised sectors vs overall manufacturing sectors (2012-
2014, EU28), € billion
If the size of enterprises is considered, micro enterprises and SMEs that are doing business
in non (or partially) harmonised sectors generated 11.7% of the turnover of the entire
manufacturing economy (€662.2 billion out of €5,690 billion).
Table 4: Turnover per size of enterprise: non (or partially) harmonised sectors vs overall
manufacturing sectors (average 2012-2014, EU28), € Billion
Non (or part)
Non (or partially) Harmonised Harmonised
Enterprises Manufacturing
Sectors S./
Manufacturing
Number of Total
Total (a)/(b)
Size active (€ Million) % %
(€ Million) %
enterprises (a)
Micro 772,730 128,872 11.1% 319,955 5.6% 2.3%

(< 9 employees)
Small
94,836 222,107 19.2% 725,176 12.7% 3.9%
(between 10 and 49
employees)
Medium
19,555 311,212 26.9% 1,300,562 22.9% 5.5%
(between 50 and 249
employees)
Large 3,629 495,825 42.8% 3,344,326 58.8% 8.7%

(>250 employees)
24
Non (or part)

Non (or partially) Harmonised Harmonised
Enterprises Manufacturing
Sectors S./
Manufacturing
1,011,835 1,158,016 100.0% 5,690,019 (b) 100.0% 20.4%

Total
3.1.2 Analysis at product level
The second type of analysis at product level, examines the market value of all traded
products for which EU harmonised product rules do not exist.16
The indicators in this analysis have also been extracted from Eurostat statistics, as presented
in the table below.
Table 5: Indicators computed for the analysis at product level
Indicator Definition Geographical Timeframe Source

coverage
Value of intra EU This indicator provides the EU-28 2008 - EU trade

trades for monetary value of traded 2015 since 1998
manufacturing manufactured products from by SITC17
products all EU countries to other EU
countries
Value of production This indicator provides the EU-28 2008 - PRODCOM

for manufacturing monetary value of 2015 Statistics18
products manufactured products
Value of extra EU This indicator provides the EU-28 2008 - PRODCOM

trades for monetary value of traded 2015 Statistics
manufacturing manufactured products from
products all EU countries to other non
EU countries
The data for all EU-28 Member States have been examined for the period of 2008-2015.
The manufacturing sectors listed in the table below have been included in the analysis. In
particular, the NACE codes used have been grouped using the International Standard
Industrial Classification of All Economic Activities (ISIC) 19. Each sector contains both
harmonised and non (or partially) harmonised products. Annex 2 lists all non (or partially)
harmonised products per each sector that have been used for the analysis at the
product level.
Table 6: Manufacturing sectors in the scope of the analysis at product level grouped using the ISIC
Sectors NACE DIVISION

Manufacture of food products, beverages and tobacco products 10 to 12
Manufacture of textiles, apparel, leather and related products 13 to 15
Manufacture of wood and paper products, and printing 16 to 18
16
Only intra EU exports are considered for the analysis.
17
http://ec.europa.eu/eurostat/web/international-trade-in-goods/data/database
18 http://ec.europa.eu/eurostat/web/prodcom/data/database
19
http://ec.europa.eu/eurostat/documents/3859598/5902521/KS-RA-07-015-EN.PDF (pag. 44)
25
Sectors NACE DIVISION

Manufacture of coke, and refined petroleum products 19
Manufacture of chemicals and chemical products 20
Manufacture of pharmaceuticals, medicinal chemical and botanical products 21
Manufacture of rubber and plastics products, and other non-metallic mineral 22-23
products
Manufacture of basic metals and fabricated metal products, except machinery and 24-25
equipment
Manufacture of computer, electronic and optical products 26
Manufacture of electrical equipment 27
Manufacture of machinery and equipment n.e.c. 28
Manufacture of transport equipment 29-30
Other manufacturing, and repair and installation of machinery and equipment 31 to 33
While the analysis at the sectorial level provided an estimate of the number of economic
operators that are potentially impacted by a sub-optimal functioning of mutual recognition
and how they are contributing to the EU economy, the analysis at the product level provides
an assessment of the value of traded goods for which mutual recognition should be applicable.
The value of non (or partially) harmonised products has been estimated using the value of
intra-EU exports for these types of product. For the period 2008 - 2015:
 The (average) annual value of intra EU exports of non (or partially) harmonised
products has been equal to €335 billion (Figure 8);
 The value on intra EU exports of non (or partially) harmonised products represented
the 18% of the value of intra EU exports (Figure 8);
 The value of intra EU exports of non (or partially) harmonised products increased by
14.2% (i.e. passing from €338 to € 386 billion), the same variation can be observed
for harmonised goods (i.e. the value passing from €1,513 to €1,725 billion).
Annex 8.2 presents the list of products (as per NACE DIGIT-4 classification) that have been
considered as being non (or partially) harmonised.
26
Figure 8: Value on non (or partially) harmonised products. Intra EU Exports, € billions, 2008 -2015
Source: EU trade since 1998 by SITC, EUROSTAT (2016)
The table below shows the average value of intra-EU exports for non-harmonised (or partially)
harmonised products per sector, where 83% (around €515 billion out of €681 billion) of
products are:
 Manufacture of basic metals and fabricated metal products, except machinery and
equipment;
 Manufacture of textiles, apparel, leather and related products, basic metals and
fabricated metal products;
 Manufacture of transport equipment;
 Manufacture of wood and paper products, and printing.
Please refer to Annex 8.2 for the list of products that have been classified as non (or partially)
harmonised for each sector.
Table 7: Value of non (or partially) harmonised products per sector (Intra EU trade, average 2008 –
2015, € billions)
Average
Annual %
value
Manufacture of basic metals and fabricated metal products, except machinery 41.81 12%
and equipment
Manufacture of coke, and refined petroleum products 0.05 0%
Manufacture of computer, electronic and optical products 15.69 5%
Manufacture of electrical equipment 2.90 1%
Manufacture of food products, beverages and tobacco products 3.37 1%
Manufacture of rubber and plastics products, and other non-metallic mineral 12.41 4%
products
Manufacture of textiles, apparel, leather and related products 55.91 17%
Manufacture of transport equipment 104.01 31%
27
Average
Annual %
value
Manufacture of wood and paper products, and printing 76.40 23%
Other manufacturing, and repair and installation of machinery and equipment 22.66 7%
Total 335.22 100%
Source: EU trade since 1998 by SITC, EUROSTAT (2016)
Another interesting element emerged if the value of the intra EU Exports is compared with the
domestic consumption at the EU28 level (i.e. value of production – value of extra EU
exports + value of extra EU imports):
 For harmonised products the average value of intra-EU exports has been 55% of the
domestic consumption for the period 2008 – 2015 and this ratio has increased by 17%
over the same period;
 For non (or partially) harmonised products the intra-EU exports represented only 35%
of the domestic consumption over the period 2008-2015 and this ratio increased only
by 14% over the same period.
Figure 9: Intra EU trades (exports) as % of the domestic consumption: Harmonised vs non (or
partially) harmonised products, 2008-2015
65%
59,2%
60% 57,9%
56,5%
54,2% 54,8%
55% 52,9%
51,8%
50,6%
50%
45%
40% 37,7%
37,1% 37,4%
35,6% 35,8%
34,5%
35% 32,9% 32,5%
30%
2008 2009 2010 2011 2012 2013 2014 2015
Harmonised Non/Partially Harmonised
Source: PRODCOM statistics, EUROSTAT (2016)
The systematic differences in the ratio of intra-EU trade to domestic consumption could be an
indication that the mutual recognition system is not as efficient as harmonisation and that
barriers on the internal market for non-harmonised goods exist.
As already mentioned, the presented results should be considered as an upper estimate of the
market value for non (or partially) harmonised products, due to the degree of sectorial
aggregation. Even if, as shown in Annex 8.2, up to 4 digits statistics were used, products
considered as non (or partially) harmonised might contain some harmonised component.
28
3.2 The implementation of mutual recognition

This section provides an overview of the process of mutual recognition as currently
implemented. It also presents the main issues identified as a cause for a revision, and the
policy options designed to remedy problems, as defined by the Commission.
3.2.1 The flow of activities
Mutual recognition is a concept that finds different applications across EU MS and across
sectors, making the representation of its flow of activities extremely complex. In addition,
some activities may not happen on a regular basis (e.g. checks and controls performed by the
MS authorities on products in a pre-marketing phase, since only some products require pre-
marketing authorisation).
The approach adopted in this chapter aims to be as simple as possible, covering the main
aspects of the process without entering into the complex minutiae that can be encountered.
The process is presented in the figure below.
The categories of stakeholders included in the process are:
 Member State Authorities, indicating all the bodies and agencies dealing with mutual
recognition directly in sectors/products subject to full or partial application of mutual
recognition;
 Economic operators, including all actors (especially companies) which may apply or
invoke the application of mutual recognition when trying to place a product on a new
market;
 European Commission, mainly in its role of receiving notifications on relevant
decisions from Member State Authorities.
29
Figure 10: Flow representation of the process of mutual recognition
10
Modifications to
comply with
4
national rules
Economic operators
2 3
Check for Verification of
additional equivalence of Placing on 9
1 national rules/ products with the
requirements national rules market Placing Placing on/
6
Mutual based on on/ Staying in
Demonstrate
Recognition MR Staying in the market
meeting
is regulatory the market
applicable 11
requirements
Taking the case
in front of a
court
Member State Authorities
5
Checks and 8
controls on the 7
product Given notice to Not placing
relevant actors on/ leaving
Decision to the market
withdraw/
allow the
product
Received
EC
notifications on
decisions
Author’s elaboration
30
The table below describes the activities included in the process and presented in the figure
above, together with the possible costs sustained by the stakeholders involved in each activity.
Different categories of costs, sustained by the different stakeholders in the process, have been
identified:20
 Transaction costs: comprising the costs of verifying if the mutual recognition

principle is applicable and/or costs of demonstrating that a product is lawfully marketed
in another Member State where the product is already sold;
 Costs for a delayed entry into the market: costs and (potential) lost revenues due
to a delayed entry into the market for the economic operators. This is compared to the
revenues obtained with an optimal application of mutual recognition;
 Compliance costs: comprising all the costs sustained when aligning a product to
national rules and requirements, adapting or modifying it;
 Lost opportunity: an estimation of the revenues or turnover foregone due to the
decision of not entering the market;
 Litigation or adjudication costs: comprising all costs and expenses sustained for
legal and judicial proceedings;
 Costs relating to the activity of PCPs and other agencies/bodies: the budget
allocated to Product Contact Points and costs sustained by national authorities, bodies
and agencies in their functioning to implement mutual recognition.
Table 8: Description of activities of the mutual recognition process
Activity Description Possible costs

MS Authorities Economic
Operators
1. Identification of Identification of whether the product Costs relating to the
whether the product is falls within the scope of mutual activity of PCPs and
harmonised or recognition or it is regulated at EU other national
not/partially harmonised level. agencies/bodies
2. Check for specific and Economic operators usually check if Costs relating to the Transaction costs
additional national rules/ national rules/regulation apply, as a activity of PCPs and
requirements precaution before they actual enter other
into the market21 agencies/bodies
3. Verification of Economic operators verify, in case of Costs relating to the Transaction costs
equivalence of products existing national rules/requirements, if activity of PCPs and
with national rules/ the product already complies with them other
requirements in the light agencies/bodies also
of clearly formulated in communicating
safety/ health objectives and verifying the
served by these relevant objectives
requirements served by technical
annexes
4. Application of mutual The economic operators may directly After this point,
recognition and placing place a product on the market, with an every step involves
the product on the ideal implementation of the principle costs relating to the
market (or not) and no additional procedures or delayed entry into
requirements the market.
Lost opportunity (in
case they decide not
to place products on
the market)
5. Assessment of the Assessment by MS Authorities of the Costs relating to
need to apply a technical equivalence of the product to national checks and controls
rule and check on the rules/requirements, with the on the product, and,
product already lawfully assessment of the need to apply a in case, to
20
A more detailed description and quantification of some of the costs is presented in Chapter 4.
21
Rules, regulations, procedures (and usual practice) vary considerably across sectors and countries.
31

Operators
marketed in another technical rule (art. 6 of Regulation) – demonstrate the
Member State always in the light of the relevant equivalence/non-
safety/health objectives. equivalence of
Authorities also have to demonstrate if product to regulatory
any violation or non-equivalence of requirements and
national rules applies. respect of safety
(Burden of proof)
6. Producing evidence Economic operators may produce
that the product is safe further evidence to the MS Authorities
and complies with in order to demonstrate that their
necessary requirements product is lawfully marketed in another
MS and poses no threats to safety,
health or public morality/security
7. Taking a decision on Based on the assessment, the MS Costs relating to the
the application of a Authority may decide either to: decision-making
technical rule in the light - prohibit, modify or withdraw the process, including
of explicit health /safety product, including suspension from the any consulting
objectives market; among different
- adopt no decision. authorities
All decisions must be taken within the
time-limit foreseen by the Regulation,
and regular notification must be given
to economic operators (and the
Commission, in case of denial)
8. Notification of the MS Authorities must communicate their Costs (and effort) in
decision to the economic decisions within the time limit foreseen giving notice through
operator by the Regulation, and notifying all the adequate channels of
relevant parties (e.g. Art. 8), also in communication to all
case they decide not to take a decision relevant actors in
over the marketing of the product. time
8. Notification of the In case of decisions (including with Costs (and effort) in
decision to the European temporary suspension of the marketing giving notice through
Commission of a product), the MS authority has to adequate channels of
also notify the European Commission. communication to all
In case of a denial for safety reasons, relevant actors in
technical or scientific justifications are time
necessary.
The Commission would need to assess
the possible decision to deny market
access and act consequently. This may
create costs for the Commission in its
functioning.
9. Decision to place on Following the decision of the MS

/stay in the market or Authority, the economic operator may
not by the economic decide to place on/stay in the market
operator or not
10. Modifying the In case of deciding to place the product Compliance Costs
products in order to be on the market, economic operators
compliant with national may decide to comply with national
rules/requirements requirements, by modifying their
products, adapting them to rules and
decisions by MS Authorities
11. Taking the case in In case of decisions (e.g. Art. 6) - Litigation and
front of a tribunal/court including suspension of the marketing, adjudication Costs
the economic operator may challenge
them before national courts or
tribunals or other instances of appeal.
Decision to place Based on the decisions taken from the
on/stay in the market authorities, the judge and their own
verification of compliance, economic
operators may decide to stay in/place
on the market
32

Operators
Decision to not place Based on the decisions taken from the Lost opportunity
on/leave the market authorities, the judge and their own
verification of compliance, economic
operators must leave or cannot place a
product on the market at all
3.2.2 Definition of the problem
The functioning of mutual recognition is not optimal across countries and sectors. Despite the
importance of such a principle in guaranteeing free movement of goods, companies still
encounter obstacles in its application when trying to place a product on a new market.22
Stakeholders, while agreeing on the importance of the principle, have conflicting views
about how well the Regulation is implemented. Member State authorities generally
have a positive view of the functioning of the principle. They have had few difficulties or
challenging cases in the last years. Very few reported any notifications or decisions against
entry to the market.23 In particular, for some Member States 24 the principle seems to work
very well: they would argue that making any revisions or modifications to the actual
Regulation is unnecessary or at least not urgent. Other authorities seem to face largely internal
issues, for instance relating to the overall structure involved in the coordination and
implementation of mutual recognition, or relating to experiencing additional difficulties in
communication among each other.25
Economic operators (companies and business representatives), while still recognising the
importance of the principle and the Regulation, raise issues concerning the actual
implementation across the EU, hampered by the non-uniformity of implementation and
divergent national practices.
According to previous studies,26 differences in both the number and scope of national rules
exist, as well as in the clarity and smoothness of procedures implemented across Member
States. This makes it difficult for companies to be generally satisfied with implementation.
Differences also exist in relation to the different sectors falling under the scope of mutual
recognition. This creates a complex environment leading to a sub-optimal functioning of the
principle.
The European Commission identified three main drivers for sub-optimal functioning of mutual
recognition:
1. Lack of awareness about the mutual recognition principle and Regulation. Despite
the importance of the principle, there are still companies who are unaware of it and its
functioning, including conditions and requirements for its application. The existence of
the principle is not explicitly mentioned either in the Treaties or in the Regulation;
22
European Commission, (2015): Evaluation of the application of the principle of mutual recognition in the field of
goods, ENTR/172/PP/2012/FC – LOT 4.
23
E.g. BE and SE national authorities.
24
E.g. CZ EE, FR and LV.
25However, timing and complexity of procedures to take and communicate decisions vary on a case by case basis,
depending on both the administrative capacity of the implementing authority and the technicality of the issue at
stake.
26
Business associations at EU and MS level.
33
2. Legal uncertainty concerning the scope of the mutual recognition principle and
Regulation. Awareness of the principle can be counterbalanced by reluctance in using
it, relating to difficulties in understanding whether a product can benefit from the
principle or not. Determining such conditions can be complex and require time and
effort, and the instruments set out so far by the Commission (Product Contact Points,
list of products and mutual recognition clause) do not seem to have provided the
assistance needed;
3. Practical obstacles relating to the application of the mutual recognition principle and
Regulation, including the voluntary discard of the principle because it is not found to
be reliable enough. This may happen due to:
a. Lack of clarity about the concept of ‘lawfully marketed’, which is key to allowing
a company to invoke the application of mutual recognition. This concept is not
defined in the Regulation and no jurisprudence from the Court of Justice exists.
Thus, despite EC guidance on the topic, Member States have different
requirements about the evidence to demonstrate the concept;
b. Difficulty to challenge administrative decisions that deny or restrict market
access, accompanied by a general lack of fulfilling the obligation for Member
States to notify the Commission any such administrative decisions. The
Regulation does not foresee any specific procedure for companies to challenge
administrative decisions other than the legal means offered by national laws
(e.g. national courts), with related costs and uncertainty of the outcome.
3.2.3 Stakeholders’ sentiment over the main problems in the application of mutual
recognition
The main problems identified by the Commission have been confirmed and further developed
by the stakeholders. Both national authorities and economic operators highlighted how issues
arise from the implementation of Mutual Recognition Regulation.
First, despite some improvements in the past few years, stakeholders still highlight a general
lack of awareness and knowledge of the existence of the principle and the possibilities
stemming from its application.27 This aspect was underlined by consultations carried out by
the EC in 2014 and 2016. In particular, in 2014, 54% of the companies interviewed declared
they either did not know about the principle or had heard of it but were not familiar with the
details.28
The analysis confirmed that economic operators are still not fully aware of the principle and
this is one of the reasons behind their approach of researching and complying with different
national rules, modifying their products accordingly in order to enter a new market. This is in
line with the results of the 2016 public consultation: 32% of respondents replied that they do
not rely on mutual recognition for entering a new market, mainly because they do not know
about it or because they do not trust it.
27
E.g. BE, ES and PL among national authorities and different business associations at EU level.
28
The public consultation carried out by the EC in 2016 showed a higher level of awareness with 70% of the
respondents answering they were aware of mutual recognition. However, as indicated in the Working document on
the problem definition, the 2014 survey – as a targeted one – can be considered as more representative than the
open and voluntary 2016 consultation.
34
National authorities29 highlighted that other EU standards and systems (e.g. CE trademark)
are more common, known and trusted than mutual recognition. This limits not only the
application of the principle but also potentially the very learning of its existence among
economic actors.
It is, therefore, not a surprise that both categories of stakeholders highlight the need to
improve awareness and training activities as one of the most important short-term priorities
to be implemented for a better functioning of MR.30
In addition to the lack of awareness of the principle, interviewees highlighted how suboptimal
functioning is driven by difficulties concerning a clear picture and legal certainty of the
scope of mutual recognition, affecting both national authorities and economic operators.
As confirmed by stakeholders, this can lead national authorities to have an intricate structure,
with many different ministries, agencies and bodies involved in the process, with each one
responsible for a sector/product but not fully aware that these fall under mutual recognition.
If and when national authorities do not effectively coordinate their work, know all the
applicable rules in place and who is taking them (especially in case of partially harmonised
products or other products that may fall under different bodies/agencies) this can result in
complex and long procedures. Often, national coordinating authorities (which are, in most
cases, the Ministries of Economy)31 are not fully aware of how many decisions are taken by
implementing bodies and for which sector/product.32 The problem may be amplified by a
general lack of communication and administrative cooperation, with a long time required to
exchange information.
For companies, the lack of definition of the scope of mutual recognition makes it difficult to
have satisfactory knowledge of the market of destination, at least without spending time and
resources. Such difficulties are not addressed by an optimal use of the measures and tools33
provided by the Regulation, as pointed out by stakeholders. For example, Product Contact
Points are rarely considered, mainly due to a lack of awareness of their existence. Member
States have different systems in place, and PCPs are deemed not equally responsive or
informative to businesses, therefore limiting the perception of their role. In addition, since
companies sometimes use external consultancies to gather information over national rules,
they prefer to contact directly those authorities responsible for the application of the
Regulation, rather than ‘informative points’ such as PCPs.
The list of products cannot be considered as a reliable tool to use when collecting information
on the possible application of mutual recognition, as it is long and uneasy to search through,
and there is no uniformity across Member States in the practice of notifying decisions.
Stakeholders highlighted additional practical obstacles and problems.
National authorities highlight that:
29
E.g. LV national authority.
30
In addition, over 90% of businesses involved in the 2016 public consultation agreed that further awareness raising
was needed, as this was the third main obstacles against a proper functioning of mutual recognition.
31
E.g. BE, FR, EE, ES, and SI.
32
As reported by several national authorities (e.g. DK, EE, ES, and LT), the communication flow between the
implementing authorities (mainly market surveillance authorities and conformity assessment bodies) and the national
coordinating authorities is not regular, as decisions taken by the former may be reported to the latter even only once
a year.
33
Namely the Product Contact Points (Article 9), the product list (Article 12(4)), the obligation to notify decisions
restricting or denying market access (Article 6(2)), as well as EC guidelines.
35
 The wide scope, size and fragmentation of the market falling under mutual recognition
and the presence of many different national legislations may create difficulties in
having clear, structured and smooth procedures to apply mutual recognition,
with many bodies involved and sometimes little coordination and communication in
their activities.
 Products falling in areas where partial harmonisation and/or some EU standards exist
create difficulties for authorities, since a mix of national and EU rules may apply,
requiring more effort from their side to check and decide. In addition, many non-
harmonised sectors (e.g. construction, foodstuffs and food-contact products) raise
serious concerns in terms of safety, leading national authorities always to check for
national rules in absence of common EU standards that may ensure a certain degree
of adequacy, therefore prolonging the process and reducing the application of the
principle.34
 A lack of communication exists also across Member States. This may result in
difficulties for a national body to understand why a product was lawfully marketed in
another Member State and what relevant rules apply, without investigating and asking
for further information or clarification. However, in some cases highlighted during the
interviews,35 communication and strict collaboration among Member States does exist.
This eased the task for national authorities and economic operators.
 A possible lack of trust among Member States: national authorities may tend to
apply their national rules or require additional tests and certifications for products
entering the market, rather than relying on decisions from other MS authorities. This
may be particularly true when national structures and the market sector are quite
fragmented, and a body or agency is called to verify the adequacy of a non-harmonised
(or partially harmonised) product that may not entirely fall under its competence, and
therefore where they are not fully competent and expert on.
Economic operators highlighted several obstacles as well, in particular relating to the
interaction with national authorities, especially in terms of:
 Obtaining easy access to information, concerning mainly relevant legislation and

procedures in place. Economic operators experience linguistic obstacles,36 limiting not
only the communication with relevant authorities but also their ability to collect
information internally. This brings the need for external consultants, raising therefore
the costs sustained in the process.
 Proving that the product is already lawfully marketed in another Member State.
This may be particularly true since Member States appear to require different
information and evidence in order for a product to be considered as "lawfully marketed"
and therefore able to enter the national market. 37
 Time required to receive a response from national authorities, not only to reach a
decision on the actual marketing of the product, but also to receive an answer to
34
Concerning construction products, interviewees (e.g. LV) highlighted how it may be difficult to rely on other-MS
standards and authorisation, for instance due to the very different climatic conditions across Member States. Products
which are deemed safe and authorised in a Member State from Southern Europe, cannot be considered as directly
marketable in a Northern country, due to clear differences of environment.
35
E.g. EU sectorial business associations
36
As mentioned by representatives of EU business associations representing SMEs.
37
Estimation provided by an EU-wide SME representative during interview and through the survey, indicates how
costs to demonstrate that a product was legally marketed in the MS of origin may range from 5 hours (at the cost of
40-50 up to 80 €/hour) to 30 hours. However, other economic operators underlined how time required may be much
longer (from 30 up to more than 50 hours), and costs consequently higher.
36
questions already submitted.38 This has a significant impact in delaying the entry into
the market or even discouraging them to enter. 39
 Application of procedures and transparency of decisions. Economic operators
consider that procedures laid down in the Regulation are not always fully applied,
especially those concerning notifications to the EC and businesses over decisions and
reasons behind a denied access to the market. 40 In addition, since no clear and defined
procedures to challenge decisions are included in the Regulation, economic operators
have only the option to proceed through national law and tribunals. This creates
additional burdens and costs for them. Sometimes the costs and time required are
considered so high that companies – in particular SMEs – decide not to enter the
market, with additional costs relating to the foregoing of potential profits.41 This is in
line with what was presented in the 2016 public consultation, when only 36% of the
respondents declared that they decided to challenge the denial of market access, with
only 2% succeeding.42
All these issues lead to huge (and potentially unbearable) costs for economic operators.
According to stakeholders, the main expenditures faced by businesses trying to market a non-
harmonised product in another Member State relates to:
 Transaction costs43 and other similar costs, concerning:

o The research and collection of information, communication with authorities and
check for relevant legislative requirements and standards in the country of
destination;44
38
Based on evidence collected through the interviews and the survey, product contact points usually replies to the
queries received from business in a time range going to few hours up to a maximum of 15 working days, as provided
by Article 10(2) of the Regulation. However, the time required to reach a decision by implementing authorities may
vary very much across Member States as well as on the basis of the products concerned, reaching even 1-2 months,
which is longer than the time limit of 20 working days (which may be expanded of further 20 working days in
particularly complex cases) indicated under Article 6(2).
39
As pointed out by representatives from national business associations operating in the metallurgic sector, the main
problem arising from the excessive time required to take a decision is that the channels of marketing and distribution
that producers have found in the market where they would like to enter may very well be closed by the time a decision
is reached and communicated. A similar point was also made by PL national authority, indicating a case in which a
delayed decision led to a missed trade opportunity. Therefore, the main costs suffered by businesses relate to the
foregone revenues and eventual profits.
40
As reported by a representative of a national business association operating in the food supplement sector, they
never experienced that a decision denying market access was taken in strict compliance with the procedure laid down
in Articles 4 to eight of the Regulation. This is in line with the findings reported in the EC Working document on the
problem definition. That is, despite the obligation to notify to the Commission any administrative decision denying or
restricting market access, only six Member States are actually fulfilling such obligations. Furthermore, during the
public consultation carried out in 2016, 52% of those respondents who indicated having tried to use mutual
recognition to enter a market declared that market access was denied.
41
The majority of businesses participating in the survey reported that costs relating to the lost opportunity of entering
a new market are very relevant. However, economic operators were not able to provide an estimate of the foregone
percentage increase in the average annual turnover due to lost opportunity to enter a new market.
42
In addition, as reported in the EC working paper on the problem definition and confirmed by business associations,
economic operators may prefer to preserve good relationships with national authorities rather than risking the
opposite by challenging a decision which denies them access to the market.
43Transaction costs relate to verifying if the mutual recognition principle is applicable and/or costs of demonstrating
that your product is lawfully marketed in another Member State where you are already selling the product.
44
Business associations have pointed out that one of the most consistent costs faced by businesses trying to benefit
from mutual recognition regards the need for external legal and linguistic consultancy services to deal with authorities
and regulations in other Member States. This cost is particularly burdensome for SMEs, as they are more likely to
reach out for external consults to get the necessary support to try accessing a new market, due to limited availability
of internal resources.
37
 Compliance costs relating to eventual adaptation to national rules. While this is

sometimes a sufficiently good reason for SMEs to decide not to enter a specific market,
also large companies may incur high costs to re-label or modify a product (already
lawfully marketed in the MS of origin) to comply with regulation of a single country; 45
 Costs relating to litigation and adjudication, in challenging the decision denying
market access before a judge.
A clear estimate of such costs is difficult to make (mainly due to lack of actual information
among the same economic operators), but an approximate value is presented in Chapter 4.
Overall, economic operators highlight how (huge) potential benefits can be achieved through
a correct and satisfactory implementation of mutual recognition, although the current
application is very fragmented across Member States and costs are quite high. Therefore, it
is important to understand what the actual magnitude of the sub-optimal functioning of mutual
recognition is (see Chapter 4) and identify possible actions to tackle the problems identified.
3.2.4 The proposed policy options
To address the problems presented above the Commission has drafted a series of policy
options. The table below summarises the different options and related sub-options.
Table 9: List of policy options and sub-options
Policy Option Sub-Option
Option 1: Baseline scenario -
Option 2: Soft law instruments to improve Awareness raising and training

the functioning of mutual recognition
A clearer mutual recognition clause
Exchange of officials in the area of mutual recognition
Option 3: Minimum legislative changes to Identifying the products to which mutual recognition may
Regulation (EC) No 764/2008 to improve apply
Free movement of goods guaranteed by compliance with
European standards
Transparency for administrative decisions denying market

access
Strengthening the Product Contact Points
Option 4: Comprehensive legislative Clarifying the scope of mutual recognition

changes to Regulation (EC) No 764/2008
to improve the functioning of mutual Declaration of compliance
recognition Fast track appeal procedure
45
A case reported by a representative of an EU business association of construction equipment may be particularly
instructive in this respect. The interviewee reported the case of a consortium of 5 large businesses which produced a
wheeled excavator in compliance with EU non-harmonised standards and tried to export it via mutual recognition.
The machine was first marketed in one Member State, which accepted the standards used by the producers. However,
when trying to export the same model to other countries, recognition was denied on grounds that road homologation
(which is everywhere a national provision) could not be accepted. As a consequence, the only way to have the product
marketed was to obtain road homologation also in these countries. More in general, business associations pointed
out how a significant constraint to mutual recognition is that Member States very often do not recognise the validity
of tests, as they may have different national standards and regulations. Another example in this respect is provided
by the test for measuring noise generated by agricultural equipment, which are not accepted by Member States who
have different standards. Hence, businesses are faced with the cost of submitting their products to the same tests in
different countries.
38
Policy Option Sub-Option
Strengthening the Product Contact Points and the

cooperation between relevant authorities
Option 5: Voluntary prior authorisation to

placing on the market
These options are characterised by different levels of changes and modifications to the
Regulation, as well as the introduction of new instruments and procedures.
A more detailed description of the options is provided below.
Option 1: Baseline
The baseline scenario is the "no policy change" option. This implies that the Mutual Recognition
Regulation in its current version remains as the applicable legal framework. Obstacles to free
movement of goods stemming from national rules will continue being addressed via existing
tools such as the Transparency Directive46. The clarification of legal uncertainties will be left
to the case law of the European Union’s Court of Justice. Businesses and national authorities
will continue to use the tools available (list of products to which mutual recognition may apply,
guidelines, mutual recognition clause, Product Contact Points) to know precisely when mutual
recognition applies in relation to a specific product. The Product Contact Points network will
continue functioning in the same manner, and possibly benefit from being integrated into a
wider network, which would act as a single entry point for all available business-related
services. Under this wider network, the provision of online information on products for
economic operators, preferably based on a predefined quality charter could be facilitated
through the 'Single Digital Gateway' (proposal forthcoming). Businesses and national
authorities will continue relying on guidance from the Commission in order to demonstrate
that a product has been lawfully marketed. The burden of proof that a product should not be
allowed market access remains on the national authorities. National authorities would remain
obliged to notify both the economic operator and the Commission of all administrative
decisions denying market access. The use of SOLVIT would remain an alternative for economic
operators who wish to challenge administrative decisions denying market access. The
introduction of a SOLVIT +, as foreseen in the Commission's action plan for improving SOLVIT,
may bring some improvements in the businesses capacity to easily challenge a national
decision denying market access on mutual recognition grounds. Furthermore, in problematic
sectors where mutual recognition cannot facilitate free movement of goods, harmonisation of
essential requirements can be used in order to ensure market access for businesses.
Option 2: Soft law instruments to improve the functioning of mutual recognition
This option refers to the adoption of an action plan containing non-legislative measures to
boost further the application of the mutual recognition principle. This option would not include
a revision of the Regulation, and therefore the PCP network and the procedure to be followed
by national authorities for denying market access would remain as they are today.
The action plan would contain, in particular, the following measures:
46
Transparency Directive (EU) 2015/1535.
39
a) Awareness raising and training
Awareness on mutual recognition, and how it works in practice, would have to be raised among
economic operators and national authorities. Effective awareness-raising campaigns and specific
sectorial training on the implementation of the mutual recognition principle would be provided at EU
level.
b) A clearer mutual recognition clause
The Commission would design a clearer mutual recognition clause to be included in national technical
rules adopted by Member States.
The new mutual recognition clause would be further supported by guidance to Member States on how
and when the clause should be included in the national legislation, and on the consequences of its
inclusion.
c) Exchange of officials in the area of mutual recognition
Exchanges of officials from Member States working in the relevant national administrations would
concern Product Contact Points but also national authorities working in problematic areas, such as
construction products, food area, etc.
Option 3: Minimum legislative changes to Regulation (EC) No 764/2008 to improve

Under this option, containing several complementary sub-options, the Regulation would be
revised. The changes to be introduced would address the main issues while allowing for more
flexibility on the use of the mutual recognition principle.
In particular, the following changes would be introduced in the Regulation:

a) Identifying the products to which mutual recognition may apply
The list of products to which mutual recognition may apply would be updated, in order to take into
account newly adopted or repealed legislation. It would also be made more user-friendly (e.g. by
introducing a more friendly product based research tool), so businesses and national authorities could
be aided in assessing the applicability of the principle of mutual recognition in a specific case or to a
specific product.
b) Free movement of goods guaranteed by compliance with European standards
Products lawfully marketed in one Member State and complying with European standards would
effectively enjoy the right of free movement in the EU. This implies the recognition, by the
Commission, and after consultation of Member States, of certain European standards in the area of
non-harmonised goods via implementing acts. This option refers only to already existing or future
European standards and not to mandating the developments of European standards. Compliance with
these standards would give a presumption of compliance with the technical rules applicable in the
origin and destination Member State, as the standards usually covers the design of the product and
the testing methods, which are the core of technical rules. Such reinforced presumption of compliance
would facilitate the free movement of goods already lawfully manufactured in a Member State.
Compliance with these standards would remain voluntary for economic operators.
c) Transparency for administrative decisions denying market access
The Regulation would introduce incentives for national authorities to ensure they comply with the
obligation to notify administrative decisions denying or restricting mutual recognition. More
transparency for these decisions would be an incentive for Member States to apply the mutual
recognition principle, as it would render less acceptable the absence of notifications or the lack of
proper justification supporting the administrative decisions to be notified. Using an IT tool for allowing
Member States to notify would also give all notifications more visibility. The IT tool to be considered
could be, e.g., the Internal Market Information tool (IMI) or ICSMS (i.e. the General Information
Support System referred to in Article 23 of Regulation (EC) No 765/2008). Under this option, non-
notified administrative decisions would be considered as non-applicable.
d) Strengthening the Product Contact Points
The Regulation would strengthen the role of PCPs in order to provide information on all applicable
rules for all products, i.e. information on Union harmonisation legislation and on national technical
rules adopted in the non-harmonised area. This would be particularly relevant for products where
certain aspects are covered by harmonised legislation and others subject to national technical rules,
since it would offer economic operators information on all rules applicable to their product.
40
Option 4: Comprehensive legislative changes to Regulation (EC) No 764/2008 to

improve the functioning of mutual recognition
Under this option, comprehensive regulatory changes would be made to the current
legislation. In particular, the following changes would be introduced in the Regulation:
Clarifying the scope of mutual recognition
The scope of the Regulation would be clarified, to expressly mention that the Regulation defines
procedural guarantees for the application of the mutual recognition principle and to better reflect the
categories of products to which mutual recognition could apply, including products for which only
certain aspects are covered by harmonisation legislation. Clarifications would be brought also
regarding the areas where measures restricting or denying market access can be taken on the basis
of the mutual recognition principle.
Declaration of compliance
The Regulation would introduce a declaration of compliance with the technical rules of the Member
State where the product is being lawfully marketed, to facilitate the access of this product to the
market of the other Member States. When entering a new market, economic operators would rely on
the same declaration to attest that their product is already lawfully marketed. All national authorities
would have to accept this declaration and would not be able to require different means of evidence.
The Regulation would define the standardised content this declaration of compliance would have. It
would include at least the identification of the economic operator and of the product, the relevant
legislation and /or standards the product complies with and, when applicable, the relevant conformity
assessment procedure carried out. It would be drafted in the language of the Member State where
the economic operator intends to market his products, by making use of multilingual forms. It would
be made available by the economic operator to national authorities upon request.
By signing the declaration, the economic operator takes full responsibility for the compliance of his
product with the applicable rules in the Member State of origin. The declaration would offer a
presumption of compliance with these rules for the economic operator; this presumption can be
rebutted by national authorities, who will have the charge to prove the non-compliance.
This option contains sub-options:
a)Voluntary self-declaration of compliance
The declaration would be issued by the economic operator and would be voluntary for all those relying
on mutual recognition to enter a new market.
b)Mandatory self-declaration of compliance
The declaration would be issued by the economic operator and would be mandatory for all those
relying on mutual recognition to enter a new market.
c)Voluntary third-party declaration of compliance
The declaration of compliance would be voluntary, but issued by a third party. Such a third party
would be a body designated by the Member State in which the product is legally marketed, e.g. by
the national Product Contact Point established in accordance with the Regulation. By issuing the
declaration, this third party would take responsibility regarding the content of the declaration, which
would give more reassurance as to the compliance of the product; however, the responsibility of
ensuring the compliance of the product would always remain with the economic operator.
d)Mandatory third – party declaration of compliance
The declaration would be mandatory for all economic operators relying on mutual recognition to enter
a new market.
Fast track appeal procedure
The Regulation would provide a new fast track procedure, which would be an alternative to the costly
and lengthy court procedures currently available. It would be inspired by the "safeguard procedure"
operating in the area of products covered by Union harmonisation legislation, which allows a Member
State or the Commission to intervene in order to challenge a national decision that is considered as
potentially breaching EU law.
The fast track appeal procedure would be very quick (no longer than 3 months), and free of charge
for businesses, as any other complaint they may address to the Commission. It would be very
inclusive, facilitating the involvement of the Commission, the necessary economic operators and the
concerned Member States. The evaluation of whether or not the administrative decision challenged
by the economic operator is compatible with EU law would be carried out by the Commission. It would
take the form of a decision, to be communicated to all parties concerned, and binding on those to
whom it is addressed.
Strengthening the Product Contact Points and the cooperation between relevant authorities
The Regulation would strengthen the role of PCPs in order to provide information on all applicable
rules for all products, i.e. information on Union harmonisation legislation and on national technical
41
rules adopted in the non-harmonised area. Furthermore, Member States would be obliged to ensure
that Product Contact Points have the necessary resources and expertise to fulfil their tasks. Finally,
mandatory administrative cooperation would be put in place.
Option 5: Voluntary prior authorisation to placing on the market

Under this option, the suboptimal functioning of the mutual recognition principle would be
addressed by intervening in a pre-marketing phase, to prevent obstacles to free movement
of goods, rather than in a post-marketing phase as it is today. By introducing a system of
prior authorisation to placing products on the market, economic operators would have
confirmation that their products can have market access in the Member State of destination
based on the mutual recognition principle before actually entering that market. The Regulation
would be amended to reflect the introduction of such pre-marketing procedure.
Voluntary prior authorisation to placing on the market
Products lawfully marketed in the market of one Member State would be placed on the market of
another Member State only after a prior examination of the product by the receiving Member State.
Such an examination would consist of assessing if the mutual recognition principle can be applied or
not, i.e. the Member State would confirm (or disallow in certain specified cases) that a product,
although not compliant with its own national legislation, can be marketed in its territory. Such a
procedure would be voluntary for economic operators.
42
4 ESTIMATING THE MAGNITUDE OF THE PROBLEM
The elements presented in the previous chapters provide a general picture of the current state
of play of mutual recognition, with definitions of the relevant market, the implementation
process, problems and the policy options drafted to address them.
This chapter aims to estimate the magnitude of the problem by examining costs associated
with the sub-optimal functioning of the mutual recognition principle.
4.1.1 Estimating the magnitude of the problem triggered by suboptimal functioning of the
mutual recognition principle
4.1.1.1 Introduction and exporting decision tree
The analysis is based on a model for estimating the magnitude of the problem and issues
arising from the current sub-optimal functioning of mutual recognition.47 In 2003, Pelkmans48
identified three core barriers or costs – information, transaction and compliance. These
elements are utilised and further developed in this study and these elements appear to be as
relevant now as they were in 2003.
Annex 8.3 provides an overview of how Eurostat intra-EU trade data and the preceding
analysis undertaken for this study have been used to find key elements that underpin the
model to estimate costs associated with the sub-optimal functioning of mutual recognition.
The analysis uses Eurostat Easy Comext data49 to estimate that 136,422 enterprises are
undertaking intra-EU exporting of non (or partially) harmonised products. Approximately 65%
of these enterprises are micro-enterprises employing 1 to 9 people (88,594 enterprises); 24%
have 10 to 49 employees (33,202 enterprises), 8.5% have 50 to 249 employees (11,530
enterprises) and 2.3 per cent have over 250 employees (3,096 enterprises).
Obviously larger enterprises (in terms of employees) will have larger volumes of intra-EU
trade in non (or partially) harmonised products than smaller enterprises. Annex 8.3 describes
the analysis to estimate the value of intra-EU trade in non (or partially) harmonised sectors.
Micro-enterprises employing 1 to 9 people are estimated to have an average value of intra-
EU trade in non (or partially) harmonised products of €0.55 million.
The figure for small enterprises with 10 to 49 employees is €1.5 m, for medium enterprises
with 50 to 249 employees €7.18 million and large enterprises have an average value of intra-
EU trade in non (or partially) harmonised products of €65.31 million. The average value of
47
The approach adopted is innovative. No previous studies could be found that model or calculate costs arising from
the current sub-optimal functioning of the mutual recognition principle. Renda, A. et al. (2014), Towards indicators
for measuring the performance of the Single Market. Briefing for the IMCO Committee. Directorate General for Internal
Policy. A theoretical-economic approach is developed from the work of Ronald Coase from 1937 onwards on
transaction costs and the nature of the firm and Oliver Williamson’s work in the 1990’s on transaction cost economics.
These approaches employ a very different idea of ‘transaction costs’ and cannot be employed for this empirical study.
Pataki, Z. (2014), The Cost of Non-Europe in the Single Market. explored the costs of European trade in a suboptimal
Single Market environment. This study incorporates the principle of mutual recognition within a broader exploration
of Single Market inefficiencies. The study does not examine in detail the costs of a sub-optimal mutual recognition
principle and does not explore sectors and/or enterprises in the detail of individual NACE categories.
http://www.europarl.europa.eu/RegData
/etudes/STUD/2014/510981/EPRS_STU(2014)510981_REV1_EN.pdf.
48
Pelkmans, J. (2003), Mutual recognition in goods and services: An economic perspective. European Network of
Economic Policy Research Institutes. Working Paper 16. p14.
49
Trade by activity and enterprise size-class (DS-058467-01) http://epp.eurostat.ec.europa.eu/newxtweb/.
43
intra-EU trade in non (or partially) harmonised products per enterprise across the three
different enterprise sizes is €2.81 million.
The study also identified a relationship between the number of products for intra-EU non (or
partially) harmonised trade and enterprises size. On average, large enterprises, with over 250
employees, were developing seven new products each year. Medium enterprises were
developing five, small two, and micro enterprises with less than ten employees were only
developing one product each year. Multiplying the average number of products by the number
of enterprises in each size band produced an estimate of 234,000 new non (or partially)
harmonised products being developed each year. The average value of intra-EU trade per new
non (or partially) harmonised product is €1.64 million.
The figures for the number of enterprises and value of intra-EU trade are central to empirical
considerations when developing the model in this chapter.
Desk research and stakeholder interviews have identified a number of activities and options
for enterprises to follow when they export products. These activities were presented in section
0. Figure 11 provides a simplified decision tree diagram to represent the route that enterprises
can follow when deciding not to export or when entering another EU Member State market
with a product covered by mutual recognition.
The decision tree captures the three main options (and subsequent steps) that an enterprise
undertaking intra-EU exports of partial or non (or partially) harmonised products needs to
consider. These key options are incorporated in the empirics of applying the model developed
within this section. The model provides a representation for an enterprise considering intra-
EU exporting of one product in one EU Member State, including different steps.
The starting point for Figure 11 is the consideration by an enterprise to export (market entry
decision). At that point they can decide to proceed and incur time and other costs before
entering a market. Alternatively, they can decide not to attempt to export, these decisions
will generally be underpinned by economic rationale (e.g. the perceived costs of exporting do
not offer sufficient rewards; in terms of profits from the markets they may enter) or enterprise
staff may not welcome the risk or other pressures of exporting.
If an enterprise decides to export, they can follow one of the two following routes.
 First, they can adjust their products to meet the requirements of the Member State
markets they want to enter (action 3 in decision tree graphic);
 Second, even if this strategy is followed, the enterprise will have to demonstrate to
national authorities that their product does meet the requirements of the Member State
targeted for exporting (this is the second route that can be pursued, see action 2 in
decision tree graphic).
44
Figure 11 Decision tree diagram for export decisions associated with products not covered by mutual
recognition
Adjusting the product to meet market requirements (action 3 in decision

tree graphic)
Stakeholders interviewed found it difficult to provide a precise cost for adjusting products due
to different circumstances and the adjustments required. However, the average estimate was
two percent of the value of intra-EU trade from a non (or partially) harmonised product. In
the model this value (two percent) can be adjusted, the default value is €32,800. 50
After adjusting the product an enterprise would still need to demonstrate to the relevant
authorities that the product can be sold lawfully in another Member State (hence the arrow
‘feeding back’ to the preceding element [action 2; demonstrating meeting regulatory
requirements] of the decision tree in Figure 11).
The decision tree in Figure 10 emphasises that the estimated 136,422 enterprises exporting
non (or partially) harmonised products intra-EU can follow one of two routes – Action 2 only
or Action 2 and 3 (demonstrating meeting regulatory requirements and adjusting the product).
50
The average value of intra-EU trade for each non or partially harmonised product is €1.64 million per annum, see
later research. Thus for production of a single product the two per cent estimate would represent €32,800. For the
sake of simplicity, and to prevent making inaccurate assumptions about production costs in relation to intra-EU export
turnover, it assumed that production costs of a single product could be equal to intra-EU export turnover (this would
equate to a position where margins on a product were small or the company was operating at break-even levels).
This assumption could be a slight over-estimation, but users are able to adjust the model to reduce this assumption
if this value is considered too high. Enterprises adjusting products will also incur expenses associated with the
demonstration of meeting regulatory requirements. The previous bullet point noted that these were €4,800. Thus
actions 2 and 3 have a combined average cost per enterprise of €37,600.
45
Responding enterprises appeared to be split 50:50 in the two routes that could be followed.
The default position in the model is that half of enterprises only undertake Action 2 and half
undertake Actions 2 and 3. The model enables users to adjust the proportion following each
route.51
Demonstrating meeting regulatory requirements (action 2 in decision tree

graphic)
As noted previously, three components can be identified to this action. A two-stage process is
usually evident.
Firstly, this option requires an assessment of information about mutual recognition principles
for their product and the requirements for the target Market State (Pelkmans described these
as ‘information costs’).52 There was a relatively high-level of agreement amongst those
interviewed that this, on average, takes between 10 and 30 hours for a single product.
However, some larger businesses with many products reported undertaking continual
monitoring of relevant information.
The second step is demonstrating to relevant authorities that the product can be sold lawfully
in another Member State – ‘transaction costs’. Interviewees suggested that this took between
30 and 50 hours. It has been noted that undertaking these two activities should usually ensure
that the third component identified – ‘litigation or adjudication costs’; 53 associated with judicial
presentation and/or review – should be avoided. None of the businesses interviewed in
connection with the decision tree model had incurred adjudication costs. Since these costs can
usually be avoided by incurring ‘information’ and ‘transaction’ costs these are not included in
the model.
At the average personnel costs quoted by enterprises, (€60 per hour) the maximum time of
80 hours (30 hours for information costs and 50 hours for transaction costs) 54 equates to a
cost of €4,800 per enterprise (per product per Member State). This data is adapted from prior
field research components of the study. In the model this value can be adjusted, the default
value is €4,800.
51
The default position of 50:50 leads to total costs of €327m per product for those only undertaking action 2 and
€2,564 m for those undertaking actions 2 and 3 (total €2,892 m). If the calculation is revised to have 25 per cent of
enterprises undertaking action 2 only (cost €163.7 m) and 75 per cent actions 2 and 3 (cost €3,520 m) the overall
total costs is €3,683 m. If the calculation is revised to have 75 per cent of enterprises undertaking action 2 only (cost
€491.1 m) and 25 per cent actions 2 and 3 (cost €1,609 m) the overall total costs is €2,101 m. The deviation between
the two options (25:75 and 75:25) makes a difference of plus €791 m and minus €791m (respectively) from the total
cost of €2,892 m for the 50:50 position.
52
Pelkmans, J. (2003), mutual recognition in goods and services: An economic perspective. European Network of
Economic Policy Research Institutes. Working Paper 16. P8.
53
Better Regulation Toolkit. 2015. Tool #51 (Typology of costs and benefits) highlights costs associated with
adjudication for policymakers and exporters. http://ec.europa.eu/smart-regulation/guidelines/tool_51_en.htm.
Judicial review can sometimes make it more difficult to enter Member State markets on later occasions. Since they
can frequently be avoided, these ‘reputation costs’ are not included in the model. However, when they do arise, they
are important in the context of mutual recognition.
54
30 hours for information costs and 50 hours for transaction costs represent a worst case scenario. These values
can be adjusted in the spreadsheet model. These costs are a relatively small proportion of overall costs (three per
cent, see Table 12), thus reducing values from the default position of 30 and 50 hours respectively will only have a
limited effect.
46
However, it is possible that after undertaking some or all of the actions to demonstrate
meeting regulatory requirements that the enterprise may decide not to continue. Hence, the
‘no’ arrow (from Action 2) in Figure 11 indicating a ‘lost opportunity’.
Moreover, it also is somehow possible that after undertaking product adjustments that the
enterprise may decide not to continue. Hence, the vertical ‘no’ arrow (from Action 3) in Figure
11 indicating a ‘lost opportunity’.
Cost of delayed market entry (action 4 in decision tree graphic)

The preceding elements take time and prevent immediate entry to the market. Research also
identified that there will also be waiting costs associated with the ‘number of products waiting
for EU regulation before free movement could become a reality for businesses. These are
included in the model as ‘Costs of delayed market entry’. Enterprises suggest the average
length of delay is about a month. They also report that the average cost of this delay is
between one and ten percent of the value of intra-EU trade from a non (or partially)
harmonised product, the average value is four percent. In the model this value can be
adjusted. The default value (of four percent) is €65,600. 55
The preceding elements of the decision tree model have focused on the costs for enterprises
that decide to try to enter a market. Fairly robust insights to these costs have been obtained
from businesses.
A further significant element that needs to be considered is the potential lost opportunity to
those businesses that decide not to try and enter markets. These costs (from a lost
opportunity) are independent from those of the business that do export and should be
regarded separately.
Lost opportunity (action 1 in decision t ree graphic) –
Lost opportunity is difficult to investigate because it represents the outcome of a ‘do nothing’
option. However, logic would dictate that if rewards were high enough, all enterprises would
‘do something’. Therefore the businesses that ‘do nothing’ are probably those that predict that
perceived costs of the preceding elements (actions 2 and 3) will be greater than the benefits
they might receive, including a small ‘premium for the risk’ of ‘doing something’.
Lost opportunity costs are much harder to estimate. The majority of businesses in most
sectors do not export for a wide variety of reasons. The proportion of businesses deciding not
to export due to a single reason - the sub-optimal functioning of the mutual recognition
principle - is very difficult to estimate. There are many other reasons companies choose not
to export.56 Nonetheless, for completeness this study provides a transparent estimate of the
possible number of businesses and the value of lost trade. These subjective assumptions are
explicitly presented below and the spreadsheet model enables relevant values to be adjusted
to enable sensitivity analysis.
55
See the previous footnote for an explanation of export turnover in relation to production costs.
56
Economic literature consistently highlights that export survival and export resilience is only achieved by the more
competitive enterprises and those with better products. It is evident that more competitive enterprises should have
greater reserves or assets and be better able to persist at exporting. Smaller less competitive businesses may not
have the resources or resilience to try and export more than once.
47
Interviewed stakeholders and online survey of companies57 estimate the cost of lost
opportunities as between one and ten per cent of the value of intra-EU trade from a non (or
partially) harmonised product, with an average value of 3.5 % of the value of intra-EU trade
from a non (or partially) harmonised product. This represents an average value for intra-EU
exporting enterprises of €57,400 per annum.58
The other difficulty concerning ‘lost opportunities’ is the number of enterprises that might
have seriously considered exporting. The average number of enterprises undertaking intra-
EU exporting of non (or partially) harmonised products is 14.3% (136,422 enterprises).
Clearly, it would not be reasonable to assume that the remaining 86.7% (approx. 818,570)
of enterprises producing non (or partially) harmonised products but not exporting should be
included in ‘lost opportunity’ calculations.
Interviews with enterprises did not provide an insight to their perceptions of lost opportunity
because those willing to respond were all exporters. Figure 11 demonstrates how the number
of enterprises seriously considering intra-EU exporting, but deciding not to go ahead, contains
two components. First, some businesses decide not to embark on any activities to examine
export non (or partially) harmonised products. This group is estimated to be the same
percentage (of non (or partially) harmonised producing enterprises that do not intra-EU
export) as those that do export (14.3%). The second component is comprised of enterprises
that embark on exporting (by undertaking actions 2 or 3) and then decide not to continue.
This group are estimated to be the same percentage of non (or partially) harmonised
producing enterprises that do not intra-EU export) as those that do export (14.3%). Based on
these assumptions, which can be changed in the model, there are 234,113 enterprises
incurring a lost opportunity.59
The decision tree has been developed into a model that can be adjusted (with six key elements
documented above, in a manner similar to a sensitivity analysis)60 to estimate the cost of sub-
optimal functioning of mutual recognition. The methodology is founded on analysis of the
value of intra-EU exports (in non (or partially) harmonised products) presented in the
preceding chapter. Previous analysis focused on the Standard International Trade
Classification (a classification of goods used to classify the exports and imports - SITC). Data
relating to the SITC classification did not enable an accurate insight into the number of
enterprises in the sectors or the proportion undertaking intra-EU exporting. The current
approach therefore uses the statistical classification of economic activities in the European
Community (NACE).61 This approach provides more granular insights and importantly detailed
insights to the number of enterprises in sectors and the numbers exporting. Enterprise level
57
Businesses that have been undertaking intra-EU exporting of non (or partially) harmonised products were the main
source of information since they have a better understanding of what is possible and understanding of the lost
opportunity they might have incurred if they did not export. If a business has never undertaken intra-EU marketing
they are unlikely to have any knowledge of the magnitude of lost opportunities.
58
The aggregate value for ‘lost opportunity’ calculations for the nine NACE categories is €13,438 million. Divided by
the assumed of 28.6 per cent of non-Intra-EU exporting enterprises (234,113) this provides an average per product
of €57,400. Obviously the volume of trade and number of enterprises undertaking intra-EU exporting of non (or
partially) harmonised products varies between individual NACE sectors; this average figure will therefore vary
between NACE sectors.
59
28.6 per cent of the non-intra-EU non-harmonised exporting enterprises (818,577) is 234,113 enterprises.
60
Section 4.1.2.5 provides a flavour of some of the sensitivity analysis undertaken. To examine all the potential
combinations would require 6! calculations (720).
http://ec.europa.eu/eurostat/statistics-explained/index.php/Glossary:Statistical_classification_of_economic
61
_activities_in_the_European_Community (NACE).
48
data enables ‘real-world’ insights from interviews with enterprises, undertaken during the
study, to be introduced into the model.
4.1.1.2 The Sub-optimal Functioning of the mutual recognition model

Like any model, the sub-optimal functioning of the mutual recognition model (henceforth
called the SFMR model) is a simplified framework designed to illustrate complex processes
using mathematical techniques. The model establishes an argumentative framework for
applying logic and mathematics that can be independently discussed and tested and applied
in various instances. The model does not pretend to be a theoretical representation (such
theories do not exist). Instead, it builds on previous conceptual studies and provides the basis
for discussing key parameters and drawing conclusions from a model that is an approximate
representation of economic facts. Feedback from the Commission has also been beneficial in
further refining the model and its underlying assumptions.
As noted above, the SFMR model is a representation of reality. However, the values presented
in the various components of the new model are founded on feedback from enterprises. The
default values, described earlier, are based on input from nine enterprises that took part in
more detailed interviews about compliance with mutual recognition principles.
The model provides estimates for costs. The same methodology is applied to each NACE
sector.62 The outcome from these consistently applied approaches would probably be most
useful in providing an insight to the relative differences of costs in different parts of the model
and the different non (or partially) harmonised sectors. This should help policymakers to focus
activities in the areas or sectors that offer the highest level of returns.
4.1.1.3 Costs of the Sub-optimal Functioning of the mutual recognition principle for a product
Section 4.1.1.1 provided a breakdown of the costs of sub-optimal functioning of the mutual
recognition principle for a single product. As noted earlier, there are estimated to be 232,000
non (or partially) harmonised products being developed each year. The average value of intra-
EU trade per non (or partially) harmonised product is €1.64 million.
Table 10 provides an overview of costs for each element described above for the export of a
single non or partially harmonised product.63 Thus if a product is exported after only incurring
administrative costs to demonstrate meeting regulatory requirements (€4,800) it will also
incur costs associated with delayed market entry (€65,600), in total the costs of sub-optimal
functioning of the mutual recognition principle for this product will be €70,400. If the product
adjustment route for a product is undertaken, the cost for a product will be €103,200.
Table 10 Enterprise costs associated with market entry for a non (or partially) harmonised product
Demonstrating Cost of delayed

Product adjustment and demonstrating requirements
regulatory market entry
(Actions 2 & 3)
requirements (Action 4)
(Model Action 2)
€4,800 €37,600 €65,600
62
The ‘steps’ of the model are consistently applied in the same way to each sector. Differences arise from different
numbers of businesses and levels of exporting in sectors.
63
As highlighted in Figure 11 businesses will usually only select action 2 or undertake product adjustments (action
3) and also incur administrative costs to demonstrate meeting regulatory requirements.
49
4.1.2 Value of non (or partially) harmonised trade

4.1.2.1 Number of enterprises undertaking non (or partially) harmonised trade
The research team have developed an approach that converts SITC Trade volume (€) to NACE
codes whilst aligning non (or partially) harmonised NACE categories. This can then be reliably
cross-tabulated with Eurostat data about the number of enterprises that export. EC studies
have also investigated worldwide exports and intra-EU exporting at the enterprise level. The
research team have thus found a method to robustly estimate (from Eurostat data) the
number of enterprises at the EU28 level undertaking intra-EU exports.
Table 11 provides an overview of trade and the number of enterprises intra-EU exporting non-
harmonised products. As noted earlier, the average number of enterprises exporting intra-EU
is 14.3 % of enterprises (136,422) in the non (or partially) harmonised sectors. There is
considerable variance in the number of enterprises undertaking exporting of non-harmonised
products between sectors – ranging from 18 enterprises in the ‘Coke and refined petroleum
products’ sector to 38,633 in the ‘Wood and paper products and printing’ sector.
If policymakers decided to focus improvements on the sectors with the highest number of
enterprises they should select the ‘Manufacture of wood and paper products, and printing’
(38,633) intra-EU exporting enterprises) and ‘Other manufacturing, and repair and installation
of machinery and equipment’ (33,932). These two sectors comprise 72,565 enterprises or
53% of non-harmonised intra-EU exporting enterprises. Interestingly, these two sectors also
comprise the enterprises with some of the lowest average intra-EU exports in the nine non-
harmonised sectors examined in this analysis (wood €2.13 m intra-EU exports per enterprise
per annum, other manufacturing €794,000).
The final column to the right of Table 11 provides an overview of the average level of intra-
EU export turnover by enterprises.
Table 11 Trade volume and enterprises undertaking non-harmonised intra-EU exporting (2015 data)
Enterprises
Enterprises Average non
Non (or partially) Intra-EU
producing harmonised
harmonised intra- exporting
non Intra-EU export
EU trade non
harmonised turnover (€m)
(€ million) harmonised
products per enterprise
products
Manufacture of basic metals and
fabricated metal products, 46,370 66,623 11,040 4.20
except machinery and equipment
Manufacture of coke, and refined
17 55 18 0.93
petroleum products
Manufacture of computer,
16,019 2,731 963 16.64
electronic and optical products
Manufacture of food products,
4,187 22,337 2,687 1.56
beverages and tobacco products
Manufacture of rubber and
plastics products, and other non- 13,834 59,951 14,727 0.94
metallic products
Manufacture of textiles, apparel,
66,094 193,912 32,872 2.01
leather and related products
Manufacture of transport
127,466 4,540 1,550 82.23
equipment Intra
Manufacture of wood and paper
82,438 284,801 38,633 2.13
products, and printing
50
Enterprises
Enterprises Average non
Non (or partially) Intra-EU
producing harmonised
harmonised intra- exporting
non Intra-EU export
EU trade non
harmonised turnover (€m)
(€ million) harmonised
products per enterprise
products
Other manufacturing, and repair
and installation of machinery and 26,927 320,049 33,932 0.79
equipment
Total €383,352 954,999 136,422 €2.81 m Avg.
Source: Structural Business Statistics
4.1.2.2 Costs associated with the decision tree model

Table 12 uses the evidence-based default values in the SFMR model presented earlier and
provided in Section 4.1.1.3. It provides an estimation of the costs associated with the sub-
optimal functioning of mutual recognition for all intra-EU exporting enterprises in the NACE
sectors with non-harmonised products.
Table 12 Costs of market entry for non-harmonised products associated with the sub-optimal
functioning of mutual recognition64
Demonstrating Product adjustment

regulatory and demonstrating Cost of
requirements requirements delayed
Total
(Model Action 2) (Actions 2 & 3) market
Cost
(€m) (50% of Non (€m) (50% of Non entry
(€m)
(or partially) (or partially) (Action 4)
harmonised harmonised (€m)
exporters) exporters)
Manufacture of basic metals and
fabricated metal products, 45.2 353.9 1,234.8 1,634
except machinery and equipment
Manufacture of coke, and refined
0.1 0.6 2.0 2.7
petroleum products
Manufacture of computer,
3.9 30.9 107.7 142
electronic and optical products
Manufacture of food products,
11.0 86.1 300.5 398
beverages and tobacco products
Manufacture of rubber and
plastics products, and other non- 60.3 472.1 1,647.2 2,180
metallic products
Manufacture of textiles, apparel,
134.5 1,053.7 3,676.6 4,865
leather and related products
Manufacture of transport
6.3 49.7 173.4 229
equipment
Manufacture of wood and paper
158.1 1,238.3 4,321.0 5,717
products, and printing
Other manufacturing, and repair
and installation of machinery and 138.9 1,087.7 3,795.2 5,022
equipment
The overall magnitude of costs sub-optimal functioning of the mutual recognition principle
€15,259 €20,0
Total €558m €4,373m
m 19
64
Due to rounding totals may not tally.
51
Table 12 provides an overview of the of market entry for non-harmonised products associated
with the sub-optimal functioning of mutual recognition. The table shows that in nearly all
sectors the lowest proportion of costs (€558 m across all intra-EU non-harmonised exporters)
are associated with demonstrating meeting regulatory requirements. Section 4.1.1.1 noted
that on average these represented only 80 hours of time per enterprise.
Costs are obviously higher for enterprises that incur this regulatory cost and undertake
product adjustments (€4,373 m across all intra-EU non-harmonised exporters) undertaking
this route to intra-EU exporting.
Costs associated with a delay in market entry are the largest element of total costs; estimated
at €15,259 million for all intra-EU non-harmonised exporters.
4.1.2.3 Lost Opportunity

Table 13 provides an overview of the level and cost of lost opportunities in the sectors
examined. Section 4.1.1.1 noted that this element of the SFMR model is more subjective and
enterprises choose not to export for a wide variety of reasons. The proportion of enterprises
not exporting due to the sub-optimal functioning of the mutual recognition principle is very
difficult to estimate. Section 4.1.1.1 explained how the model assumes that the number of
enterprises seriously considering intra-EU exporting, but deciding not to go ahead, is 234,113
enterprises. This value can be adjusted in the model.
Section 4.1.1.1 also highlighted that enterprises estimated lost opportunities averaged a value
of 3.5 % of the value of intra-EU trade from a non (or partially) harmonised product. The
estimate presented in Table 13 uses a multiplicand of 234,113 enterprises. This provides an
estimate of €13,438 million in lost opportunities from not intra-EU exporting one non or partial
harmonised product.
Table 13 Enterprise costs associated with lost opportunities for intra-EU exporting from a single
product
Estimate of lost
opportunity
(€m)
Manufacture of basic metals and fabricated metal products, except machinery
912
and equipment
Manufacture of coke, and refined petroleum products 1.0
Manufacture of computer, electronic and optical products 29
Manufacture of food products, beverages and tobacco products 323
Manufacture of rubber and plastics products, and other non-metallic products 742
Manufacture of textiles, apparel, leather and related products 2,644
Manufacture of transport equipment 49
Manufacture of wood and paper products, and printing 4,041
Other manufacturing, and repair and installation of machinery and equipment 4,697
Total €13,438 m
Average per enterprise €57,400
4.1.2.4 The Sub-optimal Functioning of the mutual recognition (SFMR) model

Figure 12 provides an overview of the key components of the model to estimate the cost of
sub-optimal functioning of the mutual recognition principle. Preceding sections have described
each component of the model and the assumptions used in calculations.
52
Figure 12 Costs and lost opportunity calculations associated with the decision tree diagram for export
decisions associated with products not covered by the mutual recognition principle
Note: ‘entps.’ refers to costs incurred per enterprise for intra-EU exporting
one non- (or partially) harmonised product
As noted earlier, the SFMR model has been developed as an MS excel spreadsheet. It enables
users to change the values of all the key assumptions. The model does not take account
whether exporting enterprises will continue to export in subsequent years, nor does it examine
any further costs associated with the sub-optimal functioning of the mutual recognition
principle.
4.1.2.5 Sensitivity analysis and the mutual recognition (SFMR) model
As noted earlier, the SFMR model is a representation of reality. The rationale behind the
selected default values presented in the various components of the new model are clearly
presented. Sensitivity analysis was undertaken to investigate how changes in default values
provided during the study would impact the outputs.
Sensitivity analysis examines how uncertainty in the output of a mathematical model or

system can be apportioned to different sources of uncertainty in its inputs. 65 Sensitivity
analysis was undertaken using the extremes of values provided by respondents. 66 Table 14
provides an overview of costs associated with changes in different parameters for the SFMR
65
Saltelli, A. (2002), Sensitivity Analysis for Importance Assessment. Risk Analysis. 22,3. p1–12.
http://www.andreasaltelli.eu/file/repository/Risk_Analysis_2002.PDF
66
This approach provides uses the views of respondents at each end of a spectrum of responses. For example in
Section 4.1.1.1 estimates of the cost of delayed market entry (action 4 in decision tree graphic) ranged between one
and ten per cent of the value of intra-EU trade from a non or partially harmonised product, the average value was
four per cent. Thus values of one and ten were used as the minima and maxima, respectively, in sensitivity analysis.
Further details of the maxima and minima for sensitivity analysis can be found in Annex 8.4.
53
model. The changes in the model are described in the left hand column of the table, the impact
of the lower quoted value is provided in the central column, the impact of the higher value is
presented in the right hand column of the table.
Table 14 Sensitivity analysis to investigate the impact of changes in default values in the SFMR model
Baseline scenario estimate €20,190m
Minimum Maximum
Change in the model
(€m) (-%) (€m) (+%)
Administration costs (action 2) (default €4,800 – 19,445 20,562

range €1,600 [minimum] and €6,400 [maximum]) (-3.7%) (+1.8%)
Adjusting product to meet requirements (default 18,282 25,912

value 2% - range 1% to 5%) (-9.4%) (+28.3)
Admin only (action 2)/product development (action

18,841 21,539
3) adjustment ratio (default value 50:50 – range
(-6.7%) (+6.7%)
75:25 and 25:75)
Cost of delayed market entry (default value 3.5% - 8,746 43,077

range 1% to 10%) (-56.7%) (+113.4%)
The table highlights that lowest levels of impact arise from changes in the cost for enterprises
of undertaking action 2 (demonstrating meeting regulatory requirements). These changes
only make a difference of plus 1.8 % (€20,562 m) or minus 3.7 % (€19,445 m) from the
baseline scenario of €20,190 million.
The largest impact is introduced by adjustments in the percentage change in the value of
intra-EU trade from a non (or partially) harmonised product for the cost of delayed market
entry. The default value is four percent. The maximum and minimum values provided by
respondents were one percent and ten percent of the value of intra-EU trade from a non (or
partially) harmonised product. These changes only make a difference of plus 113.4 %
(€43,077 m) or minus 56.7 % (€8,746 m).
Changes in the proportion of businesses included as having a lost opportunity also have a
significant impact in the model. The default proportion of 28.6 % of businesses not exporting
generates a lost opportunity (234,113 enterprises) estimate of €13,438 m. If the lowest value
of 11 % (of exporting enterprises in ‘other manufacturing’, see Annex 8.3) is adopted the lost
opportunity cost drops by 61.5 % to €5,168 m. If the highest value of 35 % (of exporting
enterprises [computer, electronic and optical products] is used to estimate those that consider
exporting but do not proceed and the number that start and then abandon exporting – total
70 %) is adopted the value increases by 144 % to €32,890 m.
4.1.3 Conclusions on the model
The SFMR presents a model to estimate the magnitude of the problem. It is possible to
undertake sensitivity analysis on key components of the model and the impacts of this
sensitivity analysis have been presented in this chapter.
Due to the nature of the problem and complexities (e.g. finding a representative sample of
the 136,422 intra-EU exporters of non-harmonised products) and costs that would be
associated with a detailed evaluation it is not possible to undertake a complete evaluation of
the problem. The model therefore contains assumptions that have been fully explained in
preceding sections. Assumptions in the model are based on feedback from exporting
54
enterprises. Commentators and observers might have different views concerning some of the
assumptions. Without further evidence no single viewpoint should be regarded as ‘correct’.
For this reason, values associated with assumptions in the model can be changed.
55
5 PROBLEMS AND OPTIONS IN PRACTICE: THE MUTUAL RECOGNITION IN FIVE

SECTORS
The previous chapters provide an overview of the general application of mutual recognition. This
chapter goes into more depth, showing how mutual recognition is implemented in practice. This
is done for five specific non (or partially) harmonised sectors and characterises a sub-optimal
implementation of mutual recognition.
5.1.1 Manufacture of other food products: food supplements

5.1.1.1 Introduction
Food supplements can be defined as concentrated sources of nutrients (or other substances)
with nutritional and physiological effect. These products are marketed by business operators in
the food sector. Such goods can be sold in ‘dose’ form, such as pills, tablets and capsules, and
may contain:
 Nutrients (vitamins and minerals);

 Botanicals;67
 Other substances (e.g. amino acids).
The main rules for the marketing of these products are laid down in Directive 2002/46/EC, 68 for
which implementation and monitoring are entrusted to the individual Member States.
The Directive includes a list of substances that may be used for the production of food
supplements, and was amended several times over the years. 69
Interviewed stakeholders highlighted how this sector still constitutes one of the main ‘grey areas’
where EU and national rules collide and combine, where national authorities have the largest
room for manoeuvre in decision making, including the acceptance/denial on market entry.
Stakeholders underlined how this type of product suffers from a poor implementation of the
principle of mutual recognition, with different MS authorities following heterogeneous procedures
and requirements to access the market.
5.1.1.2 Background
The referenced legislation on food supplements is harmonised to a limited extent, and provides
a relatively loose regulatory framework based on Directive 2002/46/EC.
The Directive provides a list of vitamins and minerals that may be used in the manufacture of
food supplements, but it does not give information either on the levels of these substances within
each product, or on any mix with botanicals or other substances. This creates a legal vacuum
around which the "puzzle" of the food supplements industry functions.
The administration of this gap is left to the MS. They identify diverse solutions to this challenge,
leading to many different safety standards, levels of ingredients allowed for products as well as
their classification as food supplements. The three main issues that this sector encounters in
regards to mutual recognition70 are:
67
Plant parts, concentrated sources of plants or their extracts or derivatives with a physiological effect.
68
Directive 2002/46/EC of the European Parliament and of the Council of 10 June 2002 on the approximation of the laws
of the Member States relating to food supplements.
69
Commission Regulation (EU) 2015/414, Commission Regulation (EU) No 119/2014, Commission Regulation (EU) No
1161/2011, Commission Regulation (EC) 1170/2009, Commission Directive 2006/37/EC
70
Food Supplement Europe (2016), Input into the REFIT of the Mutual Recognition Regulation 764/2008.
56
 Maximum levels of vitamins and minerals. Many MS authorities establish national

maximum levels for the amounts of vitamins and minerals allowed in food supplements,
while others preferred not to have specific maximum levels. The existence of particularly
low levels applied in certain Member States, together with the large differences between
the levels applied for the same substances, make it extremely difficult for companies to
manufacture one single EU-wide product;
 Substances other than Vitamins and Minerals. Some MS authorities apply positive
lists71 with specific conditions to their use. In addition, some MS may consider certain
ingredients as for medicinal use only;
 Botanicals and botanical preparation. Botanicals are used in a wide variety of food
supplements. Many MS have positive lists, including conditions of use. The content of
these lists differ widely, and certain botanicals are banned in different MS because of
medicinal status, while they are widely marketed as food supplements in others.
Stakeholders involved (i.e. businesses and consumers) call for greater transparency of the
rules:72 consumers push for developments in the level of consumer protection in Europe while
companies are more interested in improving the harmonisation of the rules. This latter point
is especially dictated by the costs of obtaining certifications to export to other European
countries. In order to facilitate exports, businesses also try to pursue product-selling strategies
that may guarantee an easier, faster and less costly route to the market by modifying their
labelling from "food supplement" to "medical device". This is achievable because, in the current
legal environment, the same product can be considered a botanical food supplement in one EU
country and an herbal medicine in another.73 This option, however, can involve some additional
costs for companies who label a product as ‘medicine’.
Considering this market, it is estimated that approximately 20% of consumers in several

European countries use at least one type of food supplement, with significant variations between
North and South, as northern populations exhibit more extensive usage.74
It is difficult, nevertheless, to have a clear picture of the market size. In recent years, the entire
European market has been estimated to be worth €11 billion,75 with an apparently growing
trend, and a good share (around 20%) represented by botanicals. Within the EU, the biggest
market is Italy, with a turnover of €3 billion, around 25% of which – €300/400 million –
comes from products that involve botanicals.76
5.1.1.3 Practices and trends identified and main issues relating to the application of mutual
recognition77
Information collected from stakeholders gives a very heterogeneous representation of the
application of mutual recognition in this sector, with many issues faced by companies. Different
Member States follow different procedures and rules, in addition to a very dissimilar recognition
and application of the mutual recognition principle. This creates issues and obstacles that
companies may have to deal with when trying to enter a new market, often culminating in a
diversity of products for different EU countries.
71
A “positive list” is an official register containing a list of all elements (or substances or products) allowed in the county.
It is opposite to a “negative list”, which lists all elements (or substances or products) not allowed in the country.
72
Food Supplements Europe, (2016) Input into the REFIT of the Mutual Recognition Regulation 764/2008; BEUC (2016),
Food Supplements.
73
BEUC (2016), Food Supplements – Challenges & risks for consumers.
74
Ibidem.
75
Euromonitor data 2014.
76
Stakeholders input.
77
Please consider that the following sections are based on inputs collected from businesses and business associations.
57
Stakeholders highlight the complexity of the sector with many different products, ingredients
and combinations, subject to different levels of control and requirements by MS. This makes it
difficult to have a clear and uniform understanding of the whole sector and complicates the
contemplation of possible strategies in which to overcome barriers.78
Different countries, different rules
Since the sector is not fully harmonised and its regulation is limited at EU level,79 companies and
their products are subject to extensive national legislation, to which they need to comply. In this
regard, stakeholders have highlighted three main areas in which companies encounter issues:
 Different classification of ingredients or substances: as already mentioned, some
products may be classified as food supplements by a MS, while another country –
sometimes an immediate neighbour – can consider them as medicines, therefore with
completely different requirements, rules and procedures to be followed for marketing;
 Different levels of ingredients or substances allowed. One of the most (and most
differently) regulated elements is the level of ingredients (e.g. vitamins, minerals and
other substances) allowed in specific products at national level. MS tend to have their
own individual specifications for these levels, even when considering the same product.
This creates problems for companies that are attempting to ensure their product
compositions and formulas comply;
 Terminology and labels: it may occur that terms and labels are not universally
accepted across Europe (e.g. the term ‘probiotic’). This requires companies to change
and adapt labels and packaging if it is the case.
Additionally, limited uniformity of approaches among Member States80 seem to exist, with some
of them that, unlike the others, do not rely on a notification-based system. According to
stakeholders, this may constitute a sort of pre-market authorisation instead of a procedure to
simply notify national authorities about the products to be marketed and register information on
labels.
In the end, what emerges is that issues are not based on the complexity of procedures, but
rather on the co-existence of many different rules, requirements and practices at national level.
This means that companies must invest time and resources in order to understand and cope
with these factors, especially in those countries with a high level of restrictions.81 However, since
most of the companies within this sector are SMEs, resources and time become crucial elements
for their survival.
The application of mutual recognition
As previously mentioned, stakeholders find the application of the mutual recognition principle to
be a difficult process in the complex environment that this case study has described.
78
This is particularly true for botanical products. While the use of botanicals and other derived preparations need to be
compliant with requirements of Regulation (EC) No 178/2002, stakeholders underlined how no real steps forward seem
to have been made to clarify the framework, without a centralised authorisation procedure – which would be extremely
helpful – for the use of botanicals, or to determine the classification of botanicals as either medicines or food
supplements. This, as well as the large differences among Member States in the definition of botanicals and lists of
products/ingredients which are allowed or not, create an uncertain and difficult environment for companies to operate.
79
Some exceptions include the Regulation (EC) No 1924/2006 on nutrition and health claims, or Directive 2002/46/EC,
with a list of substances that can be used for food supplement production, but whose implementation and monitoring is
entrusted to the individual Member States.
80
AT, NL, SE, SI, UK.
81
Such as AT, DE, FI, HR, SE.
58
Stakeholders underline that national authorities tend to focus on national legislation when make
decisions without taking into account other EU MS-certifications or evidence that the product is
already lawfully marketed in another Member State.
Moreover, since Member States are entitled to classify products either as food supplements or
as pharmaceuticals on a case-by-case basis, business operators cannot assure that their
products will be recognised as food supplements on grounds of mutual recognition simply
because they are marketed as such in another Member State. The existing instruments and
mechanisms designed to assist the application of mutual recognition – such as Product Contact
Points – are not effective enough in helping companies, given their role as information hubs,
with no real consultative or assessing capabilities and tasks.
Companies emphasised that the main reason used by national authorities to delay or even block
a product from being marketed in a Member State is the existence of potential safety issues and
the need for the authorities to protect consumers. Companies cannot easily challenge this.
Additionally, in some cases, companies report a lack of transparency in the reasons for denial.
Stakeholders suggest that since the burden of proof seems to be on companies rather than on
national authorities, limits their action and ability to challenge a decision. This is particularly
salient considering the time and resources needed to demonstrate that a product is not
dangerous.
Businesses also suggest an effort by national authorities to possibly disallow (or delay) foreign
companies trying to enter the local market in order to reduce competition to domestic
companies.
Due to the potential expenses and (considerable) use of time and resources companies
sometimes do not consider challenging a decision taken by national authorities via judicial
procedures as a viable option. According to stakeholders, this can be because of:
 Resources needed, as mentioned. For a company – especially an SME – the resources

required can be so high that it discourages pursuance. For instance, an Italian SME, active
in the area of food supplements suggested that on average, costs for lawyers and
appealing procedures can amount to around €20,000 per product, while other
stakeholders provided even higher figures (see Box 2 below);
 Uncertainty of the final outcome of the procedure, which can result in supplementary
losses endured by companies;
 A preference for not antagonising national authorities, as national authorities will be
crucial for the approval of many other products that a company usually produces and is
willing to market.
In the light of these difficulties and according to stakeholders, potential options include:
 Adapting the product to the national requirements. Clearly, this also entails some
costs.
o An Italian SME indicated that adapting the composition of a product for selling it
as a medicine can be virtually unbearable for an SME in terms of time and costs
(because of the need to develop a complete dossier, including testing, clinical tests
and documentation). This can easily amount to thousands of euros.
o Adapting a product to different limits of ingredients or substances can also require
some effort from the company, such as new technological developments, with
associated laboratory costs and feasibility studies. Such costs can be significant
for an SME (at least €30-50,000 in each case), not considering the potential
impact on the production lines, which need to be differentiated even for a single
ingredient. This strategy is not likely to repay these costs when the targeted
market is too small, and therefore does not justify such investments.
59
 Not entering the market at all, when companies realise that costs and efforts will not
lead to a positive solution or, even if this could be the case, they will be too high to be
sustained. In this case it can be very difficult to estimate the costs and potential losses
for companies, but there is no doubt that this can result in losing money as well as
possible damages to the company’s image and reputation, especially following judicial
procedures;
 Trying to look for a ‘least common denominator’ among a group of MS, which can have
similar rules and requirements, therefore targeting them with a single product that would
easily comply with all different national regulations.
The box below presents in more detail some of the experiences reported by stakeholders in
different EU MS.
Box 2: Examples of positive and negative experiences with mutual recognition in EU MS
Belgium
Stakeholders underlined that Belgium presents one of the most challenging MS to deal with, as difficulties
in entering this market may be so large that – sometimes – they have no choice other than to not market
the product.
A French SME found that in recent years the marketing of products in Belgium has become increasingly
difficult. While for some basic products (e.g. ginseng) there is no specific interpretation needed by
Belgian authorities and the scrutiny can be quite fast and straightforward, for other, more complex
products, after dealing with many questions and requests for clarification, the company saw its requests
for notification and marketing refused by the Belgian authorities. Authorities did not accept the brand
under which the product was marketed, which was, however, already lawfully marketed in at least one
other MS. Without any specific explanation given regarding the interpretation that led to this decision,
the company is still expecting a definitive response after more than 2 years. Over €10,000 and several
months have been spent by the company, which is still waiting to be in front of a court to challenge the
decision. Considering the turnover for the same product in similar markets, the company can assume to
have a potential loss of turnover between €200,000 and €500,000 due to denied access.
A Holland-based subsidiary of an international company decided not to further pursue entrance to the
Belgian market with a product already lawfully marketed in another MS. The issue was relating to a
product that, despite being accepted in other MS and proved not dangerous, had levels of ingredients
higher than those allowed under the Belgian law. The decision of not entering the market was taken after
months of the company trying to get access to the market, and through the support of SOLVIT and
product contact points, without any success. The company estimates around €100,000 spent in lawsuits.
The Netherlands
The international company faced a similar case in the Netherlands, when trying to introduce a product
onto the market through mutual recognition. While no issues were apparently encountered in the first
few years, in 2013, after a change in the Dutch law, the company started seeing its requests delayed
and eventually denied, under the motivation that the products were considered unsafe for local
consumers, since the level of some ingredients was higher than the maximum level allowed in the
country.
Despite proving that the product was already lawfully marketed in another MS and that it was to be
considered safe,82 the company decided to challenge the decision in front of a Dutch court since national
authorities gave no further explanation. After two years, with no final decision, the company decided to
market the product anyway based on the evidence already provided. A late reaction of the national
authorities, which seized the products, brought the company back to a national court. The court decided
that the fault was with the national authorities for not reacting sooner in stopping a product.
The company reported legal expenditures of around €90,000, plus the time and effort needed to reach
a final verdict. In addition, around €500,000 of potential losses (in consumer price) were considered for
2016 only, due to the difficulties in marketing the product.
Spain
82
The company specified how they submitted a proof of safety (considering the lists of products by EFSA, indicating that
they could not find any suggestion that the product was unsafe in its components up to the level that was present in the
product), evidence that the product was lawfully marketed and largely sold in another EU MS, a formal letter of approval
from a scientists – also part of EFSA – and requesting a Dutch Research Institute to draft a report on the possible
unsafety of the components, leading to no indications in this sense.
60
While mutual recognition is difficult to implement in many countries, Spain is considered as one of the
most positive examples. Companies encounter very few obstacles in entering the market – for both types
of products and levels of ingredients, as long as they can prove that the product is already lawfully
marketed in another MS. A French SME reported how the process, including a declaration by the Spanish
distributor and the presentation of another MS notification of the validity of the product, took around 2-
3 months and no more than €1,000 for a single product, quite the opposite of many other MS. 83
Poland
Companies interviewed highlighted that Polish authorities place a lot of attention on products mixed with
botanicals, even if a clear positive (or negative) list is available for such products in the country. As
reported by an Italian company, in 2010 the Polish authority recognised one of the products – already
marketed in the country – as having a type of botanical that could make it a medicine, despite it being
marketed as food supplement in other EU countries. This started a process that, covering three years,
brought the company to report its doubts directly to the European Commission (EC) and the highest
national authorities. The company successfully managed to solve the situation.
The Czech Republic
This MS is characterised by a database of notified products (managed by the Ministry of Health). Thanks
to this system, companies lawfully marketing food supplements in the Czech Republic can obtain a letter
of confirmation that the product was indeed notified to the authorities and is not considered as
dangerous. This letter could be used in order to prove to national authorities of other EU countries that
such product was sold as food supplement in the Czech Republic, and, according to stakeholder, this
significantly helped them to gain access to other markets within the Union, facilitating the
implementation of the principle of mutual recognition. Nowadays, however, this system is no longer in
place since a change in legislation moved the administration of the notification procedure to the Ministry
of Agriculture, which decided not to implement it anymore.
Other MS
Baltic Countries represent an interesting example of how the same product can be considered very
differently across MS. An Italian SME saw its product being approved and lawfully marketed in Lithuania,
while blocked in Estonia, under the motivation that it was considered as a medicine by the local
authorities. The same product is still under review in Latvia, with a consultation among authorities on
whether it should be considered as a food supplement or not. Another issue raised by a Czech company
with reference to the Baltic Countries regards age boundaries. Specifically, the company indicated that
whilst it lawfully marketed a type of food supplement for children of three or more years in another MS,
it was requested to increase the age thresholds up to twelve or eighteen years in the Baltic Countries,
and to provide additional clinical proofs in order to market the product. Germany is considered a highly
regulated market, with one of the most stringent control and regulation systems. Issues are mainly
relating to plants and botanical products, which can be often considered as medicines, with the need for
companies to change the formula or some ingredients of the product. Such changes may cost around
€5,000 per product to a SME – and become very expensive if the company has to make changes to
several products at once – plus additional time and costs to obtain a new certification, carry out new
checks on quality and the need to require a new notification from the MS where the company is based.84
In addition, Scandinavian countries also seem to have a tendency to highly regulate their markets, by
classifying many substances as medicines instead of food supplements. One of the companies
interviewed highlighted the case of glucosamine in Denmark. This substance is considered as a
pharmaceutical in this country – as well as in Sweden - while in the rest of the EU is classified as a food
supplement. The Danish authority, after an audit procedure, did not agree to the production of such a
good on that territory, and the company moved it outside Europe. The Danish authority, however,
specifies how five particular substances – classified as drugs 10 years ago – are now under review to
understand whether a change in classification may be required.
Denmark, nonetheless, has adopted quite a favourable approach on the marketing of foreign companies’
products. The national authority underlined how the usual method consists of accepting a product which
is lawfully marketed in another MS on the basis of mutual recognition, except in the case when it is either
considered as a medicine or when the national legislation requires different (usually lower) levels of
specific ingredients and substances. In this latter case, however, the company is still free to notify the
product to the Danish authorities, which will proceed to check whether different levels of substances are
dangerous for local consumers.
83
Stakeholders specified, nonetheless, how it is likely that time and costs varies heavily for different products.
84
Stakeholders underlined how German authorities may require a new notification for the modified product, to be
produced by the original Member State, even if the product is not going to be marketed in such country.
61
Nevertheless, stakeholders highlighted that the situation seems to be gradually improving with
some positive signals from Member States in terms of application of mutual recognition. On the
one hand, Member States appear to start moving towards more common and shared practices,
by defining common rules and similar requirements (e.g. FR and IT in the field of botanical
products), thus easing the process for companies. On the other hand, other Member States
where it was originally very difficult to market a new product (e.g. SI), seem to start accepting
mutual recognition, even if at a very slow pace.
5.1.1.4 Main findings on the possible application of the policy options

Overall, stakeholders agree that some changes in the application of mutual recognition in the
food supplements sector are necessary.
However, it becomes less clear what such changes should be. For companies, a major problem
is the overall application of mutual recognition, rather than more particular elements. Therefore,
while the Regulation could be adapted, improving or adding some important points or
instruments, the first step should be fostering the recognition of the Regulation by MS, and
favouring its equal and immediate application across the EU.
Considering the specific policy options, stakeholders seem to agree on the fact important
changes – including legislative changes – are needed, therefore tend to prefer elements
especially belonging to Options 385 and 4.86
Consensus seems to be built around some particular sub-options, namely 4a (Clarifying the
scope of mutual recognition) and, most of all, 4c (Fast track appeal procedure). Such elements
would help addressing some of the major issues faced by companies, clarifying and better
defining the scope of mutual recognition and its possible application, and ease the weak position
they have when confronted with authorities, in terms of time and resources needed to challenge
a decision before courts. Stakeholders highlighted how they would prefer to undertake a fast
track appeal procedure rather than going to court to challenge a denial, as they are always
concerned about not jeopardising their relations with national authorities, by taking them to
court. For this reason, if quick enough and free of charge, a fast track appeal procedure would
be definitely more appealing to businesses than traditional judicial remedies, especially since it
would involve an intervention – and quick assessment – from the Commission itself, with a
decision that would be respected by all parties.
Stakeholders identified also sub-option 3c (Transparency for administrative decisions denying

market access) as a key element to be introduced in the process – especially in combination
with the previous option - in order to strengthen participants’ position and allow them to have a
clear picture of the reasons behind a decision and therefore planning possible further actions.
Businesses have underlined how a necessary starting point in this respect would be a more
thorough adherence to the obligation of notifying decisions denying market access to the
Commission on the part of national authorities.
For all these sub-options, according to stakeholders, the benefits stemming from their
implementation will certainly outweigh the costs needed for their set-up, which will be mainly
relating to administrative procedures and need to change the internal and communication
processes within national authorities.
Other sub-options, while possibly less effective in addressing the main issues in the medium-
long term, can bring other valid elements to be taken into account, such as the sub-option 2b
(Clearer mutual recognition clause). This sub-option would have virtually no cost and, if written
85
Minimum legislative changes to Regulation (EC) No 764/2008 to improve the functioning of mutual recognition.
86
Comprehensive legislative changes to Regulation (EC) No 764/2008 to improve the functioning of mutual recognition.
62
and clearly communicated to all relevant actors (both companies and national authorities), would
be one of the first and most positive changes also in the very short-term.
Nonetheless, some of the sub-options are deemed to be not enough clear and potentially
inefficient to be implemented.
This refers, for instance, to sub-option 3a (Identifying the products to which mutual recognition
may apply), since the process would be very long and extremely complex, given the large
amount of substances, ingredients and other elements to be taken into account in this sector,
and with no real uniformity among the positive/negative lists at national level. Moreover, it would
be very difficult to keep such a list constantly updated.
Sub-option 4b (Declaration of compliance) would not bring about a substantial change with
regard to the actual situation in the food supplements sector. Indeed, national authorities would
regard neither voluntary nor mandatory declaration of compliance to be sufficient in enabling
the marketing of products such as food supplements, as they may have a potentially negative
impact on consumers’ health. From the point of view (business operators) a declaration of
compliance issued by a third party would make it easier for them to prove that a product is
lawfully marketed and compliant with national requirements in another MS. However, such
declaration of compliance would only be useful and effective in improving mutual recognition
only if it would effectively empowers businesses to market their product in other MS, without
having to provide authorities with additional proofs or tests.
Stakeholders do not regard sub-option 4d (Strengthening the Product Contact Points and the
cooperation between relevant authorities) as particularly relevant. This is because Product
Contact Points are seen mainly as a ‘mailbox’ in the application of mutual recognition, without
any substantial decision-making power. However, national authorities consider cooperation
among MS as a potentially important element, in order to understand both what other authorities
think and how they operate in dealing with different elements/substances and addressing similar
issues. It may also help national authorities align their respective procedures and decisions,
saving time in gaining proof that a product is lawfully marketed in another MS.
Doubts arise with regard to sub-option 2a (Awareness raising and training): stakeholders
interviewed – all business representatives – are fully aware of the existence and possible
implementation of mutual recognition, highlighting how the issue lies mainly within national
authorities. However, while they think that a major problem, as mentioned, relates to the need
to change the culture among authorities, which should start accepting mutual recognition, they
are not sure this sub-option represents the best solution. Such action would require time and
efforts in order to be properly implemented, with no certainty – for companies – that in the end
national authorities will be more willing to implement the principle, not to mention the resources
to be invested in the process. Among businesses, while larger market players are generally
aware of mutual recognition (and the related problems), SMEs – which constitute the majority
of operating companies – are less knowledgeable and this makes awareness raising initiatives
potentially important to improve the situation.
Considering Option 5 (Voluntary prior authorisation to placing on the market), stakeholders

highlight how this procedure could be neither very feasible nor useful in the food supplements
sector, due to its complexity and since companies are not sure that the examination would be
without delays, possible blockages and modifications required by the receiving MS.
Sub-option 3b (Free movement of goods guaranteed by compliance with European standards) is

also considered as potentially very relevant. In this sector, however, it can be difficult to apply
this option given the lack of real EU standards to be followed – and the consequent need to
define them first – and the persistent differences among MS in their rules and requirements.
These issues would probably limit the possible application of such action, or at least make it very
63
difficult from the beginning. If applied, however, the option would be a positive step towards the
achievement of a fairer and deeper Single Market, since no real costs will be added (expect for
companies to request notifications and communicated with MS authorities, as it already
happens), contributing to a hastening of the process.
Overall, a mix of different sub-options seems to be preferred over a single option, while still
focusing on legislative changes (more or less comprehensive). However, while these options
would help facilitating the work of companies across EU MS, they would probably not represent
a complete solution, since the main element highlighted is a change of approach and mind-set
needed among actors in working with mutual recognition.
Stakeholders also highlighted how all the options/sub-options will encounter a certain degree of
difficulty when implemented in this sector, considering the complexity of products, the large
differences in national regulations and the fact that concerns over the safety of products can be
raised and possibly used as a valid reason to justify any national decisions.
5.1.1.5 Conclusions
Despite the heterogeneity of cases and requirements across the EU that could create a variety
of situations for companies, stakeholders generally seem to agree on the fact that the mutual
recognition is not working properly in the sector.
Complexity of products, intricacy and differences in national requirements, scarce knowledge or

disposition of national authorities in considering mutual recognition fails to facilitate the situation
of companies, which, as a paradox, may find it easier to export food supplements outside the
EU than across internal borders, often spending more resources in fighting decisions from
authorities than their actual competitors.
While a full harmonisation of the sector would probably solve many issues, it would probably be
the hardest path to follow. Nonetheless, changes definitely needed to improve the actual
situation.
The main issue that companies highlight is an unbalanced relationship between them and
national authorities. Even if the burden of proof should lie upon the latter, these can easily delay
or deny market access without a full and clear explanation and little burden afterwards, putting
economic operators in the condition to sustain additional costs (also to prove their products are
safe and already marketed in another Member State). In addition, open-ended procedures gives
companies no real room for manoeuvre when a decision is taken by national authorities.
Therefore, stakeholders highlight how some measures are needed, with soft-law instruments to
be combined with legislative changes, in order to be more effective. The complexity of the sector,
however, may require specific attention to measures and options to be implemented.
64
5.1.2 Products in contact with drinking water

EU legislation provides Member States with a set of rules concerning the production and
commercialisation of products in contact with drinking water.87
Such measures are due to be transposed by each Member State: Directive 98/83/EC (Drinking
Water Directive) established that it is up to individual countries to take all the necessary
measures to ensure that materials and products in contact with drinking water do not generate
any negative effect on human health. However, the transposition and implementation of this
provision resulted in the emergence of a multitude of country-specific requirements, with
Member States pursuing the same objective (ensuring an adequate level of safety for
consumers) through diverse provisions and test criteria, and different levels of stringency of
rules.
This multitude of different national requirements creates a particularly challenging environment

for manufacturers in the sector, especially considering the application of mutual recognition.
Companies are subject to a series of time-consuming and complex activities necessary to obtain
the certifications, conveying an overall increase in costs that may inhibit their propensity in
accessing to new markets.
During the study, all categories of stakeholders highlighted the importance of this sector, and
the need for intervention due to a generally poor implementation of mutual recognition.
Particular emphasis is placed on Water Taps, which represent one of the core products in the
sector, with several stakeholders highlighting that the commercialisation of this type of product
in Europe remains quite challenging.
5.1.2.2 Background
The manufacturing sector of products in contact with drinking water spreads in a wide and
articulated range. A list can be summarised by the following major categories: 88
 Safety and Protection valves;

 Water treatment machineries;
 Water Taps;
 Pipes and fittings;
 Tanks and pumps.
Considering available information, it is possible to estimate the total turnover in the sector
between €40 and €43 billion per annum, while the number of companies operating can be
estimated at around 7,000 units, with a heterogeneous distribution among SMEs and large
enterprises.89 In terms of Net Sales on the European market, Germany, Switzerland and
Nordic countries are the leaders, while companies from the Iberian Peninsula (ES and PT) are
towards the bottom, as shown in the figure below.
87
Directive 98/83/EC, Drinking Water Directive.
88
Figawa, Effects of Article 10 of the EU Drinking Water Directive on test and certification costs for products in contact
with drinking water, 2016.
89
Eurostat data for product categories are not specified for products in contact with drinking water. Some estimation
based on expert evaluation is available thanks to data and document collection.
65
Figure 13: Shared of net Sales of Products in contact with Drinking Water (2015)
Source: Author’s own elaboration based on stakeholder input
All these products may be hazardous to human health, and therefore must comply with certain
safety requirements. Tests and certifications fall mainly under two categories: mechanical
and hygienic, as presented in the figure below.
Figure 14: Test and Certifications
Source: Author’s elaboration based on stakeholders’ input
The cost-spread for these certifications as well as statutory audits is different among EU MS. In
Germany, for example, audit costs amount to a figure around 9% of the total costs for tests and
certifications, while in other countries like the UK, the Netherlands and France such a cost is
twice as much or higher.90
90
Figawa, Member Survey, 2016.
66
Figure 15: Total Costs for Certifications in each of the 4MS – Million €
Source: Author’s elaboration based on stakeholders’ input
Water Taps
According to stakeholders, water taps are among the products whereby commercialisation is
more problematic. Water taps are essentially valves used to control the release of water.
Unfortunately, there is a limited availability in terms of industry sector data, and databases
cannot reach the level of granularity needed.
Estimated figures regarding the market segment of water taps are presented in the table below.91
Table 15: Estimated data on water taps in the EU
Variable 2012 2013 2014
Turnover (€ million) 14,768 14,864 15,074
N. of Enterprises 1403 1378 1393

Source: Author’s elaboration based on stakeholders input and Eurostat data
It could be estimated that the water taps segment covers about 35% of the entire turnover.
Plastic plates, sheets, tubes and profiles are the immediate followers, with an average figure of
€11,398 million. At the end of the list, tanks, reservoirs and containers of metal (less than
€500,000) can be found.
Four Member States are of particular interest in the current analysis: France, Germany, the
Netherlands, and the UK. These countries promote an initiative, started in 2011, which aims to
harmonise the tests for the hygienic suitability of products in contact with drinking water. This
initiative was launched after the failure of the European Acceptance Scheme in 2006. 92
91
Eurostat, Annual detailed enterprise statistics for industry (NACE Rev. 2, B-E) – C2814 Manufacture of other taps and
valves.
92
This project intended to create a unique European system to assess hygienic aspects of products in contact with
drinking water, source: http://www.ceir.eu
67
These countries are particularly relevant since, altogether, they generate on average 50% of
the sector turnover in Europe, and host around one third of the total number of
enterprises.
Table 16: Estimated data on water taps in DE, FR, NL, and UK
Variable 2012 2013 2014
4MS Turnover 7,4935 8,073 7,628
(€million)
4MS N. of Enterprises 423 406 419

Source: Author’s elaboration based on stakeholders input and Eurostat data
recognition
Interviewed stakeholder93 explained how currently the application of mutual recognition in this
sector is seriously deficient, thus creating limitations to both competition among businesses and
availability of products for consumers in the EU Single Market.
The main issue stems from the absence of comprehensive EU harmonised requirements on such
products. Article 10 of Directive 98/83/EC (Drinking Water Directive) 94 requires MS to verify that
the materials and substances used in the treatment and distribution systems are not present in
drinking water ‘in concentrations higher than is necessary for the purpose of their use and do
not, either directly or indirectly, reduce the protection of human health’. This refers, for instance,
to the concentration of substances leaking from such materials, or the breeding of pathogenic
microorganisms upon them.
However, as already mentioned, the implementation and monitoring measures are left to
Member States, which establish their own national test and certification bodies 95 to assure the
quality of materials and to issue licences for the sale of products in contact with drinking water.
Each body assesses the conformity of materials and products in contact with water for human
consumption against specific requirements and criteria that vary at national level (for example
as regards the compliance of products with a specific composition or the effects of the materials
on the microbiological growth in the water).
This framework creates the conditions for double or multiple testing of products in contact with
drinking water in the EU market. Companies willing to obtain a licence for marketing their
product in a single Member State have to comply with all the national test criteria and
requirements as defined under the law and by the relevant test and certifications bodies in that
Member State. However, when they want to market that same product in other Member States,
companies are typically required to repeat those same tests by the relevant bodies in each
individual Member State they want to enter, as Member States not only have different test
93
E.g. pipes, pumps, taps, valves, fittings, water heaters, catering equipment, seals, etc.; and materials such as
elastomers, metals, plastics, etc.
94
Concerning the quality assurance of treatment, equipment and materials in contact with drinking water.
95
FIGAWA reports the following list of national test and certification bodies: Österreichische Vereinigung für das Gas-
und Wasserfach (AT), BELGAQUA (BE), Sekretariatet for byggevarer godkendt til drikkevand (DK), VTT Expert Services
(FI), Centre Scientifique et Technique du Bâtiment (FR), Deutscher Verein des Gas- und Wasserfaches (DE), National
Institute of Environmental Health (HU), Ministerio della Salute (IT), Kiwa NL (NL), Państwowy Zakład Higieny (PL),
Instituto Nacional de Saude (PT), Institut Za Varovanje Zdravja Republike Slovenije (SI), Asociación Española de
Normalización y Certificación (ES), Kiwa Swedcert (SE), Schweizerischer Verein des Gas- und Wasserfaches (CH), Water
Regulations Advisory Scheme (UK).
68
criteria, but also do not recognise each other’s tests. This practice does result into an expensive
and time-consuming reiteration of activities for businesses, which are forced to repeat tests and
acquire certifications several times in the EU market. This translates to a higher final price for
consumers and contributes to the infraction of the mutual recognition principle. The current
situation is especially difficult for SMEs that may not be able to fulfil the different test and
certification requirements imposed in each Member State due to limited resources.
As pointed out by a representative of one of the largest European manufacturers of hydraulic
accessories and components, it is currently not possible for a business to market its products in
more than a few countries96 at the same time in Europe, mainly due to additional testing and
certifications that are required to be taken in each MS. In some instances, the cost of additional
testing may even exceed the cost of initial testing and certification. As an example, the
interviewee reported that, in the context of a €2 million project aimed at selling a single hydraulic
product in 15 EU MS, the total cost for the initial certification of such product amounted to
€35,000, while the cost for the double testing in a single country (FR) was €38,000. Similarly,
for a large project worth €60 million and concerning the renewal of a product that had otherwise
been present on the market for a long time, the stakeholder interviewed expects the costs for
initial certifications (estimated at around €1 million) to double due to additional certifications
when trying to market the product in all the 28 MS.
Moreover, companies have to deal with the auditors from the different national certification
bodies that periodically conduct audit visits concerning the quality certifications already acquired.
The current cost reported by the stakeholder interviewed for managing all these certifications
(which are, for drinking water only, around 1,350) is around €2.3 million per year. Remarkably,
all of these costs faced by businesses are passed on to consumers via final prices.
The problem of double and additional testing is particularly acute in some countries.
Stakeholders mentioned how Member States such as ES, FR, UK, and the Scandinavian countries
can be seen as the most challenging in this respect. Businesses may find double testing not only
expensive in terms of fees to be paid, but also extremely time consuming. The time that elapses
between the registration for tests and the certification of approval can typically span from six to
12 months, and may even reach 24 months in more complex circumstances. For companies, this
obviously results in foregone profits due to the delayed market access.
Crucially, when businesses encounter mutual recognition in dealing with national authorities in
other Member States, these typically refer to (and apply) the relevant national norms and
legislation, rather than EU Legislation. However, a representative of a German national authority
underlined how it may occur that MS authorities do not actually establish any requirements for
products to enter the market. In this sense, users (e.g. plumber, installers) are rather those who
would require companies (both foreign and domestic) to provide certifications and proofs of non-
harm in order to be used.
The elements that differ from one country to another – and therefore create issues for companies
– are tests, certifications and laboratory procedures. In some countries, these are indeed more
thorough and detailed, requiring companies to spend more time and resources to obtain the
certification. The fact that some Member States have lower (or even no) testing requirements,
may create some issues with a product coming from another Member State via mutual
recognition, since it cannot guarantee that the same level of quality and safety are achieved. To
96
The countries mentioned by the interviewee in these respect are AT, DE, and NL. Indeed, the interviewee stated that
initial product certifications are sought and obtained in these MS, as the laboratories having the necessary technical
instrumentation and know-how for complex (mechanical and hygiene) testing are mainly settled there. Moreover, the
interviewee company has a preference for German speaking countries due to the absence of language barrier in
interacting with test and certification bodies.
69
this end, some Member States97 with very similar requirements and testing levels united efforts
in order to start harmonising testing procedures in light of the potential for further EU
harmonisation of the sector.
From the point of view of businesses, there is a general lack of awareness (if not deliberate
disregard) of the mutual recognition principle by national test and certification bodies.
Moreover, interviewees reported a ‘cherry picking’ by national authorities, as some Member

States can accept some tests and certifications presented by businesses, while other tests are
repeated. Businesses are simply asked to comply with national requirements and test criteria,
even though their products underwent the same testing in other countries.
Businesses are therefore reluctant to take national authorities to court to see the principle
of mutual recognition applied. As communicated by stakeholders, there are two main reasons
behind this:
 Businesses do not want to see their long-lasting relationship with national authorities
jeopardised just to seek the application of mutual recognition to a single product. In other
words, they prefer avoiding confrontation with national authorities and complying with
national requirements by repeating tests, mainly because they are concerned about being
treated unfavourably in the future.
 Businesses are concerned that, in the absence of harmonised rules for hygienic testing
at EU level, the enforcement of mutual recognition with respect to materials and products
in contact with drinking water may start a ‘race to the bottom’ among producers as
regards the quality of products, a fact which is expected to negatively impact the safety
of consumers. Finally, business associations interviewed reported that among its
members there is a problem of awareness about mutual recognition. While companies
dealing with products in contact with drinking water are aware of and well-versed in
relevant legislation such as Regulation (EU) No 305/2011 (Construction Products
Regulation) or Directive 98/83/EC (Drinking Water Directive), they are less aware about
the possibility of benefiting from mutual recognition.
The status quo in the sector of materials and products in contact with drinking water points
towards certain policy options and sub-options for tackling the issues identified in the previous
section, with economic operators underlining that changes are needed.
Clearly, Option 1 (no policy change) is not considered as a viable option, since continuing with
the business as usual would mean leaving mutual recognition completely unapplied to materials
and products in contact with drinking water.
Option 298 can be feasible and useful in many respects, especially if compared to additional
changes. Awareness raising campaigns would help both economic operators and national
authorities understand what mutual recognition is and how it shall be applied in practice to the
products concerned. Including a clearer mutual recognition clause in national technical rules
adopted by MS can also be particularly useful in clarifying to national authorities when the
application of mutual recognition is appropriate and correct.
It is less clear whether the exchange of officials in this specific sector would help achieve a better
application of mutual recognition, as officials seem to be especially concerned with the
application of their own national legislative provisions and requirements.
97
DE, FR, NL, UK.
98
Soft law instruments to improve the functioning of mutual recognition.
70
Regarding Option 3,99 Sub-options 3b (Free movement of goods guaranteed by compliance with
European standards) and 3c (Transparency for administrative decisions denying market access)
seem to be particularly relevant. The identification and application of shared European standards,
especially with regard to hygienic tests, would allow businesses avoiding the costs relating to
double testing. In this regard, the initiative started by the European Drinking Water (see Box 3
below) aims at defining at EU level a unified and science-based regulatory framework for
materials and articles in contact with water for human consumption, so that product compliance
with harmonised standards shall be demonstrated only once for the entire Single Market.
Moreover, the introduction of incentives for national authorities to notify decisions denying
mutual recognition would allow for a much-needed increase of administrative transparency, as
authorities would be required to justify administrative decisions on more robust ground than
that which actually occurs.
Box 3: European Drinking Water (EDW)
Founded in 2015, the European Drinking Water (EDW, formerly ICPCDW) is a consortium of 25 European
trade associations representing industries that manufacture and supply products and materials used in
drinking water applications and connected to municipal drinking water supplies within the EU.
The coalition is open to any relevant business association and has a horizontal structure, as each member
has equal rights to participate in and give its contribution to EDW meetings and activities. Members elect
the chairman of the consortium, and may withdraw from it at any time.
EDW’s purpose is to address the current lack of EU harmonised regulatory requirements for the
conformity of products and materials used in applications involving contact with drinking water. The
mission is to discuss and define a harmonised scheme for requirements and conformity assessment of
products and materials used in drinking water applications that can be accepted in all EU MS.
This is similar to what started by MS authorities, as mentioned above, with four countries starting
to harmonise their certifications and testing procedures in order to create easier and more
common rules and requirements for companies.
Regarding Option 4,100 stakeholders highlighted some interesting elements to be implemented.

Sub-option 4a (Clarifying the scope of mutual recognition) would contribute to improving the
application of mutual recognition in the sector, as clarifying the scope of Regulation (EC) No
764/2008 can help national authorities understand what degree of discretion they have in taking
measures denying market access.
Introducing a declaration of compliance (Sub-option 4b), either voluntary or mandatory, would

not necessarily produce a major change in the current situation, as businesses already
demonstrate that they are in compliance with national test requirements when trying to market
their product in a different MS. Nonetheless, they could be asked to repeat or undertake
additional tests and certifications.
5.1.2.5 Conclusions
Economic operators highlighted how the actual application of mutual recognition to products
in contact with drinking water needs to be improved. The absence of a harmonised scheme of
requirements for products and materials accepted by all Member States caused a fragmentation
of the internal market in terms of quality marks and certifications, as well as an impact on the
level of consumer protection.
More importantly, the lack of awareness, mind-set or willingness by national authorities to apply
mutual recognition in this sector, combined with companies reluctance to challenge them in front
99
Minimum legislative changes to Regulation (EC) No 764/2008 to improve the functioning of mutual recognition.
100
71
of a court, depict a situation in which businesses are unable to sell lawfully marketed products
in a large number of EU MS at the same time.
National authorities underlined how no real acceptance of mutual recognition is accompanied by

a lack of harmonisation at EU level of key elements that, for instance, would ensure a similar
quality levels to the final users (such as quality or safety standards).
Businesses have to deal with the costs of double testing and additional certifications and the
foregone profits due to delayed market entry, as they have to wait several months before being
allowed entering the market of other Member States.
In light of this, awareness raising among both economic operators and national authorities,
combined with the inclusion of a clearer mutual recognition clause in national technical rules and
the drafting of shared European standards, appear to stakeholders as the more useful policy
measures that shall be taken in order to improve the application of mutual recognition in this
sector.
72
5.1.3 Food contact-material: food packaging

The present case study examines a specific category of materials and articles intended to come
in contact with food (food contact materials or FCMs), namely food packaging. This sector was
deemed relevant, both by competent authorities and by economic operators, especially
considering the complexity of applying the Mutual Recognition Regulation to this context.
This is mainly due to the fact that food contact materials (including food packaging) are only
partially harmonised at EU level. In addition, the non-harmonised aspects of food contact
materials are often subject both to extensive national regulation and to extended practical
scrutiny by the competent authorities, which is justified by the potential impact on public safety
and more precisely public health.
Given that competent authorities must, under Article 6.1 of the Regulation, specify technical or
scientific evidence to the effect that ‘the intended decision is justified on one of the grounds of
public interest set out in Article 30 of the Treaty or by reference to other overriding reasons of
public interest’, the application of the Regulation to food packaging can be particularly relevant
when assessing the policy options.
5.1.3.2 Background
a. The sector/product
The food and drink industry in general is the EU's biggest manufacturing sector in terms of
jobs and value added. The EU boasts an important trade surplus in trade in food and EU food
specialities are well appreciated overseas. In the last 10 years, EU food and drink exports have
doubled, reaching over €90 billion and contributing to a positive balance of almost €30 billion.
The food contact material (FCM) sector in particular has an approximate annual turnover of €100
billion.
Apart from the Mutual Recognition Regulation, the FCM sector is more specifically regulated
through the Food Contact Materials Regulation (EC) No 1935/2004. This Regulation establishes
the principle of safety assessment and management, specifically regarding the risk of transfer
of chemicals from such materials into foods. Some of these contact materials are covered by
Union legislation, specifically active and intelligent materials (which are not inert by design),
ceramics, plastics, and regenerated cellulose. The materials covered only by national measures
are adhesives, printing inks, coatings, glass, ion exchange resins, waxes, metals, cork, wood,
paper and board, silicones, rubber, textiles and combinations of materials. 101
The FCM Regulation explicitly foresees a complementary role for the Member States, which are
allowed to maintain or adopt national provisions in relation to FCMs, in the absence of specific
measures adopted under the Regulation itself. Furthermore, the European Food Safety Authority
(EFSA) is explicitly granted the authority to adopt specific measures aiming to protect public
health (i.e. to evaluate the safety of specific FCMs), which it does with some frequency. 102
Thus, food packaging is subject to a relatively complex regulatory framework: the main
principles are set out at the EU level via the FCM Regulation, which explicitly covers some
materials but leaves others within the remit of the Member States. A producer of food packaging
must therefore follow a specific procedure 103 towards the national competent authority104 if no
101
See http://ec.europa.eu/food/safety/chemical_safety/food_contact_materials/legislation_en.
102
See http://www.efsa.europa.eu/en/topics/topic/food-contact-materials and specifically
http://www.efsa.europa.eu/en/science/food-ingredients-and-packaging for decisions on food packaging.
103
Illustrated here: http://www.efsa.europa.eu/sites/default/files/applications/apdeskapplworkflowfcm.pdf.
104
Published here: https://ec.europa.eu/food/sites/food/files/safety/docs/cs_fcm_auth_ref_en.pdf.
73
EU level rules are available; and the national competent authority must forward such requests
for authorisation to EFSA for EU level scrutiny. Decisions may be made at the national level, but
only insofar as topics have not been harmonised at the EU level and always taking into account
the rules of EU law, including the Mutual Recognition Regulation. Since specific guidelines are
available at the EU level on how FCMs must be tested and assessed (by the European Reference
Laboratory for Food Contact Materials EURL-FCM),105 in principle, similar decisions should be
made by the various Member States.
The sector itself is relatively complex and multi-layered, comprising various types of economic
operators that interact to provide food packaging. The ‘Industrial guidelines on traceability of
materials and articles for food contact’ 106 distinguish between:
 The processing of starting materials by the converters and producers;
 Use of empty packaging by distributors or fillers;
 Distribution of finished articles such as kitchenware/tableware by distributors or retailers;
 Sale to end consumers of filled packaging by distributors or retailers.
The range of the non-harmonised aspects of the FCM industry was recently examined through a
2016 JRC Study on the European regulatory and market situation of non (or partially)
harmonised food contact materials.107 The Study found that this sector suffered from a lack of
harmonisation of materials listed under the framework regulation and that it was ‘the object
of issues in mutual recognition’. Specifically, the study highlighted a lack of detail in relation to
requirements and quality assurance towards declaration of compliance and supporting
documents, certification where applicable, basis for enforcement and sanctions. Tellingly, the
JRC argued that this was a hurdle for competent authorities as well, rather than only for
economic operators. Indeed, FCM is an industry in which the Member States have a
complementary authority, allowing them to exercise a certain margin of discretion, but only
within the limitations permitted by the FCM Regulation, the procedural norms established in
relation to EFSA, and the logic of the Mutual Recognition Regulation. From a Member State
perspective, the mirror image of this competence is the need to be relatively specific in relation
to the criteria and processes that they apply to make their decisions. This can be problematic in
practice.
From the economic operators’ perspectives, the guidance, which is available from the
competent authorities, is often described as being too generic and high-level to allow
them to prepare authorisation requests with a sufficient degree of predictability. Access to
national level legislation and the interpretative documents created by competent regulators in
relation to the application of the legislation was often described as lacking, both on the nature
of substances considered, on the types of restrictions and numerical values imposed. Ambiguities
on this point were seen as impeding mutual recognition, for both regulators and economic
operators.
b. The Member State and its market for the sector/product

Competent authorities are present in all Member States under the FCM Regulation. However, for
this case study it is worth underlining that the competences and activities of the authorities
diverge relatively widely, and can vary depending on the substances involved, with not all
substances being covered in all Member States. Even when competent authorities for a given
105
See https://ec.europa.eu/jrc/en/eurl/food-contact-materials.
106
See http://www.apeal.org/wp-content/uploads/2015/04/1.-Industrial-Guidelines-Traceability-Jan2006.pdf.
107
Non-harmonised food contact materials in the EU: regulatory and market situation, 2016, JRC; see
https://ec.europa.eu/jrc/en/publication/eur-scientific-and-technical-research-reports/non-harmonised-food-contact-
materials-eu-regulatory-and-market-situation-baseline-study.
74
substance are available in multiple Member States, their FCM schemes and specific requirements
for the authorisation of substances are not the same. EFSA acts in principle as a mitigating factor
on this point by establishing and supporting a Member State network to facilitate share dating
needs further follow-up activities comparing national protocols.
As noted in the introduction, the main role of the Member State (or rather of its competent
authority) under the FCM Regulation is to act as a contact point for economic operators that wish
to submit requests for authorisation for specific substances to EFSA. They also may act as a
regulator with subsidiary competences (i.e. when the EU has not intervened to harmonise
specific products). They work by applying national legislation, criteria and procedures to
determine whether FCMs are safe, taking into account both the FCM Regulation and the Mutual
Recognition Regulation. Conceptually, this should result in a framework in which national
regulatory intervention should be limited and well justified, due to the subsidiary role of the
national competent authorities, and where the impacts of national regulatory interventions
should be mitigated through the mutual recognition principle.
recognition
Based on the currently available information, the conceptual framework as described above
does not appear to be fully effective in creating an optimally efficient internal market.
Partially this is due to the complex product and service chain in the FCM sector. Compliance
must be ensured at the end-point, i.e. retailers and distributors must obtain assurances from
their suppliers that FCMs comply with applicable safety standards, which they do by requiring
declarations of conformity from producers of packaging. The challenge is then that these
producers operate on a global or at least multi-jurisdictional scale with customers in multiple
countries, whereas each national competent authority can choose in principle to exercise its
subsidiary competence to define specific requirements in relation to specific FCMs.
In practice, national standards and norms for FCMs are reported as becoming more
prevalent in some countries, with France, Denmark, Sweden, Belgium, Italy and Spain being
mentioned as Member States with a stricter consumer protection focus. Other countries, such
as Estonia, based themselves principally or exclusively on EU level norms and are generally
willing to accept declarations of conformity from other Member States. The perception among
the consulted economic operators is that the appetite for national requirements is driven
more by a national policy focus on safety and public health than by objective requirements: in
principle, national requirements should not differ significantly since EU consumers are
presumably equally vulnerable to health risks from specific substances. However, rational
justifications for imposing national standards are not commonly made available, nor are they
challenged in practice by the industry, since this could create market access difficulties.
The aforementioned JRC study supports that national FCM measures are not as rare as they
should be under the current regulatory setup, noting that ‘close to 8,000 substances were
found. Some materials are regulated by more than 10 Member States (metal, glass) and some
only by a few (wood). National rules for ceramics, glass and metals/alloys cover about 15 heavy
metals and ban substances such as barium and mercury. There are between 100 and over 5,000
substances authorised for each category of the other materials. Only 15-35% of substances
considered nationally are in the lists that EFSA reported as being adequately risk assessed’.
Interviews conducted in the metal packaging and printing ink confirm that national requirements
are common in these industries, which is natural, as they are not harmonised at the EU level.
The result of these national requirements is the creation of an informational bottleneck and
of a compliance cost. The informational bottleneck stems from the fact that an FCM manufacturer
may struggle to identify suitable requirements: their customers may require assurances that
75
they comply with applicable requirements in a specific market (likely comprising multiple
countries), but there is no single contact point where the manufacturer can go to determine
what these requirements might be. Notifications by Member States will in principle be submitted
to the TRIS database,108 but it will still be incumbent on a FCM product manufacturer to monitor
any updates to these requirements continuously. The Product Contact Points are not a sufficient
response, since they are a ‘pull’ rather than a ‘push’ mechanism: an economic operator must
‘pull’ information from them by contacting them on a case-by-case basis, meaning that they
must periodically re-contact the relevant PCPs in order to keep their information up to date. A
‘push’ model where the PCPs must publish (‘push’) their information to a central contact point
at EU level would be more efficient (arguably, also for the PCPs, who would then be relieved of
the duty of communicating with individual operators).
This informational bottleneck would be infeasible in practice to SMEs, which are however scarce
in the FCM manufacturer market. 109 In practical terms, sector associations for the different non
(or partially) harmonised substances (such as adhesives, printing inks, coatings, glass, etc., as
enumerated above) play a critical role here, since they are in continuous contact with their
members, which allows them to stay abreast of new norms being issued.
When the information bottleneck is overcome, the result is inevitably a cost of compliance.
When a specific national norm is identified, the manufacturer will need to assess whether its
manufacturing lines are already compliant (or more likely: which plants are compliant and which
are not), and either assign the outputs of a compliant plant to a specific market or modify
additional plants to ensure compliance. Targeted compliance initiatives (in which some plants
are compliant with a national requirement and others are not) are prevalent, in order to ensure
that modifications are cost effective. A ‘race to the top’ in which all relevant standards are
identified and the strictest ones are complied with in all plants is not economically feasible.
Consulted economic operators do not report any cases where market access was blocked or
where a product launch was abandoned due to national requirements. However, the cost of
compliance is seen as being very high: the development and approval of modified production
facilities can easily run in the millions, and running costs of parallel compliant plants across the
entire European FCM industry may run in the hundreds of millions over the last five years.
Overall, for economic operators, the lack of harmonisation, transparency and accessibility
on applicable requirements, rules and procedures is the key challenge. When moving from one
Member State to the next, it is challenging to identify (a) whether national rules exist; (b) who
the competent authority is; (c) what the applicable requirements for their specific FCMs are; and
(d) whether the Mutual Recognition Regulation is a satisfactory solution.
The interrelationship between the FCM Regulation and the Mutual Recognition Regulation is not
clear to economic operators. In practice, there is significant familiarity with the FCM Regulation
as such and with applicable rule sets, but economic operators do not see its practical ability to
facilitate compliance with specific national rules. As noted in the 2016 study, this lack of clarity
‘leads industries to seek external legal advice, which adds to costs and may result in lengthier
authorisation processes and delayed market access. It can also result in a greater focus on
certification and accreditation systems at industrial level’. Thus, the compliance costs in the FCM
industry are significant, and the benefits to health and safety appear uncertain.
108
See http://ec.europa.eu/growth/tools-databases/tris/en/.
109Retailers and distributors of course include many SMEs, but their burden is typically limited to requesting declarations
of conformity, which do not require knowledge or understanding of the substantive requirements: the goods must be
known to be safe in accordance with national rules, but knowledge of those national rules is not critical for compliance
at the end customer stage
76

The lack of harmonisation and the lack of a justification for national rules is the main barrier
identified by economic operators: there is no simple way to identify applicable national
requirements beyond a compliance assessment that must be conducted on a country-by-country
basis whenever an economic operator first chooses to enter a specific market. This is ineffective
in terms of cost efficiency and in terms of legal certainty. Currently, industry associations play a
crucial role on this point, since they provide systematic information to their members on
competent authorities and applicable national rules and procedures. This is an industry-led
workaround that operates on a materials-specific basis: when an FCM has a specific industry
association, identifying legal and procedural requirements is a key objective.
However, this approach relies on industry effort as a solution to a problem (lack of transparency)
that the legislation aimed to address: the FCM Regulation in combination with the Mutual
Recognition Regulation should have led to a situation where national legislation should be
relatively scarce, where there should be an authorisation procedure towards EFSA that aims to
support the assessment of national rules, and where mutual recognition of equivalent
requirements is facilitated. That is however not the general rule for the FCM Regulation, which
sees significant numbers of national legal frameworks creating a significant compliance
cost and burden for economic operators. The mutual recognition principle is not commonly
applied by national regulators in the FCM industry: declarations of conformity in other countries
are not recognised as being sufficient to meet local requirements, unless the economic operator
demonstrates that the substance of the declaration meets local requirements. Thus, mutual
recognition in practice places the burden of proof on economic operators who have to satisfy this
requirement on a case-by-case basis.
5.1.3.5 Conclusions
Based on the currently available information, for the FCM sector a combination of soft and
hard regulatory changes seems advisable:
 As a soft measure, competent authorities should be encouraged to signal and identify

their applicable national rules systematically at the EU level, so that economic operators
can assess whether national rules exist and how these should be satisfied without having
to contact the designated Product Contact Points on a case-by-case basis.
In addition, it appears that stronger scrutiny would be justified in determining whether
the national rules indeed satisfy the requirements of EU legislation (i.e. that there is no
existing specific measure adopted at EU level under the Regulation itself) and of the
Mutual Recognition Regulation.110 A process should be foreseen, building on the existing
framework of Product Contact Points and their role in identifying ‘the remedies generally
available in the territory of that Member State in the event of a dispute between the
competent authorities and an economic operator’ that allows national requirements to be
challenged when no such evidence is presented.
 As a harder legislative reform measure requiring a revision of the Mutual Recognition
Regulation, procedures should be established that facilitate a finding of equivalence
between national requirements that fall outside the scope of the harmonisation of the
FCM Regulation. Specifically, the mutual recognition of national authorisations through
declarations of compliance should be supported as a way in which economic operators
can be granted easier access to national markets. The sole alternative is greater
harmonisation of technical standards at the EU level, so that mutual recognition is no
longer required, as all economic operators would need to comply with identical
requirements.
110Namely that these requirements are justified, as demonstrated by specified technical or scientific evidence, on one of
the grounds of public interest or other overriding reasons of public interest; and that they are appropriate for the purpose
of achieving the objective pursued and does not go beyond what is necessary in order to attain that objective.
77
5.1.4 Manufacture of basic precious and other non-ferrous metals: precious metals
Stakeholders have identified the non-ferrous metals sector as a key sector, where trade of
precious metals is still hampered by a sub-optimal application of the mutual recognition principle.
The main obstacles with regard to the sub-optimal application of the mutual recognition are
relating to controlling procedures (in relation to the quality of non-ferrous metals), marketing of
the products and other requirements (e.g. standard of fineness for non-ferrous metals).
Therefore, this remains a relatively heavily nationally regulated sector, where application of
mutual recognition is difficult and differs across MS’s, thus limiting the possibilities for foreign
companies to access different markets.
5.1.4.2 Background
The non-ferrous metals industry incorporates a range of productive activities along various
stages of the value chain including mining, smelting recycling, and refinery upstream, and
second processing, and fabrication of intermediaries further downstream. The various sub-
sectors that make up the non-ferrous metals industry include primarily:
 Base metals (aluminium, copper, zinc, lead, nickel, tin);

 Precious metals (silver, gold, palladium, other platinum group metals);
 Minor metals including refractory metals (e.g. tungsten, molybdenum, tantalum,
niobium, chromium) and specialty metals (e.g. cobalt, germanium, indium, tellurium,
antimony, gallium).
Non-ferrous metals possess unique characteristics such as their low weight (aluminium), high
conductivity (copper), or resistance to corrosion and non-magnetic property (zinc) which is why
they are valued as a strategic input to a wide variety of products and sectors. These range from
chemical processing, catalytic processes and engineering to transport equipment, automotive,
electronics, packaging, and construction, and to jewellery, aerospace, lasers, lighting, medical
equipment, fibre optics transmission, military radar and missile guidance, and solar energy. 111
The market demand for non-ferrous metals is driven by several factors:
 Increasing demand for galvanised steel which has industry applications

 Utilisation of non-ferrous metals in construction due to corrosion-resistant properties
 Unique properties of non-ferrous metals to restrict bacterial growth which has
applications in the healthcare sector
 Unique characteristics of recyclability and low weight make non-ferrous metals
indispensable to achieving the EU’s energy and resource efficiency goals
The non-ferrous metal industry is an important industry for the EU economy for several reasons.
Firstly, the sector contributes significantly to the EU economy with an annual turnover of €120
billion and 47 million tonnes of production.112 Secondly, the EU is one of the biggest
consumers of non-ferrous metals worldwide. Aluminium represents the largest market share in
the manufacture of non-ferrous metals. Thirdly, in terms of employment, the sector employs
more than 500,000 people and downstream industries provide the majority of these jobs.
111
Ecorys (2011), Competitiveness of the EU Non-ferrous metals industries. Available at:
https://ec.europa.eu/growth/tools-databases/eip-raw
materials/en/system/files/ged/82%20fn97624_nfm_final_report_5_april_en.pdf.
112
Eurometaux. https://www.eurometaux.eu/about-our-industry/key-industry-data/
78
Of the sectors investigated by the case studies, the manufacture of basic precious and other
non-ferrous metals had relatively few intra-EU exporting enterprises, only 17,500.
recognition
Interviews with stakeholders representing the non-ferrous metals sector revealed how the
implementation of the mutual recognition principle in the non-ferrous metals sector is fairly
complex, particularly for surveillance authorities. Stakeholders further described the need for a
strong argument to deal with products legally marketed in other MS’s. The key questions to be
asked are: what is the legal market in the other MS? Moreover, how are non-ferrous metals
legally marketed in other MS’s?
Stakeholders also described a lack of communication and information from other contact points
as a potential issue in the current application of the mutual recognition principle. This information
on national legislation is considered imperative for surveillance authorities.
Furthermore, stakeholders stated that some Member State Product Contact Points (PCP) are not
very responsive. This is seen as a problem because market surveillance procedures are in fact
time-limited working to specific timeframes, and it is very important for the PCPs to respond
quickly and accurately. Chapter 4 revealed how costly these delays can be.
There was general agreement among stakeholders that there is improper knowledge of the
mutual recognition principle and around respective responsibilities of the authorities involved.
There is generally a lack of understanding of the procedure more broadly. Even in cases where
relevant people know the mutual recognition principle, they are often unclear about how to apply
the principle. Lack of understanding at the strategic level suggests an inevitable lack of
understanding at a specific sectorial level.
The non-ferrous metals sector is also considered problematic in terms of the application of the
mutual recognition principle and one where harmonisation would be preferable because of
differences in the way metals are marketed in different MS’s. For example, there are instances
where metals marketed in a MS may not be adequate in another MS because of large climatic
differences. In general, non-ferrous metals fall within a grey area in which there are EU
legislation standards but MS’s have room for making requests to businesses (for instance, there
are minimum EU performance criteria to comply with, but some MS’s may ask for additional
information). In cases such as this, the mutual recognition is put into question and full
harmonisation would be more useful.
According to stakeholders, it usually takes at least a month to check for the problematic sector,
this includes gathering all of the information and issuing the decision from the Market
surveillance authority. Stakeholders emphasised the importance of collecting information and
facts about the product and basing the final decision on facts. The interviews pointed out that
with non-ferrous metals, and namely with precious metals, there are wide variations in the
amount of notifications. Some countries have less than half a dozen notifications per year that
are referred to the European Commission, while others have a considerably higher number of
notifications, especially in the case of precious metals. Respondents described some of the key
issues that appear to be concerns in countries that notify frequently. Issues include some MS’s
not recognising the CE marking from another MS and also issues around sensitivity. Overall, it
was agreed that decisions can be taken quite quickly if there is a robust system and tradition on
non-ferrous metals in place.
Another issue within the non-ferrous metals sector identified was relating to the application
procedure of the Regulation. Stakeholders stated that there are frequently rejections of non-
ferrous metals that do not take into account the procedure for the application of a technical rule
in the Regulation. The economic operator faces difficulties with the current procedure. The
79
procedure is reported as being too administrative. The easiest route for the economic operator
is to adapt quickly to the demands of the competent authorities and to try to avoid the long and
burdensome administrative procedures. Hence, the application procedure of the Regulation is
regarded as critical weakness of the Mutual Regulation Principle.
Considering the current problems within this sector with regard to the application of mutual
recognition, stakeholder agree on the need for change. With regard to specific policy options,
elements of options 2, 3 and 4 are considered relevant in order to improve the application of
mutual recognition in the non-ferrous metals sector. Some sub-policy options are considered to
be more effective than others. Each policy option is considered in turn.
Policy option 1 (no policy change) does not seem to be a viable option considering the issues
reported by stakeholders. Continuing business as usual under the current Regulation would mean
leaving mutual recognition completely unapplied to non-ferrous metal products.
According to stakeholder feedback, option 2 (Soft change) was a favourable option. Sub option
2a (Awareness raising and training) was popular among the stakeholders. It is regarded as one
of the key priorities for improving the functioning of mutual recognition in this area. Awareness
raising and training among economic operators and national authorities would clarify the general
lack of understanding of the regulatory procedures and the application of it. Stakeholders also
do not attach any limitations with this option.
Sub option 2b (A clearer mutual recognition clause) is another feasible option and one that could
be used in combination with other additional changes such as sub-option 4a (Clarifying the scope
of mutual recognition). A possible solution is to provide the exact wording of the mutual
recognition clause, which can then be applied by MS’s in their national regulations. This would
help make the mutual recognition clause much clearer than is currently reported. There are also
not any significant costs relating to these changes. However, a caveat with this sub-option are
the issues that result from a ‘one size fits all’ approach. Trying to generalise the mutual
recognition clause may make it more difficult in specific cases. Sub option 2b would be regarded
as a beneficial policy option unless the clause is required to be changed regularly and/or differs
across MS’s.
Sub option 2c (Exchange of officials in the area of mutual recognition) does not seem to be
particularly useful nor the most cost-effective way to improve collaboration. One of the concerns
with this sub option is the uncertainty associated with it. Stakeholders were unclear of how this
policy option would materialise in practice.
Some legislative changes relating to policy option 3 are required in order to improve the
situation. Sub option 3a (identifying the products to which mutual recognition may apply) could
be beneficial but is not considered to be an efficient option or one that is of high priority. For
this option to materialise it is recognised that the Regulation would have to be very specific. This
would be difficult to implement due to the variation of regulation across MS. It would increase
administrative costs and would require a great amount of detail.
In relation to policy option 3, sub-option 3b (Free movement of goo ds guaranteed by

compliance with European standards) is considered to be an appropriate policy option in order
to bring about positive change. However, the limitation with this option is that standards must
be ‘European recognised standards’ which gives a presumption of conformity.
Sub-option 3c (Transparency for administrative decisions denying market access) appears to be

a feasible option. It has clear benefits in allowing companies easier access to claim rights based
on the Mutual Recognition Regulation. This sub-option could tie in with other aspects of EU
80
regulation/policy. It could also help to reduce overall costs of implementing mutual recognition
through improved transparency.
With regard to sub-option 3d (Strengthening the Product Contact Points) it is agreed that this
could be a feasible option. This seeks to improve the current system, which seems to be easier
than trying to change the Regulation completely. This option could help improve the
communication between the PCPs that was identified as an issue by stakeholders. However, the
limitations associated with this option are that it would require many resources, would be timely
and overall a costly option.
As previously mentioned, sub option 4a (Clarifying the scope of mutual recognition) is regarded
as a necessary change that is required. This option would help to make the mutual recognition
principle clearer and easier to implement. Although, the limitations associated with this option
are that it may require a legislative process, which could be a lengthy process. In addition, it
would also require consultation with all MS’s.
Only parts of sub-option 4b (Declaration of compliance) seem relevant. Voluntary self-

declaration appears to be a feasible option in comparison to the different types of declarations.
Mandatory declaration is not regarded as an appropriate form of declaration of compliance
because that would be burdensome for companies. Voluntary self-declaration allows companies
to make declarations on a voluntary basis and ensure that the companies themselves design the
declaration of compliance rather than involving third parties.
In relation to policy option 4, sub-option 4c (Fast track appeal procedure) does not appear to be
a viable option. It may beneficial for companies to some extent, but it can complicate matters
when enforcing the procedure. Stakeholders were sceptical of this option as it is an additional
procedure. Stakeholders viewed it more desirable to improve existing remedies rather than
introducing additional procedures. This option poses concerns whether the procedure runs
parallel to the existing procedure or is alternative to it. If it runs parallel to the existing judicial
remedy then there could be conflicts arising from both procedures with different decisions made
in both. If it is an alternative procedure then it raises questions on the legal certainty.
Sub-option 4d (Strengthening the Product Contact Points and the cooperation between relevant
authorities) is a viable option. It seeks to improve the existing PCPs and it is not such a costly
option to improve the existing system. It also addresses some of the issues raised around
communication between PCPs in different MS’s.
5.1.4.5 Conclusions
Stakeholders generally seem to agree on the fact that mutual recognition is not working as
efficiently as it could be in the sector. Therefore, there appears to be a need for reform to
improve the current situation consisting of a combination of soft and hard regulatory changes.
The nature of the sector and the products, differences in national requirements, or disposition
of national authorities in considering mutual recognition do not facilitate the situation of
companies. These hindrances pose barriers to trade and therefore companies may find it easier
to export non-ferrous metals outside the EU than across the EU internal borders.
Businesses face delayed market entry costs due to the complexity of procedures and the time
taken to reach a decision regarding the marketing of non (or partially) harmonised products
coming from another MS. There is also an abundance of national legislation combined with a
lack of clarity on standards, further adding to companies’ resource costs and the time taken to
enter the market.
On the other hand, the lack of awareness or willingness by national authorities to apply mutual
recognition in this sector or change national regulations depicts a situation in which it is difficult
for businesses to sell lawfully marketed products to a large market of EU MS simultaneously.
81
This seriously hampers growth of this sector and the EU market as a whole due to the wider
applications of non-ferrous metals.
Overall, there is clearly a need for raising awareness among businesses and national
authorities. This would support the EC in raising the profile of mutual recognition and encourage
national authorities to alter national regulations more easily. In addition, as part of raising
awareness, there is also a need for a clearer mutual recognition clause in national technical rules
and the drafting of shared European standards that would appear to be useful to both companies
and national authorities. These elements describe the implementation of soft measures to
improve the functioning of mutual recognition.
A harder form of regulatory change would entail strengthening the role of the PCPs so that
they provide information on all applicable rules for all products within the non-ferrous metals
sector with information on harmonisation legislation and national technical rules adopted in the
non (or partially) harmonised areas. This would be particularly relevant for products where
certain aspects are covered by harmonised legislation and others subject to national technical
rules, since it would offer businesses information on all rules applicable to their product. This
allows for more flexibility on the use of the mutual recognition principle. Additionally, better
cooperation between the PCPs and national authorities would ensure that the PCPs have the
necessary resources and expertise to fulfil their tasks allowing them to respond more efficiently,
therefore reducing the cost of delayed market entry.
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5.1.5 Fertilisers
This case study investigates the intra-EU trade of fertiliser products and the operating of the
general fertiliser sector in Europe in order to explore how these products interact with Mutual
Recognition Regulation 764/2008. Barriers appear to exist in this sector, in the form of
differences in product standards and definitions across Member States, diversity in the number
of product classifications and varying interpretations of how fertiliser products may be introduced
into European markets.
The rationale for this case study is supported by the production of a number of innovative
fertiliser products, manufactured from organic materials that fall outside the scope of the 2003
Regulation.113 Regulations proposed in 2016 do not restrict the trading of these products due to
the continued functioning of mutual recognition and ongoing compliance with national standards.
This situation has caused confusion amongst sector representatives as to which products can be
marketed and where. The fertiliser sector consequently lacks clarity and transparency in
classifying products in parallel with a disparity of understanding across different Member States.
Costs associated with the mutual recognition Principle in addition to supplementary licensing
fees, compliance costs and staffing costs ensure that some businesses within this sector express
an aversion to accessing European markets altogether.
5.1.5.2 Background
The mutual recognition Principle represents a regulatory mechanism, designed and implemented
to ensure a proper functioning of the internal market. This is in order to facilitate the free
movement of goods and services. Within the fertiliser sector, enterprises are experiencing
barriers to this envisioned free flowing trade due to the diversity and volume of technical
requirements and an uncertainty in the classification of products. Prior communication with
product contact points show that fertilisers represent the product and industry where
authorisation procedures are most frequently notified.114
Only selected fertilisers are subject to EU regulation, and these fertilisers may be sold and used
throughout the EU.115 All other fertiliser products must adhere to Member State national
legislation. This situation contributes to the difficulty in classifying products that are and are not
available for intra-EU trade. The list of EC classified fertilisers is displayed in Table 17.116
Table 17: Types of Fertilisers subject to EC Regulation.
Types of Fertiliser under EC Regulation
Nitrogenous Fertilisers Phosphatic Fertilisers Potassic Fertilisers
Basic slag (Thomas

Calcium nitrate (nitrate Magnesium ammonium
phosphates and Kainit
of lime) nitrate
Thomas slag)
Calcium magnesium
nitrate (nitrate of lime Urea Single superphosphate Enriched kainit salt
and magnesium)
Concentrated
Magnesium nitrate Crotonylidene diurea Muriate of potash
superphosphate
113
http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=URISERV%3Al21278
114
Evaluation of the Application of the mutual recognition principle in the field of goods.
115
http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=URISERV%3Al21278
116
http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32003R2003&from=EN
83
Types of Fertiliser under EC Regulation
Potassium chloride
Sodium nitrate (nitrate
Isobutylidene diurea Triple superphosphate containing magnesium
of soda)
salts
Partially solubilised rock

Chile nitrate Urea formaldehyde Sulphate of potash
phosphate
Nitrogenous fertiliser Sulphate of potash

Calcium cyanamide containing Dicalcium phosphate containing magnesium
crotonylidene diurea salt
Nitrogenous fertiliser
Nitrogenous calcium Kieserite with
containing Calcined phosphate
cyanamide potassium sulphate
isobutylidene diurea
Nitrogenous fertiliser
Aluminium-calcium
Sulphate of ammonia containing urea
phosphate
formaldehyde
Ammonium sulphate
Ammonium nitrate or
with nitrification Soft ground rock
calcium ammonium
inhibitor phosphate
nitrate
(dicyandiamide)
Ammonium
Ammonium sulphate- sulphonitrate with
nitrate nitrification inhibitor
(dicyandiamide)
Magnesium Urea-ammonium
sulphonitrate sulphate
The turnover of the fertiliser industry for European businesses is €13.2 billion per annum. 117
17.4 million Tonnes of fertiliser are produced annually in Europe, represented predominantly by
Nitrogen (73%), Potash (17%) and Phosphate (10%). 118 A core representative of the sector,
Fertilizers Europe, suggest that classifying the diverse array of products available offers a central
issue for businesses within the sector. Fertilizers Europe has published a report identifying that
‘the aim of the European Commission’s amended fertilizer Regulation is to make this possible by
harmonising definitions and quality standards for all types of fertilising products that can be
traded across the EU119.
Desk and field research during the study have reinforced the need for attention within this sector.
Stakeholders have frequently identified the sector as problematic when dealing with
inconsistencies between European Member States and unpredictable ‘CE marking and licensing
fees’. Interviews with businesses and business associations have stressed the existence of trade
barriers and regulatory complications within the sector due to a lack of transparency and
understanding about the clause, especially when exporting to new European markets. It was
suggested that a potentially destructive combination of licensing fees and ‘unwritten barriers’
deemed the implementation of the mutual recognition as ‘invalid’ before it is even applicable.
117
http://fertilizerseurope.com/fileadmin/documents/ETS/1._Fertilizers_Europe_documents/ETS_version_for_web.pdf.
http://fertilizerseurope.com/index.php?eID=tx_nawsecuredl&u=0&g=0&t=1488368202&hash=e9a0e6cad2b273f0ec
118
1c5a279995dadeee7d3d8f&file=fileadmin/user_upload/publications/statistics_publications/Stats_Brochure2.pdf.
http://fertilizerseurope.com/index.php?eID=tx_nawsecuredl&u=0&g=0&t=1488368202&hash=e9a0e6cad2b273f0ec
119
1c5a279995dadeee7d3d8f&file=fileadmin/user_upload/publications/statistics_publications/Stats_Brochure2.pdf.
84
The Commission estimates that the complications in classifying and harmonising products within
this sector cost economic operators 26 million euros on an annual basis. 120 The justification for
selecting the fertiliser industry as a case study is therefore clear.
The Commission stressed in 2016121 two socio-economic challenges encountered by operations

within the fertiliser sector in addition to the problem of product classification highlighted by
further regulatory discussions and Table 17. These two challenges are summarised as:
 Diverging national rules. Innovative fertiliser products manufactured from organic
materials currently lie outside the capacity of contemporary fertilisers’ regulation. The
access of these products to the Single Market therefore depends on the application of
mutual recognition across Member States. Inconsistencies across these Member States
when communicating national rules therefore make the application of this process
complicated;
 Environmental concerns. The current regulation does not address environmental
concerns that may develop via the use of fertilisers. This includes the contamination of
‘soil, inland waters, sea waters and ultimately food’.
recognition
Stakeholder interviews with businesses, business associations and national authorities have
confirmed some of the originally anticipated challenges faced by the fertiliser sector. Each
stakeholder in some form communicated ways that the application of the mutual recognition
Principle has performed sub-optimally, leading to consequent restrictions to intra-EU trade and
subsequently hampering European consumption of fertiliser products. These sub-optimal
features include an ambiguity in the standards of Member States, regulatory and licensing
barriers and a lack of understanding in terms of the Principle itself.
Central to these issues is a lack of communication and transparency throughout the process of
exporting a fertiliser product to other European Member States. The complicated classification
of products (Table 17) represents a list of products under EC regulation exclusively, and does
not include fertiliser products subject solely to national legislation. This further contributes to
the obscurity of determining whether a product can or cannot be marketed abroad.
Stakeholders confirmed this complexity, suggesting that trade regulation worked sporadically
for different Member States and that ‘bio-fertilisers were of particular interest within the fertiliser
sector’. This is made more pertinent alongside a lack of mutual trust between national
authorities, particularly concerning less familiar innovative products. Stakeholders suggested
that Spain and France are more complicated when considering these types of transactions, whilst
Poland, Ireland and Germany provided a more efficient process.
In addition, mutual recognition seem to work better into the United Kingdom via imports, but
not for British companies looking to export. Stakeholders claim that a combination of licensing
and registration fees plus ‘unwritten barriers’ within this sector mean that mutual recognition is
in fact ‘invalid’ and that markets cannot be accessed in the first place. In this company’s case,
the benefits of continuing to access European markets are considered unaffordable in terms of
costs, and access to the EU market was terminated.
120
https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0ahUKEwiIoobfo9jTAhWFDsAKHcFpCS
gQFggmMAA&url=http%3A%2F%2Fec.europa.eu%2FDocsRoom%2Fdocuments%2F13381%2Fattachments%2F1%2Ft
ranslations%2Fen%2Frenditions%2Fnative&usg=AFQjCNHtcUMXZh02deoR6h8s5wVLbYSOdg
121
http://europa.eu/rapid/press-release_IP-16-827_en.htm
85
Stakeholders also indicated that when Cyprus and Bulgaria entered the EU, the UK SME lost
business from both markets due to these Member States being immediately attached to new
licensing fees.
A stakeholder also adds that 25% of the company’s workforce is dedicated to understanding and
complying with all trade regulations (including compliance with mutual recognition). Four of the
seventeen staff at the head office are dedicated to these issues, aggregating to costs of
approximately €170,000 per annum. The participant suggests that many of the trade procedures
benefit large companies, whilst regular SMEs cannot be so selective when pursuing new Member
State markets.
Stakeholders, however, suggest that they may not have to make any extra effort in ensuring
the operation of mutual recognition and that most of the queries that they receive are in relation
to ‘CE marking, labelling, etc.’. They are aware, however, that the fertiliser sector is one of the
main areas of concern when considering mutual recognition.
Some of the trends/issues identified via the mutual recognition process in the fertiliser sector
can therefore be summarised as:
 Diverging national rules. Much as the initial sector research implies, the stakeholders
confirm the presence of varying standards and rules across each of the European Member
States.
 A lack of transparency/communication when exploring European markets via mutual
recognition. Much of the stakeholder feedback implied that the clause is not universally
consistent within the European market.
 Understanding whether products are regulated by EC or national legislation.
The general portrayal of experiences and opinions from stakeholders within the fertiliser sector
suggest the appropriateness of some policy options and not others.
Policy Option 1 (no policy change) does not seem to provide a feasible solution. Continuing with
existing regulation and business operations threatens to remove many incumbent and future
fertiliser manufacturers from the market, due to national standard disparities and
costs/challenges to market entry.
Option 2122 may present a viable policy option. Sub-option 2a, (Awareness raising and training),
may help to clarify details of mutual recognition, including its essential functions and how it
works in practice. This issue is something that is recommended by many of the stakeholders so
that communication and knowledge of the Principle is shared and illuminated amongst economic
operators. Sub-option 2b, (A clearer mutual recognition clause), is something that has been
identified as something of a necessity throughout the fertiliser case study. Discussion between
Member States and the Commission would enable clarity when considering a variety of
complicated products that may either apply to EC regulation or national legislation.
Sub-option 2c, (Exchange of officials in the area of mutual recognition), does not deliver such a
strong case. This sub-option does not appear as relevant as sub-options 2a and 2b as most
national authorities seem predominantly concerned with the application of their own domestic
legislation and product standards.
Option 3123 also offers a number of robust policy recommendations. Sub-option 3a, (Identifying
the products to which mutual recognition may apply) seems particularly significant when
considering the fertiliser case study. This sub-option would help to simplify Table 17 and
122
Soft law instruments to improve the functioning of mutual recognition.
123
Minimum legislative changes to Regulation (EC) No 764/2008 to improve the functioning of mutual recognition
86
therefore explicitly communicate which products are and are not included in EC regulation. Sub-
option 3a also seems to correspond with sub-option 3b, (Free movement of goods guaranteed
by compliance with European standards). Sub-option 3c, (Transparency for administrative
decisions denying market access) also seems relevant to the fertiliser sector. By incentivising
national authorities to comply with decision notifications and prompting interactions regarding
decisions restricting or denying mutual recognition, Member States, national authorities and
businesses would develop a clearer understanding of the Regulation.
Option 4124 - Stakeholders have not highlighted many useful policy sub-options in terms of the
fertiliser sector. The majority of stakeholders were impartial when considering sub-option 4a
(Clarifying the scope of mutual recognition) and sub-option 4b (Declaration of compliance. Sub-
option 4c (Fast track appeal procedure) delivered a polarisation of opinions with Product Contact
Point Poland directly opposing the idea whilst Fertilisers Europe supported it.
A stakeholder interviewed endorsed a policy option somewhere between Options 3 and 4. Within
Option 3 the participant communicated a preference towards an improvement in transparency
for administrative decisions denying market access and when considering Option 4, advocates
the fast track appeal procedure. The participant suggested that the appeal procedure can
currently take between 9 and 12 months and therefore this area could be improved by this policy
sub-option.
An SME communicated a slightly less aligned preference in terms of the policy options in
comparison with Fertilisers Europe. The stakeholder was highly in favour of a universally enriched
awareness of mutual recognition and an improvement of ‘human capital’ in such areas. These
suggestions support Option 2a, awareness raising and training and 2b, a clearer mutual
recognition clause. In addition to this, the participant was enthusiastic about sub-option 3c, an
improvement in transparency for administrative decisions denying market access.
Stakeholders interviewed provided also some comments for analysis regarding the suggested
policy options. In particular, the participant agreed that policy option 2 would be the most
constructive. More specifically the participant recommended sub-option 2a, awareness raising
and training and sub-option 2b, a clearer mutual recognition clause. The stakeholder also
encouraged policy sub-option 3c, transparency for administrative decisions denying market
access.
In addition to these recommendations, stakeholders communicated a particular aversion to sub-

option 4c, a fast track appeal procedure. The participant queried as to how this sub-option would
be beneficial, how it would be implemented and whether it would make procedures even longer.
The stakeholder suggested that a fast track appeal procedure would in fact create a greater
delay and cause another reason to withdraw a product.
5.1.5.5 Conclusions
Some of the ideas and challenges of applying mutual recognition to the fertiliser sector have
therefore been supported and developed by the stakeholders taking part in this case study.
Stakeholders interviewed acknowledges that whilst there are other additional barriers to trade,
such as ‘CE marking’ the fertiliser sector does require attention when considering the application
of this Regulation. These issues are founded upon a universal lack of understanding by both
businesses and national authorities when considering the clause.
Business and business association feedback offers some more specific issues when implementing
mutual recognition to the fertiliser sector, such as cross-border standard differences and a sense
of confusion when taking fertiliser products to foreign markets. In some instances, as highlighted
124
87
above, businesses are actually avoiding the European market, motivated by market costs
outweighing market benefits.
No policy change presents an unproductive and inadvisable policy option. Stakeholders and prior
desk research have underlined a definitive set of issues when considering the fertiliser sector
that should be addressed in some form. However, businesses, business associations and national
authorities have each advocated transparency for administrative decisions denying
market access, whilst both businesses and national authorities have additionally supported
awareness raising and training.
88
6 THE WAY FORWARD: ASSESSMENT OF THE POLICY OPTIONS
The previous sections presented the problems currently affecting the implementation of
mutual recognition. Following stakeholder input and the analysis of their sentiment via the
survey (Annex 8.5), this section aims to assess each policy option:
 Effectiveness in solving the problems that are hampering the implementation of the
mutual recognition principle and Regulation (section 6.1);
 Effectiveness in reducing costs for economic operators (section 6.2);
 Effectiveness in five specific sectors (section 6.3).
Based on this analysis three policy options identified as most relevant have been discussed
with a panel of experts in order to identify their potential impacts (section 6.4).
6.1 Effectiveness of the policy options in enhancing the functioning of the

mutual recognition
6.1.1 Effectiveness of the policy option in increasing the awareness
The field research (interviews and survey) confirmed that the baseline scenario is not
adequate in ensuring awareness about mutual recognition among stakeholders.
Indeed, awareness raising is deemed as important and beneficial not only for economic
operators, who are often unaware of the possibility of benefiting from the mutual recognition
principle, but also for national legislators (who should always include a mutual recognition
clause in the relevant national legislation) and implementing authorities (who at times do not
notify decisions restricting or denying market access as prescribed under Article 6(2)).
As represented in the table below, comprehensive legislative changes to the Regulation are
required by stakeholders to improve awareness about the mutual recognition principle.
Specifically clarifying the scope of mutual recognition (sub-option 4a) and introducing a
declaration of compliance (sub-option 4b) are considered as the most effective actions
especially from the perspective of the economic operators.
Table 18: Effectiveness of the policy options in increasing the awareness about the mutual recognition
principle and Regulation according to stakeholders
Stakeholders
that consider
Options Sub-options the option Performance
effective
PA EO
1.Baseline 1a No policy change 21% 8% Not at all effective

Awareness raising and
2. Soft law 2a 58% 50% Effective
instruments to training
improve the 2
A Clearer clause of MR 68% 50% Effective
functioning of b
mutual
Exchange of officials in the
recognition 2c 32% 33% Not effective
area of mutual recognition
3. Minimum Identifying the products to
legislative 3a which mutual recognition 84% 50% Effective
changes to may apply
Regulation to Free movement of goods
improve the 3
guaranteed by compliance 48% 75% Effective
functioning of b
with European standards
89
Stakeholders
that consider
Options Sub-options the option Performance
effective
PA EO
mutual Transparency for
recognition 3c administrative decisions 58% 58% Effective
denying market access
3 Strengthening the Product
42% 33% Not effective
d Contact Points
Clarifying the scope of mutual
4. 4a 68% 84% Very Effective
recognition
Comprehensive
legislative 4
Declaration of compliance 58% 83% Very Effective
changes to b
Regulation to 4c Fast track appeal procedure 16% 75% Not effective
improve the
functioning of Strengthening the Product
mutual 4 Contact Points and the
37% 83% Effective
recognition d cooperation between relevant
authorities
5. Voluntary
prior
Voluntary prior authorisation
authorisation 5 16% 58% Not effective
to placing on the market
to placing on
the market
not at all effective = at least 75% of the consulted stakeholder judged the sub-option as not effective
not effective = at least 50% of the consulted stakeholder judged the sub-option as not effective
effective = at least 50% of the consulted stakeholder judged the sub-option as effective
very effective = at least 75% of the consulted stakeholder judged the sub-option as effective
Considering minimum legislative changes to the Regulation, the introduction of

incentives for national authorities to ensure compliance with the obligation to notify
administrative decisions denying or restricting mutual recognition (sub-option 3c) is also
considered as potentially effective but to a lower extent. More transparency for these
decisions would be an incentive for Member States to apply the mutual recognition principle,
as it would render less acceptable the absence of notifications or the lack of proper justification
supporting the administrative decisions.
No agreement among stakeholders emerged with respect to other sub-options.
6.1.2 Effectiveness of the policy options in reducing the legal uncertainty as regards the
scope of the mutual recognition principle
When businesses are aware of mutual recognition, the lack of knowledge regarding its scope
renders them reluctant to use the principle for entering new markets. Determining if a product
might benefit from the mutual recognition principle is not straightforward, as mutual
recognition applies to a very wide range of products.
Stakeholders’ consultation underlines that minimum or comprehensive legislative changes are

needed to reduce the existing (legal) uncertainty. Specifically, a constant update of the list
of products to which mutual recognition may apply is considered as an effective aid to
businesses and national authorities when assessing the applicability of the principle of mutual
recognition in a specific case or to a specific product (sub-option 3a). Together with this,
90
giving all notifications more visibility (e.g. by using an IT tool for allowing Member States
to notify) would also effectively increase (sub-option 3c) transparency of administrative
decisions and legal certainty in the implementation of the mutual recognition principle.
Furthermore, comprehensive legal changes are well appreciated especially by economic
operators: the scope of the Regulation might be better clarified (e.g. by defining
procedural guarantees for the application of the mutual recognition principle and by clearly
mentioning the categories of products to which mutual recognition could apply). As an
alternative, the introduction of a declaration of compliance, with the technical rules of the
Member State where the product is being lawfully marketed, is perceived as effective in
facilitating the access of a product to the market of the other Member States (sub-option 4b).
A new fast track procedure is well appreciated by economic operators and it is considered as
an alternative to the costly and lengthy court procedures currently available (sub-option 4c).
Table 19: Effectiveness of the policy options in reducing legal uncertainty as regard the scope of the
mutual recognition principle according to stakeholders
Stakeholders
Options Sub-options Performance
PA EO

Awareness raising and
2a 42% 42% Not effective
2. Soft law training
instruments to
2
improve the A Clearer clause of MR 63% 42% Effective
b
functioning of
mutual Exchange of officials in
Not effective/
recognition 2c the area of mutual 27% 33%
Not at all effective
recognition
Identifying the products
3a to which mutual 74% 59% Effective
recognition may apply
3. Minimum
legislative Free movement of goods
changes to 3 guaranteed by
48% 75% Effective
Regulation to b compliance with
improve the European standards
functioning of Transparency for
mutual 3c administrative decisions 58% 58% Effective
recognition denying market access
3 Strengthening the
d Product Contact Points
Clarifying the scope of

4a 68% 75% Effective
mutual recognition
4.
Comprehensiv 4
e legislative Declaration of compliance 52% 67% Effective
b
changes to
Fast track appeal
Regulation to 4c 37% 75% Effective
procedure
improve the
functioning of Strengthening the
mutual Product Contact Points
4
recognition and the cooperation 37% 84% Effective
d
between relevant
authorities
5. Voluntary Voluntary prior
prior 5 authorisation to placing 32% 59% No agreement among stakeholders
authorisation on the market
91
Stakeholders
PA EO
to placing on
the market
6.1.3 Effectiveness of the policy options in removing the practical obstacles relating to the
application of the mutual recognition principle and Regulation
The stakeholder consultation highlighted that the baseline scenario is characterised by

practical obstacles, as sometimes economic operators do not find it reliable enough. One of
the main reasons pointed out by the businesses is the fact that national authorities have a
different approaches towards products lawfully marketed in another Member State. Some of
them tend to privilege their own rules (with whose cultural and historical background they are
well acquainted) and, in case of doubt, tend to apply them at the cost of mutual recognition.
Applying national rules at the cost of mutual recognition may also be a disguised way to
protect local businesses and domestic markets. This can have an important impact on the
level of competition in the Single Market.
Furthermore, there is agreement among stakeholders that soft law instruments and a
voluntary prior authorisation to placing on the market cannot remove the existing
obstacles to the application of the mutual recognition.
Despite this, there is a different perception of the problem and of the possible measures to
solve it.
Table 20: Effectiveness of the policy options in removing practical obstacles in the implementation of
the MR principle according to stakeholders
Stakeholders
PA EO
2. Soft law Awareness raising and

2a 42% 33% Not effective
improve the 2
A Clearer clause of MR 69% 33% Effective
functioning of b
mutual Exchange of officials in the
recognition 2c 37% 58% Not effective
Identifying the products to
3. Minimum 3a which mutual recognition 74% 50% Effective
legislative may apply
changes to
Free movement of goods
Regulation to 3 Effective
guaranteed by compliance 53% 58%
improve the b
with European standards
functioning of
mutual Transparency for
recognition 3c administrative decisions 74% 50% Effective
denying market access
92
Stakeholders
PA EO
3 Strengthening the Product
d Contact Points
Clarifying the scope of mutual Effective

4. 4a 63% 50%
recognition
Comprehensive
legislative 4 Effective
Declaration of compliance 48% 59%
changes to b
Regulation to Not effective
4c Fast track appeal procedure 32% 58%
improve the
mutual 4 Contact Points and the
recognition d cooperation between relevant
authorities
5. Voluntary
prior
to placing on
the market
On the one hand, National Authorities deem actions entailing minimum changes to the
Regulation (Identifying the products to which mutual recognition may apply and
Transparency for administrative decisions denying market access) as those most effective to
address potential obstacles. On the other hand, economic operators generally consider
the comprehensive legislative revision to the Regulation provided for by sub-option 4
(with the partial exception of sub-option 4d) as the most effective measure in which to
address the problems to an optimal implementation of the mutual recognition principle, along
with sub-option 3b (Free movement of goods guaranteed by compliance with European
standards) and sub-option 3d (Strengthening the Product Contact Points).
6.1.4 Effectiveness of the policy options in avoiding delayed market access
As in the previous case, the delayed market access is a problem that affects mainly
businesses. Therefore, as expected, consulted stakeholders had a different perception on the
most effective actions to be taken for avoiding it.
Table 21: Effectiveness of the policy options in avoiding delayed market access for businesses
according to stakeholders
Stakeholders
PA EO
2. Soft law Awareness raising and

2a 52% 16% Not Effective
improve the 2b A Clearer clause of MR 63% 25% Not Effective
93
Stakeholders
PA EO
functioning of
Exchange of officials in the
mutual 2c 37% 16% Not effective
recognition
Identifying the products to
3a which mutual recognition 79% 34% Effective
3. Minimum may apply
legislative Free movement of goods
changes to 3b guaranteed by compliance 58% 50% Effective
Regulation to with European standards
improve the
functioning of Transparency for
3c administrative decisions 63% 33% Not effective
mutual
recognition denying market access
Strengthening the Product Not effective
3d 37% 16%
Contact Points
Clarifying the scope of mutual

4. 4a 64% 50% Effective
recognition
Comprehensiv
e legislative
4b Declaration of compliance 53% 50% Effective
changes to
Regulation to 4c Fast track appeal procedure 37% 50% Not effective
improve the
mutual Contact Points and the
4d 58% 50% Effective
recognition cooperation between relevant
authorities
5. Voluntary
prior
to placing on
the market
Based on the information collected, National Authorities identifying the products to

which mutual recognition may apply (Option 3a) is considered as the most effective sub-
option to avoid delays in granting market accesses to economic operators willing to sell
lawfully marketed products in other Member States. The availability of a list of products falling
under the Mutual Recognition Regulation, updated based on repealed or newly adopted
legislation, would allow PCPs and implementing authorities to assess more easily and rapidly
whether or not mutual recognition may apply case by case. In addition, a clearer mutual
recognition clause (Option 2b), to be included in technical national rules, is regarded as an
incisive action in this regard.
However, for economic operators only comprehensive legislative changes might reduce
the time to enter a new market (i.e. all sub-options under option 4). As an alternative a high
harmonisation and the introduction of European standards is desirable.
94
6.2 Effectiveness of the policy options in reducing costs for economic operators
Concerning the potential impact of the proposed policy options on the costs relating to the
current application of mutual recognition, only the view of economic operators via the online
survey was considered.
A clear preference emerged with respect to sub-options 3b and 4c. Both sub-options are
considered as the most effective in reducing all costs deriving from a sub optimal functioning
of the mutual recognition principle.
Table 22: Effectiveness of the policy options in reducing costs for economic operators according to
stakeholders
Costs
Options Sub-options Delayed Performance

Transaction Courts
market
s procedures
entrance
No policy Not at all
1.Baseline 1a 8% 8% 0%
change effective
Awareness
2a raising and 42% 25% 25% Not effective
2. Soft law training
instruments to
A Clearer
improve the 2b 42% 25% 25% Not effective
clause of MR
functioning of
mutual Exchange of
recognition officials in the
2c 34% 25% 33% Not effective
area of mutual
recognition
Identifying the
products to
3a which mutual 50% 42% 42% Not effective
recognition
may apply
Free movement
3. Minimum of goods
legislative guaranteed by
3b 66% 58% 58% Effective
changes to compliance
Regulation to with European
improve the standards
functioning of Transparency
mutual for
recognition administrative
3c 50% 50% 50% Not effective
decisions
denying market
access
Strengthening
3d the Product 42% 34% 34% Not effective
Contact Points
Clarifying the
4. 4a scope of mutual 58% 50% 50% Effective
Comprehensiv recognition
e legislative
Declaration of
changes to 4b 58% 50% 50% Effective
compliance
Regulation to
improve the Fast track
functioning of 4c appeal 58% 58% 59% Effective
procedure
95
Costs
Options Sub-options Delayed Performance

Transaction Courts
market
s procedures
entrance
mutual Strengthening
recognition the Product
Contact Points
and the
4d 58% 59% 49% Effective
cooperation
between
relevant
authorities
5. Voluntary
Voluntary prior
prior
authorisation to
authorisation 5 58% 58% 33% Effective
placing on the
to placing on
market
the market
not at all effective = at least 75% of the consulted EOs judged the sub-option as not effective
not effective = at least 50% of the consulted EOs judged the sub-option as not effective
effective = at least 50% of the consulted EOs judged the sub-option as effective
very effective = at least 75% of the consulted EOs judged the sub-option as effective
6.3 Cost effectiveness of the policy options based on cross case study analysis
This paragraph summarises the results of the case studies with respect to possible obstacles
in implementing the different policy options as well as their effectiveness in the sectors
considered:
 Food supplements;
 Products in contact with drinking water;
 Food contact-material;
 Basic precious and other non-ferrous metals;
 Fertilisers.
6.3.1 Summary of results
The baseline scenario option was not received well by the stakeholders consulted.
The issues that were most frequently mentioned were diverging national regulations, low
access to valuable information for EO and lack of transparency and effective communication
channels between EO and PA. According to respondents, maintaining the status quo increases
risks and shrinks the supplier market, primarily at the expenses of SMEs.
Among the policy options presented to the stakeholders, options 3c, 4c and 4d were
particularly favourable:
 Transparency for administrative decisions denying market access (3c) - A
policy sub-option favoured by all respondents. According to participants, Member
States, national authorities and businesses would be able to develop a clearer
understanding of the regulation if national authorities are incentivised to comply with
decision notifications. In addition, respondents suggest that it is necessary to increase
the accessibility of constructive feedback on decisions made.
 Fast track appeal procedure (4c) - According to EO stakeholders, appeal procedures
can currently take between 9 and 12 months and results in heavy losses on their side.
96
Any improvement with regard to reducing this kind of waste, such as detailed in sub-
option 4C is very much favoured by EO, yet to a lesser extent by PA.
 Strengthening the Product Contact Points and the cooperation between
relevant authorities (4d) - Strengthening the cooperation between national
authorities as mentioned in sub option 4d is deemed as beneficial by all stakeholders.
Establishing a recognised, competent body (national or other) that businesses can
present their queries to can potentially reduce uncertainties and bottlenecks.
Other sub options that were also received positively by respondents but to a lesser
extent were 2a, 3b and 3d:
 Awareness raising and training (2a) – this option was favoured by a majority of
stakeholders, particularly the SME respondents. EO stated that communication and
knowledge of the Principle should be shared and explained better. Yet, respondents
from the fertiliser sector ranked this sub-option as less relevant in terms of their sector.
 Free movement of goods guaranteed by compliance with European standards
(3b) - According to the stakeholders surveyed, sub-option 3b was deemed highly
beneficial yet not feasible. Currently, rational justifications for imposing national
standards are not commonly made available, nor are they challenged by the industry.
Globally, for EOs, the lack of transparency and accessibility on applicable requirements,
rules and procedures is the key challenge: when moving from one Member State to
the next, it is challenging to identify (a) whether national rules exist; (b) who the
competent authority is; (c) what the applicable requirements for their specific FCMs
are; and (d) whether the Mutual Recognition Regulation is a satisfactory solution.
Hence, efforts made towards harmonisation, for the sake of reducing uncertainty and
divergence between Member States, is regarded as positive.
 Strengthening the Product Contact Points (3d) – Sub-option 3d was deemed
positive by EO but to a lesser extent by the PA. Strengthening the ability of the PCP to
handle and clarify queries is relevant. This option is particularly favourable if it entails
an increasing availability of information to EO. There is a possibility that the use of the
term strengthening created some confusion among respondents.
With regard to the other sub options, stakeholders either did not agree on their merit or
agreed that they are not beneficial:
 Declaration of compliance (4b) – Sub-option 4b was partially opposed by EO.

According to their experience, obtaining a certificate from one MS does not guarantee
automatic recognition in another.
 Exchange of officials in the area of mutual recognition (2c) - Furthermore, both
PA and EO expressed doubt that an exchange program between national authorities,
as proposed in sub-option 2c, has the potential of ameliorating existing problems with
mutual recognition principle.
 Identifying the products to which mutual recognition may apply (3a) - Among
respondents, there was some positive feedback with regard to sub-option 3a.
Stakeholders responded that such a measure might help to simplify and communicate
which products are and are not included in EC regulation. The lack of transparency and
the lack of a justification for national rules is identified as the main barrier by economic
operators: there is no simple way to identify applicable national requirements beyond
a compliance assessment that must be conducted on a country-by-country basis
whenever an economic operator first chooses to enter a specific market. Yet, since the
sub option did not specify any effort to increase availability of this information, this sub
option was not so well received.
 A clearer mutual recognition clause (2b) - Similarly, according to surveyed
stakeholders, sub option 2b relates to the regulation of mutual recognition but does
not touch upon what stakeholders deemed most problematic: implementation.
97
6.4 Assessment of the most effective options

The table below summarises the assessment of the policy options in accordance to feedback
received from stakeholders (see Annex 8.5). As discussed so far, four options appear as most
relevant for them:
 Free movement of goods guaranteed by compliance with European standards (Option

3b)
 Transparency for administrative decisions denying market access (Option 3c)
 Fast track appeal procedure (Option 4c)
 Strengthening the Product Contact Points and the cooperation between relevant
authorities (Option 4d)
The following sections present the results of the discussion the study team had with a panel
of experts. This exercise has been used to identify the new activities envisaged by each option
and costs that such activities imply and the main stakeholders affected.
98
Table 23: Preliminary comparison among policy options
Performance criteria
Options Sub-options
PC1 PC2 PC3
1.Baseline 1a No policy change -- -- --
2a Awareness raising and training - - +

2. Soft law instruments to improve the
2b A Clearer clause of MR + - -
functioning of mutual recognition
2c Exchange of officials in the area of mutual recognition - - --
3a Identifying the products to which mutual recognition may apply + - -
3b Free movement of goods guaranteed by compliance with European standards + + +

3. Minimum legislative changes to Regulation to
improve the functioning of mutual recognition
3c Transparency for administrative decisions denying market access + + ++
3d Strengthening the Product Contact Points - - +
4a Clarifying the scope of mutual recognition + + -
4. Comprehensive legislative changes to 4b Declaration of compliance + + -

Regulation to improve the functioning of mutual
recognition 4c Fast track appeal procedure - ++ ++
Strengthening the Product Contact Points and the cooperation between

4d + + ++
relevant authorities
5. Voluntary prior authorisation to placing on

5 Voluntary prior authorisation to placing on the market - -
the market
Options that appear as most effective as per stakeholders’ perception
99
6.4.1 Option 3b, Free movement of goods guaranteed by compliance with European
standards
This first option appeared interesting, but difficult to implement. The applicability of the option
is subject to the ability of the EC to identify standards, anticipate how the MS would accept
them as an additional proof to apply mutual recognition, and anticipate whether additional
standards than EU standards can be used to deny/block marketing of products.
The discussion with experts underlined that not all sectors are characterised by such standards
(e.g. food supplements sector). This option therefore would lead to limited changes or
improvements in the functioning or costs of mutual recognition.
According to Regulation (EU) 1025/2012, only so-called 'harmonised' European standards,
requested by the EC (and cited in the OJEU) could give presumption of conformity with legal
requirements. Such requirements need a legal basis.
Thus, from the description of this policy option, it is not clear whether it would include a
revision of the Mutual Recognition Regulation itself or a cross-reference mechanism with
existing legislation such as the General Product Safety Directive.
However, there was consensus on the fact that the nature of standards (i.e. technical
compliance tools) should not be turned into an extension of the law, whether from one Member
State or a European measure, but compliance with standards should remain voluntary.
The example of national quality guides (e.g. Belgium) was given during the meeting as an
effective example for the implementation of this option through implementing acts. However,
even when specifically adopted by a Member State, such guidance is not a standard elaborated
by a standardisation organism. In addition, some experts point out that most of mutual
recognition issues stem from interpretation differences relating to the legal status of the
product between Member States, rather than from quality issues. Accepting quality guides is
therefore likely to lead to limited improvements or only partially solving the issues.
In conclusion, this option is regarded as an improvement to the application of mutual

recognition.
6.4.2 Option 3c, Transparency for administrative decisions denying market access
Currently, many administrative decisions are not notified. In order to change this, Member
States would need a significant incentive.
Thus, it is essential that the act of not notifying would entail consequences. Given that failure
to notify an administrative decision leads to the measure not being applicable, the
implementation of this option would strongly improve notification and also stimulate Member
States to think carefully about the reasons for not accepting mutual recognition.
It is important that the notification clearly specifies both the grounds and detailed reasoning
for refusing mutual recognition of the product and the justification for the necessity and
proportionality of the measure. If not, there is little added value of such notifications.
Specifying those reasons would enable the Commission to judge the relevance,
appropriateness and justification of the measure, and initiate appropriate action if deemed
necessary.
In addition, operators generally do not know if, at the end of the procedure, the decision of
refusing mutual recognition has been notified or not. Transparency would be increased by a
100
prescribed format imposed upon authorities for communicating the decision, requiring the
mentioning of a unique notification number and the detailed reasons underlying the refusal.
The implementation of the above is likely to lead to a reduction of a certain number of mutual
recognition denial cases. Thus, the policy option is likely to have a significant impact on the
costs for operators.
The TRIS system for notifying technical national regulations in non (or partially) harmonised
areas is a good example of an extremely transparent notification system. Following the
notification, interested parties can send specific comments, and measures that are not notified
cannot be applied.
In conclusion, if notification is strengthened and non-notified decisions are not applicable, this
option is likely to lead to an improvement in the application of mutual recognition.
6.4.3 Option 4c, Fast track appeal procedure
The main weakness of the current procedure is that it is open-ended. The only option for an
operator to appeal a decision by a national authority is to go to the relevant court, which is a
costly and lengthy process that most operators do not engage in.
A fast track appeal procedure at EC level would therefore be an excellent and necessary tool
to help resolve issues, and verify that the grounds used by a national authority to block entry
in their market of products lawfully marketed in another Member State is legitimate and
justified.
Because of the EC decision, this option would provide solutions to mutual recognition issues
and set precedents (building a judicial basis or case law) that would avoid the need to address
recurring or future issues, or engage in lengthy and complex discussions on further
harmonisation.
The effectiveness of the procedure depends on how it is implemented (e.g. decision process,
criteria, etc.). It can only work if the general procedure is also strengthened as described in
the texts provided by the EC, thus preventing appeals from becoming the standard norm.
Two main questions to be answered on this relate to the following:
 How burdensome would the process and procedures for companies be when going to
the Commission (which side would have the burden of proof then?)
 How many resources (technical, human and financial) are needed from the
Commission, since virtually all denials can be appealed by economic operators in front
of the Commission?
Although this option would imply additional costs for the EC, this could be counterbalanced by
reduced needs to address issues and harmonisation on issues that have been settled.
The option would probably be even more effective if combined with Option 3c
(Transparency for administrative decisions), since these can be two pieces of the same
mechanism to ensure transparency and speed to the process.
In summary, this is the key option that is likely to most improve the efficiency of the
functioning of the Mutual Recognition Regulation in most of the sectors where mutual
recognition applies.
6.4.4 Option 4d, Strengthening the Product Contact Points and the cooperation between
101
relevant authorities
This option represents something that needs to be done to strengthen the current system,
without introducing new elements or procedures. However, it is essential to provide a more
significant role to the PCPs.
Today PCPs are only equipped for sharing information. In business experience, this is not very
helpful for companies ending up in the procedure and it sustains the impression that PCPs
have a limited role.
Strengthening their role is necessary but that can only be achieved by giving the PCPs a
recognised and active role in the procedure. As mutual recognition is mainly about business
and the possibility for companies to operate in the internal market, PCPs should be mandated
to actively support companies in discussion with the authorities that take the administrative
decision.
Such support can have many aspects, for instance PCPs can:
 Confirm self-declaration of compliance or issue such declarations;
 Assist the operator by verifying that the information requested and the justification
provided by the authorities is legitimate in the context of the legal procedure;
 Provide their opinion in relation to the justification brought by the authorities to deny
mutual recognition and the necessity and proportionality of such measures.
These PCP opinions should have an authoritative value and be usable in the appeal process.
In conclusion, recognising the PCPs as authoritative actors in the procedure would strengthen
the possibilities for operators to exercise their right to mutual recognition against unjustified
restrictive views by national authorities.
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7 CONCLUSIONS AND RECOMMENDATIONS
This study was aimed at collecting data and information to understand the current application
of the mutual recognition principle by identifying the economic value of non (or partially)
harmonised products; estimating the magnitude of the sub-optimal functioning of mutual
recognition in the EU and identifying the most significant impacts of policy options envisaged
for a revision of the Regulation.
Between 2012 and 2014, around 0.99 million enterprises were operating within non-
harmonised sectors, representing more than 50% of the total number of active enterprises
in the manufacturing sectors (around 2 million).
When compared to the harmonised sector, the relevance of micro enterprises is higher in non
(or partially) harmonised sectors: 87% of the enterprises operating within the non (or
partially) harmonised sectors are micro enterprises (i.e. with less than nine employees) and
around 11% are Small and Medium Enterprises (i.e. with a number of employees between
10 and 250).
If wealth creation is considered, active companies in non (or partially) harmonised sectors
contributed to:
 Around 23.7% of the yearly added value created in the manufacturing sectors (i.e.
€336.5 billion out of €1,417);
 Around 11.7% of the yearly turnover generated within the manufacturing
economy (€662.2 billion out of €5,690 billion).
The value of intra-EU exports of non (or partially) harmonised products increased by
14.2% (i.e. passing from € 338 to € 386 billion) over the period 2008-2015. This value
represents 18% of the overall value of the intra-EU exports. However, while for
harmonised products the value of intra-EU trade (exports) was on average 55% of the
domestic consumption over the same period, for non (or partially) harmonised products
the intra EU trades represent only 35% of the domestic consumption. This might
indicate a sub-optimal functioning of the mutual recognition leading to potential barriers for
intra EU trade in the case of non (or partially) harmonised products.
The European Commission identified three main drivers for such a sub-optimal functioning of
mutual recognition:
1. Lack of awareness about the mutual recognition principle and Regulation;
2. Legal uncertainty regarding the scope of the mutual recognition principle and
Regulation;
3. Practical obstacles relating to the application of the mutual recognition principle and
Regulation, due to:
a. Lack of clarity on the concept of ‘lawfully marketed’;
b. Difficulty to challenge administrative decisions that deny or restrict market

access, accompanied by a general lack of fulfilling the obligation for Member
States to notify the Commission any such administrative decisions.
Since sub-optimal functioning can create costs and other obstacles to the work of actors
involved, this study developed a model for estimating the magnitude of this problem and the
main issues arising from the current sub-optimal functioning of the mutual recognition
principle.
103
The model provides a representation for an enterprise considering intra-EU exporting of one
product in one EU Member State. If a product is exported, on average, an enterprise will incur
administrative costs to demonstrate meeting regulatory requirements (€4,800). It will also
incur costs associated with delayed market entry (€65,600). In total, the costs of sub-optimal
functioning of the mutual recognition principle for this product will be €70,400. If the product
adjustment route is undertaken, the cost for a product will be €103,200.
In order to address the problems presented above and to reduce the cost of the sub-optimal
functioning of the mutual recognition principle, the Commission drafted a series of policy
options, each changing the Regulation to a different extent, as well as introducing new
procedures or tools.
Targeted surveys and interviews allowed for a comprehensive understanding of stakeholders’

perspective of these policy options, and the identification of those options that actors involved
in the process may find more effective and feasible. Following analysis of the results, it
emerged that:
The applicability of any improvement in the Regulation depends on how much the
Commission would be able to take into consideration that the identified problems
(level of awareness, legal uncertainty and practical obstacles) and related drivers
differ from on product/sector to another;
The fact that different approaches followed at Member State level created a
high variation in the ways the mutual recognition is applied. With respect to costs
for economic operators, these across-the-board inconsistencies might limit
businesses decision of investing in cross-border operations;
In general, both economic operators and national authorities agree that measures
to improve the MR Regulation are pivotal in ensuring equal opportunity for
producers to access the cross-border, intra-EU market. Stakeholders raised
concerns regarding a possible shrinking of the supplier market if the MR regulation
will not be revised appropriately to address its current imperfections. However,
while the responses revealed wide consensus among National Authorities about the
need for either soft-law or hard-law intervention, economic operators appeared
more cautious when asked to estimate the effectiveness of the proposed options in
reducing delayed market access;
The main divergence in perceptions between economic operators and national

authorities was with regard to the source of the problem of the MR regulation.
National authorities emphasised the lack of clarity in EU regulation particularly with
regard to product classification. Economic operators, on the other hand, testified
that they wished to see improvement in the implementation of existing regulation,
particularly with regard to transparency in decision-making and information
sharing;
The divergence in perception between national authorities and economic operators

regarding the source of the problem of MR regulation translates to differences in
preferences with regard to who should carry the burden of the efforts needed to
simplify MR implementation. The surveyed national authorities displayed clear
preference to the possibility of economic operators contributing to this
effort by obtaining voluntary/mandatory declaration and for the EU
authorities to contribute by clarifying regulations. Economic operators, on
104
their part, expressed that efforts for simplification of appeal procedures and
knowledge sharing should be taken primarily by national and EU authorities;
Four policy options were favoured by all stakeholders:

a. Free movement of goods guaranteed by compliance with European
standards (Option 3b);
b. Transparency for administrative decisions denying market access (Option
3c);
c. Fast track appeal procedure (Option 4c);
d. Strengthening the Product Contact Points and the cooperation between

relevant authorities (Option 4d).
These four options have been discussed with a panel of selected stakeholders in order to
identify the main activities and costs that such activities imply and the main stakeholders
impacted. The exercise concluded that:
It is extremely difficult to reach a quantification of the impacts potentially

produced by the policy options. This is due to both a limited knowledge of the
detailed process and its costs, which makes it very hard to estimate any value for
the whole market (comprising different sectors/products/countries), and the large
differences among sectors/products/countries that make it almost impossible to
generalise an impact on the process. In addition, difficulties in quantification also
lie in the fact that impacts of policy options highly depend on how such options
would be actually implemented – through which instruments, with what incentives
and legal basis, etc., therefore limiting the possibility to identify a potentially
quantifiable impact of their application;
Option 3b appears to be an interesting one, but its potential impacts are perceived
as limited to those sectors where EU standards exist (which is not, for instance, the
case of the food supplements sector). This option, therefore, will lead to a limited
changes or improvements in the functioning or costs of mutual
recognition;
The use of an IT tool for notifying Member States decision and the non-
applicability of not-notified decisions are perceived as every effective in ensuring
the transparency of the administrative decisions denying or restricting mutual
recognition. However, it would likely have only a limited impact on reducing the
costs for economic operators;
A fast track appeal procedure at EC level is perceived as an effective and

necessary tool to mitigate the sub-optimal functioning of the mutual recognitions.
It can guarantee that administrative decisions denying the entry in a market of
products lawfully marketed in another Member State are legitimate and justified.
How effective this procedure will be will depend on:
a. How burdensome the process and procedures would be;

b. How many resources (technical, human and financial) are needed on the
Commission side, since virtually all denials can be appealed by economic
operators in front of the Commission
105
This option would probably be even more effective if combined with Option
3c (Transparency for administrative decisions), since these can be two pieces of
the same mechanism to ensure transparency and speed to the process;
Strengthening the role and responsibilities of the Product Contact Points and
improving the cooperation between relevant authorities represent something that
needs to be done no matter what kind of modifications of the Regulation will be
introduced;
The maximum potential for improvements in the application of mutual recognition
will stem from a combination of options 3c, 4c and 4d rather than from the
implementation of only one of the options.
For the implementation of the policy options, there are various elements to be taken into
account, since they may constitute issues limiting the effectiveness of any option. Based
on these, and the conclusions presented above, it is possible to list some main
recommendations for the next steps:
R1. The description of policy options should be further detailed and clarified. This –
as it is presented now – can still leave too much room for interpretation that may
not address the problems originally identified (e.g. in terms of legal certainty) and
may not guarantee a full and correct implementation of the actions (and the mutual
recognition principle as a consequence). It is important to specify roles and
responsibilities among stakeholders in order to avoid any misunderstanding and
provide clear indications to guide the implementation;
R2. Defining a clear and solid legal basis for the implementation of the options is a
key condition for their effective implementation. More specifically, in the case of
options 3c125 and 4c,126 the definition of legal arrangements can be perceived as a
limit to their feasibility, considering the complex process that this may entail (e.g.
the distribution of powers and responsibilities, incentives, controls and possible
penalties for not fulfilling relevant requirements might require a long negotiation
process among the EC and MS);
R3. Introducing incentives for national authorities to notify administrative decisions

denying or restricting mutual recognition. The transparency of administrative
decisions should be ensured by giving all notifications more visibility (e.g. by
introducing specific IT tools) and by considering decisions that are not notified as
not applicable. This will guarantee that all denying market access decisions are
based on proper justification in terms of rigorous and verifiable risks relating to
health and/or safety objectives as expressed in national legislation;
R4. Communication and collaboration channels between different national

authorities, between EO and national authorities should be strengthened. The
existence of some tools already tested to this purpose may facilitate this task, but
clear indication of roles and tools and guidelines on how and when to proceed are
instrumental to an increase and effective communication;
R5. Improving the role of PCPs, this can relating to:
a. Confirmation of the self-declaration of compliance done by businesses;
125
Transparency for administrative decisions denying market access.
126
Fast track appeal procedure.
106
b. Verification that the information requested by the authorities is legitimate

in the context of the legal procedure;
c. Formulating an opinion on the justification brought by the authorities to

deny mutual recognition and on the necessity and proportionality of such
measures.
PCPs still suffer both a limited awareness from actors and reduced abilities to
influence the process. Strengthening their role and responsibilities may help both
authorities and economic operators to have a faster, clearer and more defined
process to follow. To this end, clear instruments are to be provided to support the
growth of PCPs within the process of mutual recognition;
R6. While each option introduces some relevant elements and addresses key problems
causing a sub-optimal application of mutual recognition, the impact and
effectiveness of the intervention would likely be maximised if a combination of
the preferred options are implemented. This may be true especially for the
tools pursuing more transparency in the process and trying to quicken it, by
introducing a fast-track appeal procedure.
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8 ANNEXES
8.1 Harmonised, Non-Harmonised (or partially) harmonised sectors. Classification used in the market analysis
(Sectorial Level)127
NACE Description Harmonised
Group
C101 Processing and preserving of meat and production of meat products harmonised
C102 Processing and preserving of fish, crustaceans and molluscs harmonised
C103 Processing and preserving of fruit and vegetables harmonised
C104 Manufacture of vegetable and animal oils and fats harmonised
C105 Manufacture of dairy products harmonised
C106 Manufacture of grain mill products, starches and starch products harmonised
C107 Manufacture of bakery and farinaceous products harmonised
C108 Manufacture of other food products no/partially
C109 Manufacture of prepared animal feeds no/partially
C110 Manufacture of beverages no/partially
C120 Manufacture of tobacco products no/partially
C131 Preparation and spinning of textile fibres no/partially
C132 Weaving of textiles no/partially
C133 Finishing of textiles no/partially
C139 Manufacture of other textiles harmonised
C141 Manufacture of wearing apparel, except fur apparel harmonised
C142 Manufacture of articles of fur no/partially
C143 Manufacture of knitted and crocheted apparel harmonised
127
Level 3 (three-digit code) of the hierarchy of codes in NACE was used.
108

Group
C151 Tanning and dressing of leather; manufacture of luggage, handbags, saddlery and harness; dressing and dyeing of fur no/partially
C152 Manufacture of footwear harmonised
C161 Sawmilling and planning of wood no/partially
C162 Manufacture of products of wood, cork, straw and plaiting materials no/partially
C171 Manufacture of pulp, paper and paperboard no/partially
C172 Manufacture of articles of paper and paperboard no/partially
C181 Printing and service activities relating to printing no/partially
C182 Reproduction of recorded media no/partially
C191 Manufacture of coke oven products no/partially
C192 Manufacture of refined petroleum products no/partially
C201 Manufacture of basic chemicals, fertilisers and nitrogen compounds, plastics and synthetic rubber in primary forms harmonised
C202 Manufacture of pesticides and other agrochemical products harmonised
C203 Manufacture of paints, varnishes and similar coatings, printing ink and mastics harmonised
C204 Manufacture of soap and detergents, cleaning and polishing preparations, perfumes and toilet preparations harmonised
C205 Manufacture of other chemical products harmonised
C206 Manufacture of man-made fibres no/partially
C211 Manufacture of basic pharmaceutical products no/partially
C212 Manufacture of pharmaceutical preparations harmonised
C221 Manufacture of rubber products harmonised
C222 Manufacture of plastics products harmonised
C231 Manufacture of glass and glass products harmonised
C232 Manufacture of refractory products no/partially
109

Group
C233 Manufacture of clay building materials harmonised
C234 Manufacture of other porcelain and ceramic products no/partially
C235 Manufacture of cement, lime and plaster harmonised
C236 Manufacture of articles of concrete, cement and plaster harmonised
C237 Cutting, shaping and finishing of stone no/partially
C239 Manufacture of abrasive products and non-metallic mineral products n.e.c. no/partially
C241 Manufacture of basic iron and steel and of ferroalloys no/partially
C242 Manufacture of tubes, pipes, hollow profiles and related fittings, of steel harmonised
C243 Manufacture of other products of first processing of steel no/partially
C244 Manufacture of basic precious and other non-ferrous metals no/partially
C245 Casting of metals harmonised
C251 Manufacture of structural metal products harmonised
C252 Manufacture of tanks, reservoirs and containers of metal harmonised
C253 Manufacture of steam generators, except central heating hot water boilers harmonised
C254 Manufacture of weapons and ammunition no/partially
C255 Forging, pressing, stamping and roll-forming of metal; powder metallurgy no/partially
C256 Treatment and coating of metals; machining harmonised
C257 Manufacture of cutlery, tools and general hardware no/partially
C259 Manufacture of other fabricated metal products harmonised
C261 Manufacture of electronic components and boards harmonised
C262 Manufacture of computers and peripheral equipment harmonised
C263 Manufacture of communication equipment harmonised
110

Group
C264 Manufacture of consumer electronics harmonised
C265 Manufacture of instruments and appliances for measuring, testing and navigation; watches and clocks harmonised
C266 Manufacture of irradiation, electromedical and electrotherapeutic equipment harmonised
C267 Manufacture of optical instruments and photographic equipment no/partially
C268 Manufacture of magnetic and optical media no/partially
C271 Manufacture of electric motors, generators, transformers and electricity distribution and control apparatus harmonised
C272 Manufacture of batteries and accumulators harmonised
C273 Manufacture of wiring and wiring devices harmonised
C274 Manufacture of electric lighting equipment harmonised
C275 Manufacture of domestic appliances harmonised
C279 Manufacture of other electrical equipment harmonised
C281 Manufacture of general-purpose machinery harmonised
C282 Manufacture of other general-purpose machinery harmonised
C283 Manufacture of agricultural and forestry machinery harmonised
C284 Manufacture of metal forming machinery and machine tools harmonised
C289 Manufacture of other special-purpose machinery harmonised
C291 Manufacture of motor vehicles harmonised
C292 Manufacture of bodies (coachwork) for motor vehicles; manufacture of trailers and semi-trailers no/partially
C293 Manufacture of parts and accessories for motor vehicles no/partially
C301 Building of ships and boats harmonised
C302 Manufacture of railway locomotives and rolling stock harmonised
C303 Manufacture of air and spacecraft and related machinery no/partially
111

Group
C304 Manufacture of military fighting vehicles no/partially
C309 Manufacture of transport equipment n.e.c. no/partially
C310 Manufacture of furniture no/partially
C321 Manufacture of jewellery, bijouterie and related articles no/partially
C322 Manufacture of musical instruments no/partially
C323 Manufacture of sports goods harmonised
C324 Manufacture of games and toys harmonised
C325 Manufacture of medical and dental instruments and supplies harmonised
C329 Manufacturing n.e.c. harmonised
C331 Repair of fabricated metal products, machinery and equipment no/partially
C332 Installation of industrial machinery and equipment no/partially
112
8.2 Products classified as non or partially harmonised in the market analysis

(Product level)128 by sector
Nace
Description
code
Manufacture of food products, beverages and tobacco products
10.89 Manufacture of other food products n.e.c.
12.00 Manufacture of tobacco products
Manufacture of textiles, apparel, leather and related products
13.10 Preparation and spinning of textile fibres
13.20 Weaving of textiles
13.30 Finishing of textiles
13.91 Manufacture of knitted and crocheted fabrics
13.93 Manufacture of carpets and rugs
13.94 Manufacture of cordage, rope, twine and netting
13.95 Manufacture of nonwovens and articles made from nonwovens, except apparel
13.96 Manufacture of other technical and industrial textiles
13.99 Manufacture of other textiles n.e.c.
14.11 Manufacture of leather clothes
14.20 Manufacture of articles of fur
15.11 Tanning and dressing of leather; dressing and dyeing of fur
15.12 Manufacture of luggage, handbags and the like, saddlery and harness
15.20 Manufacture of footwear
Manufacture of wood and paper products, and printing
16.10 Sawmilling and planning of wood
16.21 Manufacture of veneer sheets and wood-based panels
16.22 Manufacture of assembled parquet floors
16.23 Manufacture of other builders' carpentry and joinery
16.24 Manufacture of wooden containers
Manufacture of other products of wood; manufacture of articles of cork, straw and
16.29
plaiting materials
17.11 Manufacture of pulp
17.12 Manufacture of paper and paperboard
Manufacture of corrugated paper and paperboard and of containers of paper and
17.21
paperboard
17.22 Manufacture of household and sanitary goods and of toilet requisites
17.23 Manufacture of paper stationery
17.24 Manufacture of wallpaper
17.29 Manufacture of other articles of paper and paperboard
18.11 Printing of newspapers
18.12 Other printing
18.13 Pre-press and pre-media services
18.14 Binding and related services
18.20 Reproduction of recorded media
128 All PRODCOM codes under the level 4 (four-digit code) NACE hierarchy included in the table are considered as
non or partially harmonised in the Market Analysis at product level.
113
Nace
Description
code
Manufacture of coke, and refined petroleum products
19.10 Manufacture of coke oven products
Manufacture of chemicals and chemical products
All products within this sector have been considered as harmonised
Manufacture of pharmaceuticals, medicinal chemical and botanical products
Manufacture of rubber and plastics products, and other non-metallic mineral products
23.19 Manufacture and processing of other glass, including technical glassware
23.41 Manufacture of ceramic household and ornamental articles
23.44 Manufacture of other technical ceramic products
23.49 Manufacture of other ceramic products
23.69 Manufacture of other articles of concrete, plaster and cement
23.70 Cutting, shaping and finishing of stone
23.91 Production of abrasive products
23.99 Manufacture of other non-metallic mineral products n.e.c.
Manufacture of basic metals and fabricated metal products, except machinery and
equipment
24.31 Cold drawing of bars
24.32 Cold rolling of narrow strip
24.33 Cold forming or folding
24.34 Cold drawing of wire
25.12 Manufacture of doors and windows of metal
25.40 Manufacture of weapons and ammunition
25.50 Forging, pressing, stamping and roll-forming of metal; powder metallurgy
25.71 Manufacture of cutlery
25.72 Manufacture of locks and hinges
25.73 Manufacture of tools
Manufacture of computer, electronic and optical products
26.52 Manufacture of watches and clocks
26.70 Manufacture of optical instruments and photographic equipment
26.80 Manufacture of magnetic and optical media
Manufacture of electrical equipment
27.52 Manufacture of non-electric domestic appliances
Manufacture of machinery and equipment n.e.c.
Manufacture of transport equipment
Manufacture of bodies (coachwork) for motor vehicles; manufacture of trailers and
29.20
semi-trailers
29.31 Manufacture of electrical and electronic equipment for motor vehicles
29.32 Manufacture of other parts and accessories for motor vehicles
30.99 Manufacture of other transport equipment n.e.c.
Other manufacturing, and repair and installation of machinery and equipment
31.01 Manufacture of office and shop furniture
31.02 Manufacture of kitchen furniture
114
Nace
Description
code
31.03 Manufacture of mattresses
31.09 Manufacture of other furniture
32.11 Striking of coins
32.12 Manufacture of jewellery and related articles
32.13 Manufacture of imitation jewellery and related articles
32.20 Manufacture of musical instruments
32.91 Manufacture of brooms and brushes
33.11 Repair of fabricated metal products
33.12 Repair of machinery
33.13 Repair of electronic and optical equipment
33.14 Repair of electrical equipment
33.15 Repair and maintenance of ships and boats
33.16 Repair and maintenance of aircraft and spacecraft
33.17 Repair and maintenance of other transport equipment
33.19 Repair of other equipment
33.20 Installation of industrial machinery and equipment
115
8.3 Detailed methodology and assumptions for the estimation of the magnitude
of the problem
This annex provides an overview of constituent elements, calculations and assumptions of
core elements of the Suboptimal functioning of mutual recognition Model.
The number of enterprises intra-EU exporting non (or partially) harmonised products
The study team analysed Structural Business Statistics to calculate the number of enterprises
in non (or partially) harmonised NACE Sectors, see Table A1.
Eurostat Easy Comext data129 was used to find the proportion of intra-EU exporting
enterprises. These percentage values were used to calculate the number of enterprises
engaged in intra-EU exporting non (or partially) harmonised products, see the two columns in
the right hand side of Table A1.
Table 24 Enterprises intra-EU exporting non (or partially) harmonised products
Enterprises
producing
% intra-
NACE non and Intra-EU
EU
Sectors partial exporting
exporting
harmonised
products
Basic metals and fabricated metal

products, except machinery and 24 and 25 66,623 17 11,040
equipment
Chemicals and chemical products 20
Coke, and refined petroleum products 19 55 33 18
Computer, electronic and optical
26 2,731 35 963
products
Food products, beverages and tobacco
10, 11 & 12 22,337 12 2,687
products
Rubber and plastics products, and
22 and 23 59,951 25 14,727
other non-metallic mineral products
Textiles, apparel, leather and related
13, 14 & 15 193,912 17 32,872
products
Transport equipment 29 and 30 4,540 34 1,550
Wood and paper products, and printing 16, 17 & 18 284,801 14 38,633
Other manufacturing, and repair and
installation of machinery and 31, 32 & 33 320,049 11 33,932
equipment
Total 954,999 136,422
Enterprise size and exporting

A Eurostat publication130 provides an insight to international trade by enterprise
characteristics. The Eurostat analysis provides an insight to the proportion of enterprises
129
Trade by activity and enterprise size-class (DS-058467-01) http://epp.eurostat.ec.europa.eu/newxtweb/
130
Eurostat. 2017. International trade by enterprise characteristics. The March 2017 publication utilises data from
2012.
116
exporting in different employee size bands131. These Eurostat international trade percentages
are adopted to estimate the proportion of enterprises in different size bands.
Table 25 Estimating the size of enterprises intra-EU exporting non (or partially) harmonised products
Percentage of enterprises
Enterprises
intra-EU exporting
Micro - 0 to 9 emps 64.9% 88,594

Small - 10 to 49 emps 24.3% 33,202
Medium - 50 to 249
8.5% 11,530
emps
Large - 50 to 249
2.3% 3,096
emps
Total 100% 136,422
Enterprise size and value of exports
The same Eurostat publication132 used in the previous section also provides an insight to the
value of international trade undertaken by enterprises of different sizes. Eurostat analysis
provides an insight to the proportion of trade undertaken by enterprises in different employee
size bands. The Eurostat international trade percentages are adopted to estimate the value of
intra-EU trade in non (or partially) harmonised sectors.
Table 26 Estimating the value of intra-EU trade in non (or partially) harmonised products undertaken
by enterprises of different sizes
Percentage of intra-EU Value of intra-EU trade in
trade in non (or partially) non (or partially)
harmonised sectors harmonised sectors (€m)
Micro - 0 to 9 emps 12.7% 48,590

Small - 10 to 49 emps 13.0% 49,727
Medium - 50 to 249
21.6% 82,808
emps
Large - 50 to 249
52.8% 202,227
emps
Total 100% 383,352
Average value of intra-EU exports of non (or partially) harmonised products by enterprises of
different sizes
The preceding two tables enable the calculation of the average value of intra-EU exports of
non (or partially) harmonised products by enterprises of different sizes.
131
The four employee size bands are 0 to 9 - Micro, 10 to 49 - Small, 50 to 249 - Medium and over 250 - Large.
Table 25 is adjusted pro-rate to take account of this feature of intra-EU exporting. Eurostat suggest enterprises with
0 to 9 employees constitute 64.9 per cent of all exporting enterprises, 10 to 49 employees – 24.3 per cent, 50 to 249
employees – 8.5 per cent, over 250 employees – 2.3 per cent.
132
Ibid. Eurostat. 2017.
117
Table 27 Estimating the average value of intra-EU trade in non (or partially) harmonised products for
enterprises of different sizes
Total value of intra-EU
Average value of
trade in non (or
Enterprises intra-EU trade
partially) harmonised
(€000s)
sectors (€m)
Micro - 0 to 9 emps 88,594 48,590 550

Small - 10 to 49 emps 33,202 49,727 1,500
Medium - 50 to 249
11,530 82,808 7,180
emps
Large - 50 to 249 emps 3,096 202,227 65,310
136,422 383,352 €2,810
Number of products developed by enterprises undertaking intra-EU exporting of non (or

partially) harmonised products by enterprises of different sizes
Interviewees provided an insight to the number of non (or partially) harmonised products they
developed each year for intra-EU exporting. As might be expected the number of products
varied by the (employee) size of enterprises. The left column of Table 28 provides an insight
to the average number of intra-EU traded products by enterprises of different sizes. By
multiplying the average number of products for each enterprises size group by the number of
enterprises in that group it is estimated that total number of non (or partially) harmonised
products is 234,321 developed each year. This equates to an average of 1.7 products for each
of the 136,422 enterprises intra-EU exporting non (or partially) harmonised products.
Table 27 provided an overview of the average value of intra-EU trade for enterprises for
different (employee) sizes. This is presented in the central column of data in Table 28. By
dividing this value by the average number of products it is possible to calculate the average
value per product of intra-EU trade in non (or partially) harmonised products. The average
value of intra-EU trade per non (or partially) harmonised product is €1.64 million.
Table 28 Estimating the average value of intra-EU trade in non (or partially) harmonised products for
enterprises of different sizes
Average number Average value of
Average value per
of intra-EU intra-EU trade for
product of intra-
traded products the enterprise
EU trade (€000s)
per enterprise (€000s)
Micro - 0 to 9 emps 1 550 548

Small - 10 to 49 emps 2 1,500 749
Medium - 50 to 249 1,436
5 7,180
emps
Large - 50 to 249 emps 7 65,310 9,331
Average 1.70 €2.81m €1.64m
118
8.4 Sensitivity analysis

Extremes for user changeable variables used in sensitivity analysis
The Rationale behind the selected default values the SFMR model are presented in chapter 4.
Sensitivity analysis was undertaken to investigate how changes in default values would have
an impact on outputs. Sensitivity analysis was undertaken using the extremes of values
provided by respondents133.
This annex provides a brief overview of the maximum and minimum parameters used in
sensitivity analysis of various components of the SFMR model presented in chapter 4.
Administration costs to demonstrate meeting regulatory requirements
Interviewees estimated time costs of between 40 to 80 hours. Personnel costs quoted by

interviewees ranged between €40 and €80 per hour. The default in the model was set at 80
hours and €60/hour – this provided a value of €4,800. The two extremes presented by
interviewees provide values of €1,600 and €6,400.
Adjusting the product to meet market requirements
The default value in the model was set at two per cent of the value of intra-EU trade from a
non (or partially) harmonised product – this provided a value of €32,800. The two extremes
presented by interviewees ranged between one and five per cent. These extremes provide
values of €16,400 and €82,000.
Proportion of enterprises choosing administrative and product adjustment routes
The default in the model was set at 50:50 – Half of enterprises only incurred administration
costs to demonstrate meeting regulatory requirements. The remaining 50% undertook
product adjustments; these businesses also incurred administrative costs. The two
approaches examined in sensitivity analysis were for ratios of 75:25 and 25:75.
Cost of delayed market entry
The default in the model was set at four per cent of the value of intra-EU trade from a non (or
partially) harmonised product – this provided a value of €65,600
The two extremes presented by interviewees ranged between one and ten per cent. These
extremes provide values of €16,400 and €164,000.
Lost opportunity
The default percentage value in the model was set at 3.5 % of the value of intra-EU trade
from a non (or partially) harmonised product – this provided a value of €65,600. The two
extremes presented by interviewees ranged between one and ten per cent. These extremes
provide values of €16,400 and €164,000.
This element of the model also accommodates a calculation of the number of enterprises that
might have seriously considered exporting. The default value in the model was set at 234,113
enterprises (28.6 % of non-exporting enterprises).
The minima assumption is that the lowest intra-EU proportion of exporters in relevant NACE
sectors is adopted (11 per cent of exporting enterprises in ‘other manufacturing’ – 90,040
133
This approach provides uses the views of respondents at each end of a spectrum of responses. For example in
Section 4.1.1.1 estimates of the cost of delayed market entry (action 4 in decision tree graphic) ranged between one
and ten per cent of the value of intra-EU trade from a non or partially harmonised product, the average value was
four per cent. Thus values of one and ten were used as the minima and maxima, respectively, in sensitivity analysis.
119
enterprises). It is assumed that this is the total number of lost opportunities from those
considering exporting but do not proceeding and the number that start and then abandon
exporting. The maximum value is derived from the highest intra-EU proportion of exporters
in relevant NACE sectors. This highest value of 35 per cent of exporting enterprises (in the
computer, electronic and optical products sector) is used to estimate the number of
enterprises that consider exporting but do not proceed and the number that start and then
abandon exporting – total 70 per cent – 573,000)
120
8.5 Analysis of stakeholders’ sentiment on proposed policy options

Considering the issues highlighted by stakeholders and presented in the previous chapters,
the research team investigated their sentiment and reaction to a revision of the Regulation
and the possible ways.
Therefore, field research focused not only on the current functioning of mutual recognition –
and its main issues – but also on how to revise the Regulation, through the policy options
proposed by the Commission (see section 1.1). Targeted surveys and interviews allowed to
understand stakeholders’ point of view about the Policy Options. A preliminary analysis of the
answers collected highlights some main points:
 In general, both economic operators and national authorities agree that measures to
improve the Mutual Recognition Regulation have to be taken. However, while
among economic operators there is quite a spread consensus about the need for
intervention, either through soft-law or hard-law instruments, national authorities
appear to be more cautious in this respect, with some of them 134 even appealed by
retaining the status quo;
 Within each category of stakeholder, preferences and opinions about the feasibility
and priority of policy options (and sub-options) seem to be rather fragmented and
heterogeneous. In some cases, stakeholders underlined a lack of clarity or
understanding of specific policy sub-options;
 Sometimes the same options or set of sub-options are regarded as effective by
both categories of stakeholders to reach more than one objective (for instance,
both categories consider Option 4a as effective with respect to both increasing
awareness and improving legal certainty);
 Both economic operators and national authorities appear to be in favour of mixing
different sub-options, rather than the adoption of a single, full policy option.
 National authorities seem to support elements of Option 2 and 3 throughout all
questions, therefore preferring soft-law or limited regulatory changes rather than
heavier and more comprehensive modifications of the Regulation.
 Economic operators regard Option 1 and Option 2 to have a more limited positive
impact on cost reduction compared to the options foreseeing a legislative revision of
the Regulation (Option 3 and Option 4), although in general businesses are not positive
about legislative revisions.
The rest of the section presents the main findings of the analysis of replies on the application
of the different options to achieve different objectives. Only the first four objectives were
included in both surveys (national authorities and economic operators).
Raising awareness
As confirmed during interviews,135 stakeholders consider increasing awareness about mutual
recognition as a priority. Indeed, awareness rising is deemed as important and beneficial not
only for economic operators, who are often unaware of the possibility of benefiting from the
mutual recognition principle, but also for national legislators (who should always include a
mutual recognition clause in the relevant national legislation) and implementing authorities
134
E.g. national authorities from CZ, EE, FR, LV.
135
Indeed both business associations and national authorities regard increasing awareness as a short-term term
priority, as it may be pursued more easily and immediately compared to other options requiring a legislative revision
of the Regulation.
121
(who at times do not notify decisions restricting or denying market access as prescribed under
Article 6(2)).
As represented in Figure 16, national authorities indicate Option 3a (Identifying the products
to which mutual recognition may apply) as the most effective action to undertake for
increasing awareness, followed by Option 4a (Clarifying the scope of mutual recognition) and
Option 2b (Clearer clause of mutual recognition). As confirmed also during interviews,136 the
drafting and dissemination of an up-to-date product list and the design of a clearer mutual
recognition clause to be included in national technical rules, would enable economic operators
to know whether or not the products they are trying to market in another MS fall or not within
the scope of Regulation, while at the same time reducing the margins of legal uncertainty
providing both national authorities and economic operators with clear and structured
procedures to follow.
Figure 16: Effectiveness of Policy Options in increasing awareness about MR, National Authorities
Option 5
Option 4d
Option 4c
Option 4b
Option 4a
Option 3d
Option 3c
Option 3b
Option 3a
Option 2c
Option 2b
Option 2a
Option 1
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Not at all effective Not effective Effective Very effective
Source: EY elaboration on information collected through the online survey
In addition, economic operators appear to prefer Option 4a (Clarifying the scope of mutual
recognition) as the single most effective action to increase awareness about mutual
recognition, and express more in general a clear support in favour of a comprehensive
legislative revision of the Mutual Recognition Regulation, also by introducing a declaration of
compliance (Option 4b) and strengthening PCPs and administrative cooperation among
relevant authorities (Option 4d), as shown in Figure 17.
136
National Authorities expressed their support to revising and updating the product list, even though it was pointed
out that very innovative products can hardly be foreseen and enlisted. Interviewed representatives of business
associations reported that the product list, as it is today, is either not known by businesses or regarded as not very
informative or useful, as far as it is not at all user friendly and too long. LT reported that many products enlisted are
not regulated at all in any Member State, and that it would be made more user friendly by the introduction of a
product-based search system.
122
Figure 17: Effectiveness of Policy Options in increasing awareness about MR, Economic operators
Option 5
Option 4d
Option 4c
Option 4b
Option 4a
Option 3d
Option 3c
Option 3b
Option 3a
Option 2c
Option 2b
Option 2a
Option 1
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Interestingly, both national authorities and economic operators contacted through the survey
prefer increasing awareness through measures that imply legislative changes, rather than by
means of more limited soft law instruments aimed at improving the actual functioning, as the
ones set out under Option 2.
Improving legal certainty

As shown in Figure 18, national authorities indicate Option 3a (Identifying the products to
which mutual recognition may apply) as the most effective in improving the legal certainty in
the application of mutual recognition principle and Regulation, showing support also for
Options 4a (Clarifying the scope of mutual recognition) and Option 2b (Clearer clause of MR).
All these sub-options address some of the main issues highlighted also during interviews as
major reasons for legal uncertainty. Considering also the previous objective, according to
replies from national authorities, the very same set of options may be effective in both
increasing awareness and improving the legal certainty of mutual recognition application.
Figure 18: Effectiveness of Policy Options in improving legal certainty of MR, National Authorities
Option 5
Option 4d
Option 4c
Option 4b
Option 4a
Option 3d
Option 3c
Option 3b
Option 3a
Option 2c
Option 2b
Option 2a
Option 1
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
123
As shown in Figure 19, unlike national authorities, economic operators consider Option 4d
(Strengthening the Product Contact Points and the cooperation between relevant authorities)
as highly effective, along with Option 4a (Clarifying the scope of mutual recognition), Option
4c (Fast track appeal procedure) and Option 3b (Free movement of goods guaranteed by
compliance with European standards). Moreover, economic operators believe that the current
Mutual Recognition Regulation (Option 1) is completely ineffective with respect to ensuring
legal certainty.
Figure 19: Effectiveness of Policy Options in improving the legal certainty of MR, Economic operators
Option 5
Option 4d
Option 4c
Option 4b
Option 4a
Option 3d
Option 3c
Option 3b
Option 3a
Option 2c
Option 2b
Option 2a
Option 1
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
A convergence between national authorities and economic operators can be observed only in
relation to the need for clarifying the scope of mutual recognition (Options 4a), in order to
define procedural guarantees for the application of the Regulation as well as to better delimit
the products or categories of products falling under it. Otherwise, opinions on how to improve
legal certainty are quite different, with economic operators seeming to prefer rather extensive
legislative changes than national authorities.137
Addressing potential obstacles to mutual recognition implementation

According to national authorities, the most effective measures to address potential obstacles
to the implementation of mutual recognition (such as the lack of clarity around the concept of
"lawfully marketed", or difficulties in challenging administrative decisions denying market
access) are those enshrined in Option 3a (Identifying the products to which mutual recognition
may apply) and 3c (Transparency for administrative decisions denying market access),
followed by Option 2b (Clearer mutual recognition clause), as shown in Figure 20.
137
Many elements preferred by economic operators belong to Option 4, while national authorities seem to have a
more heterogeneous opinion over the sub-options. This can be explained, as pointed out also during interviews (e.g.,
FR and LV), as a preference for “softer” interventions which may have a more immediate impact while adding lower
administrative burden for authorities, since new legislation would easily mean for them to change and adapt structures
and procedures, with organisational effort required at least in the short term.
124
Figure 20: Effectiveness of Policy Options in addressing potential obstacles to MR implementation,
National Authorities
Option 5
Option 4d
Option 4c
Option 4b
Option 4a
Option 3d
Option 3c
Option 3b
Option 3a
Option 2c
Option 2b
Option 2a
Option 1
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
On their side, economic operators generally consider the comprehensive legislative revision
to the Regulation provided for by Option 4 (with the partial exception of Option 4a) as the
most effective set of measures to address the problems to an optimal implementation of the
mutual recognition principle, along with Option 3b (Free movement of goods guaranteed by
compliance with European standards) and Option 3d (Strengthening the Product Contact
Points), as shown in Figure 21.
Figure 21: Effectiveness of Policy Options in addressing potential obstacles to MR implementation,
Economic operators
Option 5
Option 4d
Option 4c
Option 4b
Option 4a
Option 3d
Option 3c
Option 3b
Option 3a
Option 2c
Option 2b
Option 2a
Option 1
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Overall, it may be noticed how both national authorities and economic operators are in favour
of a legislative revision of Regulation, even if the latter, once again, prefer more extensive
legislative changes than the former.
Avoiding delayed market access

According to information collected from national authorities, identifying the products to which
mutual recognition may apply (Option 3a) is considered as the most effective sub-option also
125
to avoid delays in granting market accesses to economic operators willing to sell lawfully
marketed products in other Member States. The availability of a list of products falling under
the Mutual Recognition Regulation, updated on the basis of repealed or newly adopted
legislation, would allow PCPs and implementing authorities to assess more easily and rapidly
whether or not mutual recognition may apply case-by-case. In addition, if a clearer mutual
recognition clause (Option 2b), is included in technical national rules, it would be regarded
as an incisive action in this regard, as shown in Figure 22.
Figure 22: Effectiveness of Policy Options in avoiding delayed market access, National Authorities
Option 5
Option 4d
Option 4c
Option 4b
Option 4a
Option 3d
Option 3c
Option 3b
Option 3a
Option 2c
Option 2b
Option 2a
Option 1
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
The evidence is less clear in regard to economic operators. While considering the baseline
scenario (Option 1) as ineffective, given the existing difficulties in accessing a market
presented in section 3.2, EO do not show clear support in favour of a single option or clear set
of sub-options. It can be noticed that soft-law instruments (Option 2), Option 3 (with the
partial exception of Option 3b) and Option 5 (Voluntary prior authorisation to placing on the
market) are in general considered as ineffective in avoiding delayed access to markets. Figure
23 shows, once again, how more extensive legislative changes (under Option 4) generally
represent the preference of this category of stakeholders.
Figure 23: Effectiveness of Policy Options in avoiding delayed market access, Economic operators
Option 5
Option 4d
Option 4c
Option 4b
Option 4a
Option 3d
Option 3c
Option 3b
Option 3a
Option 2c
Option 2b
Option 2a
Option 1
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
126
Reducing transaction costs

Concerning the potential impact of proposed Policy Options on the costs relating to the current
application of mutual recognition, economic operators 138 generally believe that keeping the
status quo (Option 1) and adopting soft-law instruments (Option 2) would have a limited
positive impact on cost reduction compared to those Options foreseeing a legislative revision
of the Regulation (Option 3 and Option 4).
Stakeholders estimate that Option 3b (Free movement of goods guaranteed by compliance

with European standards) and Option 4d (Strengthening the Product Contact Points and the
cooperation between relevant authorities) would have the largest positive impact in reducing
transaction costs.139 Specifically, Option 3b would introduce a reinforced presumption
according to which products lawfully marketed in one Member State, and complying with
European standards, are assumed to be in compliance with the technical rules in force into
both the origin and destination Member States, thereby reducing the costs relating to
demonstrate that a product is already lawfully marketed in another Member State. 140 Both
Option 1 (keeping the status quo) and Option 2 (specifically the exchange of officials in the
area of mutual recognition) are instead expected to have a more limited impact on transaction
costs, as shown in Figure 24.
Figure 24: Effectiveness of Policy Options in reducing transaction costs, Economic operators
Option 5
Option 4d
Option 4c
Option 4b
Option 4a
Option 3d
Option 3c
Option 3b
Option 3a
Option 2c
Option 2b
Option 2a
Option 1
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
From 0 to 10% of cost reduction From 10% to 30% cost reduction

From 30% to 50% cost reduction More than 50% cost reduction
The establishment of a fast track appeal procedure (Option 4c), being rapid and free of charge
for businesses, is regarded as the option with the largest positive impact on the costs faced
by economic operators when challenging before courts decisions denying market access. Also
Option 4d (Strengthening the Product Contact Points and the cooperation between relevant
138
The elements treated in the following figures were not included in the online survey targeting national authorities,
therefore they rely on input from economic operators only.
139
I.e. costs faced by businesses when verifying if the MR principle is applicable or in demonstrating that a product
is lawfully marketed in another Member State.
140
However, interviewees (e.g. sectorial business Association at EU level and SME representative at EU level) have
highlighted a certain lack of clarity and possible concerns about this sub-option, since it may move too much towards
harmonisation, limiting the application of mutual recognition on the market.
127
authorities) and Option 5 (Voluntary prior authorisation to placing on the market) are expected
to have a positive impact on court procedure costs, the former by improving the available
information on EU legislation and on national technical rules adopted in the non (or partially)
harmonised area, and the latter by confirming to businesses that products may access the
market of another Member State on the basis of mutual recognition in a pre-marketing phase
(rather than in a post-marketing phase, as it happens today). Once again, Option 1 and Option
2 are considered to have a smaller positive impact on court procedure costs, as presented in
Figure 25.
Figure 25: Effectiveness of Policy Options in reducing costs relating to court procedures, Economic
operators
Option 5
Option 4d
Option 4c
Option 4b
Option 4a
Option 3d
Option 3c
Option 3b
Option 3a
Option 2c
Option 2b
Option 2a
Option 1
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Reducing costs relating to the lost opportunity of entering a new market

Economic operators believe that the reinforced presumption of compliance provided for in
Option 3b (Free movement of goods guaranteed by compliance with European standards)
would have also a positive impact on reducing the costs suffered by business when losing the
opportunities of gaining access to new markets due to the suboptimal function of mutual
recognition. Economic operators do not consider in this case concrete costs sustained in the
process, but rather the foregone revenues and (possible) profits that would have resulted in
case of actual access to the market, and now lost. While also Option 4c (Fast track appeal
procedure) is anticipated to have quite a significant impact on cost reduction, Option 1 and
Option 2 are instead expected to produce a more limited reduction of actual costs relating to
lost business opportunities, as shown in Figure 26.
128
Figure 26: Effectiveness of Policy Options in reducing costs relating to the lost opportunity of entering
a new market, Economic operators
Option 5
Option 4d
Option 4c
Option 4b
Option 4a
Option 3d
Option 3c
Option 3b
Option 3a
Option 2c
Option 2b
Option 2a
Option 1
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

129
8.6 Stakeholders involved in the case studies

Stakeholder category Organisation141 Description
Business Association Food Supplements Europe International association

working to promote issues
relating to the industry of the
food supplements in Europe.
Members include other
associations active at national
level
Business Association FIGAWA German association based in

Cologne, whose members are
businesses operating in the gas
and water sector. The
association promotes
technological development in
the industry and try to improve
cooperation between the
German organisations and
international bodies for the
development of rules and
regulations.
Business Association Fertilizers Europe Fertilizers Europe is an

association that focuses on
representing the major
European manufacturers of
fertiliser products. The
association is comprised of
agricultural, technical,
economic and statistical
committees.
Business Association EU Association Association representing the

interests of the European
manufacturers of printing inks
and related products.
Business Association EU Association The association representing

Europe’s rigid metal packaging
industry comprising
manufacturers, suppliers, and
national associations. Its
membership covers more than
450 manufacturing sites,
employing over 65.000 people.
80% of member companies are
small and medium-sized
enterprises. Together, they
produce some 85 billion units
every year for the beverage,
food, health & beauty,
household and industrial
markets.
141
In certain cases, stakeholders have asked for not disclosing their contact details.
130
Business French SME SME founded in 2003 with over

130 employees – all based in
France – and turnover of over
€30 million in 2016
Business Italian SME SME founded in the 1980s to

produce and commercialise
food supplements. Around 30
employees and turnover of
more than €15 million in 2016
Business Dutch subsidiary of a Holland-based subsidiary of a

multinational company multinational company founded
in 1947. Established over 25
years ago and with annual
turnover of around €15 million
in the Benelux area
Business Czech based large firm Company created in 1992

producing food supplements
and medicinal products. It
operates mainly in Eastern
European countries like
Bulgaria and Romania.
Business Italian large company Firm founded in 1978, today

the turnover is around €180
million with more than one
thousands employees. Some
distributors are located in Asia
and UEA.
Business Norway large company Large firm operating within the

food sector. Food supplements
segment generates
approximately €200 million in
sales, while the number of
employees is around 500 units.
Business Large company Multinational company based in

Switzerland with over 10,000
employees and 125 years of
activity. 80% of the turnover
(over €2 billion per year) is
generated in the EU.
Business UK SME An SME that was founded in

1991 with a turnover of
approximately 23 million euros.
The company has recently
abandoned the EU market,
minus one Member State and
has four staff dedicated to
regulatory issues. This SME is
currently working on six
products targeted for new
markets.
131
Business Origin Fertilisers Origin Fertilisers is 30 years

old and employs between 150
– 200 workers. Unfortunately,
the majority of Origin’s
business is of an import nature,
with the view to resell
domestically. Origin does
however export very high value
niche products in special
circumstances.
Business UK SME A manufacturer of packaging

products and technology
(including cans, closures,
wrappings and tins). It is a
significant economic operator
in this market, active in 40
countries, employing over
23,000 people and net sales of
$9.1 billion annually.
National authority Danish Authority Danish authority in charge of

nutrition legislation
National Authority German Authority German authority responsible

for checks and definitions of
acceptance levels (excluding
certifications and testing) in
the field of materials in contact
with drinking water
National Authority Slovenian Authority A Slovenian Authority

responsible for strengthening
international competitiveness
of Slovenian enterprises. One
of its remits is to perform tasks
within the internal market in
which the Ministry prepares
and implements the European
and national policy and
legislation in the field of free
movement of goods and
services, the national technical
infrastructure of quality,
company law, consumer
protection, intellectual
property, and competition
protection among others.
National Authority National Standards Authority of National Standards Authority of

Ireland Ireland (NSAI) is Ireland’s
official standards body. It is
accountable to the Minister of
Jobs, Enterprise and
Innovation. NSAI works to
improve the performance of
Irish businesses and protects
consumers through the setting
of standards and issuing of
132
certification in the quality and

safety of goods and services.
The NSAI is a Product Contact
Point for Ireland, which means
they represent the point of
contact for businesses and/or
authorities of another Member
State for the free movement in
harmonised and non (or
partially) harmonised sectors
under the mutual recognition.
National Authority National Board of Trade, The National Board of Trade is

Sweden the Swedish governmental
agency responsible for issues
relating to foreign trade, the
Internal Market and trade
policy. They have many areas
of expertise including within
the EU internal market, and
technical barriers to trade
among others.
National Authority Ministry of Economy of the The Ministry of Economy is

Republic of Lithuania responsible for handling
government business in
various areas including the
business environment which
encompasses simplification of
rules, reduction of
administrative burden on
businesses, and export
promotion of Lithuanian
enterprises.
National Authority Ministry of Economy, Trade and The Ministry deals with
Business Environment strategic policy making,
Relations, Romania, Product regulation and implementation
Contact Point in the field of industry, mineral
resources, energy, trade,
SMEs, cooperatives and the
business sector, supporting the
internal market development
and internationalisation for
economic growth. In addition,
the ministry has a
representation function in
international fora and ensures
Romania’s compliance with
European and international
norms. The Ministry is also the
Product Contact Point
organisation for Romania.
National Authority Product Contact Point, Poland Product Contact Point Poland is
the ministry-provided
organisation responsible or
communication on behalf of the
Member State. Specifically
133
Product Contact Point Poland

represents a point of contact
for businesses exporting to
Poland and for Polish
businesses looking to export to
other European states.
National Authority Poland Product Contact Point Product Contact Point Poland is
the ministry-provided
organisation responsible or
communication on behalf of the
Member State. Specifically
Product Contact Point Poland
represents a point of contact
for businesses exporting to
Poland and for Polish
businesses looking to export to
other European states.
National Authority Department for International A governmental arm

Trade UK responsible for promoting
British trade within an
international context. The DIT
represents a point of call in
which businesses and business
associations can acquire trade
policy and trade regulation
information.
National Authority Estonian Authority Authority responsible for

organising and conducting
governmental supervision in all
the spheres of handling and
over the materials and objects,
specified in Article 1 (12) of the
FCM Regulation
134
8.7 Information sources

The Mutual Recognition Regulation
Regulation (EC) No 764/2008 of the European Parliament and of the Council, of 9 July
2008, laying down procedures relating to the application of certain national technical rules
to products lawfully marketed in another Member State and repealing Decision No
3052/95/EC
European Commission guidance documents
European Commission (2010): Free movement of goods – guide to the application of Treaty
provisions governing the free movement of goods
European Commission (2010): Guidance document: the relationship between Directive
98/34/EC and the Mutual Recognition Regulation
European Commission (2013): Commission Working Document: Guidance document. The
concept of ‘lawfully marketed’ in the Mutual Recognition Regulation (EC) No 764/2008
European Commission (2010): Guidance document: The relationship between Directive
2001/95/EC and the Mutual Recognition Regulation
European Commission (2010): Guidance Document: The application of Mutual Recognition
Regulation to prior authorisation procedures
Regulation to narcotic drugs and psychotropic substances
Regulation to food supplements
Regulation to non-CE marked construction products
Regulation to fertilisers and growing media
Regulation to articles of precious metals
Regulation to weapons and firearms
Minutes of the Consultative ‘mutual recognition Committee’
European Commission (2009): Minutes of the first meeting of the Consultative ‘mutual
recognition Committee’ held in Brussels on 4 March 2009
European Commission (2011): Minutes of the second meeting of the Consultative ‘mutual
recognition Committee’ held in Brussels on 19 November 2010
European Commission (2012): Minutes of the third meeting of the Consultative ‘mutual
recognition Committee’ held in Brussels on 30 November 2011
European Commission (2013): Minutes of the 4th meeting of the Consultative ‘mutual
recognition Committee’ held in Brussels on 7 December 2012
European Commission (2014): Minutes of the 5th meeting of the Consultative ‘mutual
recognition Committee’ held in Brussels on 6 December 2013
Communications and other Commission documents
European Commission (2007): Accompanying document to the Proposal for a directive of
the European Parliament and of the Council laying down procedures relating to the
135
application of certain national technical rules to products lawfully marketed in another

Member State and repealing Decision 3052/95/EC Impact assessment
European Commission (2012): First report on the application of Regulation (EC) No
764/2008 2008 - COM(2012) 292 final
European Commission interpretative communication of 3 October 1980, concerning the
consequences of the judgment given by the court of Justice on 20 February 1979 in Case
120/78 (‘Cassis de Dijon’)
European Commission, 4 November 2003: Commission interpretative communication on
facilitating the access of products to the markets of other Member States: the practical
application of mutual recognition
European Commission COM(1999) 299 final: mutual recognition in the context of the follow
up to the Action Plan for the Single Market - on the application of the mutual recognition
principle, based on a detailed analysis of the cases of incorrect application of mutual
recognition handled by the Commission
European Commission (2002): Second biennial Report on the Application of the Principle
of mutual recognition in the Single Market
European Commission (1999): Commission Staff Working Paper: First Report on the
application of the principle of mutual recognition in product and services markets
European Commission (1998): Document du travail des services de la Commission:
L’application du principe de reconnaissance mutuelle
European Commission (2014): Restarting the EU’s Growth Engine – A new start for the
Internal Market
Commission Staff Working Paper: Impact Assessment, Accompanying the document Draft
Proposal for a Regulation of the European Parliament and of the Council relating to
fertilising materials and fertiliser additives, and repealing Regulation (EC) No 2003/2003
(draft, unpublished)
Evaluation of the Application of the Principle of mutual recognition in the Field of Goods,
European Commission, Directorate-General for Internal Market, Industry,
Entrepreneurship and SMEs, 2015
Commission website on mutual recognition
http://ec.europa.eu/growth/single-market/goods/free-movement-sectors/mutual-
recognition/index_en.htm
Commission website on IMI
http://ec.europa.eu/internal_market/imi-net/index_en.htm
Online public consultation on the revision of the Mutual Recognition Regulation
http://ec.europa.eu/growth/tools-databases/newsroom/cf/itemdetail.cfm?item_id=8831
Public consultation on mutual recognition - Summary of results – European Commission,
DG GROW
Content_Export_MR-Business_MR-Business_Anonymou.xls exported on 3.10.2016 (data

collected in public consultation framework)
Content_Export_MR-Consumer-Citizens_MR_Consumers_Anonymou.xls exported on
3.10.2016 (data collected in public consultation framework)
Content_Export_MR-Authorities_MR-Authorities_Anonymou.xls exported on 3.10.2016

(data collected in public consultation framework)
136
More and better mutual recognition - Problem definition (Draft) – European Commission,
DG GROW, 20.09.2016
More and better mutual recognition – Policy options (Draft) – European Commission, DG
GROW, 20.09.2016
Minutes of the conference ‘Single market for products: fresh ideas to unleash the full
potential’, Brussels, Friday 17 June 2016 – European Commission, DG GROW
Relevant literature
BIS publication (2011), The economic consequences for the UK and the EU of completing
the Single Market
Brenton, P., Sheehy, J., and Vancauteren, M. (2001), ‘Technical Barriers to Trade in the
European Union: Data, Trends and Implications for Accession Countries’, Journal of
Common Market Studies, 2001, No 39, p. 241
Business Europe (2014), Position paper: Evaluation of the application of the principle of
mutual recognition mutual recognition principle of goods
Christine, J. (2013), The principle of mutual recognition mutual recognition principle in EU
law
Commission report COM(2001)736 of 7 December 2001, ‘Economic Reform : Report on the
functioning of Community product and capital markets’
Commission Staff Working Paper SEC(2001)1993 of 7 December 2001, ‘Statistical and
technical annex to the ‘Report on the functioning of Community product and capital
markets’
‘Technical barriers to trade’, Volume 1 of Sub-series III (‘Dismantling of Barriers: Technical
Barriers to Trade’), Single Market Review, Luxembourg, 1998
Copenhagen Economics (2012): Delivering a stronger single market
Correia de Brito, A. and Pelkmans, J. (2012), Pre-empting technical barriers in the single
market, Brussels, CEPS, CEPS Policy Brief no. 277, July
CSES (2014), Evaluation of the Internal Market Legislation for Industrial Products
Delimatsis, P., (2010), "Thou shall not… (dis)trust": codes of conduct and harmonisation
of professional standards in the EU, Common Market Law Review, Vol. 47, 4, August, pp.
1049 - 1087
European Court of Justice: Case C-171/11 – Reference for a preliminary ruling of 30.3.2011
European Court of Justice: 2014/648/CY
Felbermayr, G. and Jung, B. (2008), Sorting it out: technical barriers to trade and industry
productivity, FIW Working paper no. 14, Vienna (WIFO, WIIW, WSR)
Galli, G., Pelkmans, J. eds, Regulatory reform and competitiveness in Europe, Vol. 1, pp.
238 – 291 (E. Elgar,Cheltenham)
HM Government UK (2013), Review of the Balance of Competences between the United

Kingdom and the European Union - The Single Market
Hagemejer, J. and Michalek Jan J. (2004), ‘The Significance of Technical Barriers to Trade
for Poland and other CEECs Acceding to the EU: Reconsidering the Evidence’, Emergo –
Journal of Transforming Economies and Societies, 2004, v. 11, No 1, p. 36
137
Ilzkovitz, F., Dierx, A., Kovacs V. and Sousa. N. (2007), ‘Steps towards a deeper economic
integration: the internal market in the 21st century’, European Economy, Economic Papers,
No. 271. January 2007
OECD (2013), International Regulatory Co-operation: Addressing Global Challenges, OECD
Publishing
OECD (2013), Trends in international regulatory co-operation, in International Regulatory
Co-operation: Addressing Global Challenges, OECD Publishing
Orgalime (2014), Position paper: Suggestions for improving the application of the mutual
recognition principle
Pelkmans, J., (2003), mutual recognition in Goods and Services: An economic perspective
Pelkmans J., (2007), mutual recognition in goods, on promises and disillusions, Journal of
European Public Policy, Vol. 14, 5, August, pp. 699 – 716
Pelkmans, J., (2010), mutual recognition: rationale, logic and application in the EU internal
goods market
Pelkmans, J., (2011), the case for ‘more Single Market’
Pelkmans, J., (2012), mutual recognition: economic and regulatory logic in goods and
services, in: T. Eger & B. Schaefer, ed.s, Research Handbook on the economics of EU law,
Cheltenham, E. Elgar
Pelkmans, J., Correia de Brito, A. (2015), Transatlantic MRAs: Lessons for TTIP?, CEPS
Special Report, no. 101, March, Brussels
Pelkmans, J., Labory S., Majone, G. (2000), Better EU regulatory quality: assessing current
initiatives and new proposals
Pelkmans J., Correia de Brito, A., Enforcement in the single market, Brussels
Rodrigue, J.P. et al. (2016), The Geography of Transport Systems, Routledge

Schmidt, S. (2008), mutual recognition – a new mode of governance
List of references to documents relating to the overall methodology
Better Regulation guidelines and toolbox http://ec.europa.eu/smart-
regulation/guidelines/toc_guide_en.htm
Inception Impact Assessment (Achieving more and better mutual recognition for the single
market for goods), European Commission, DG GROW, 2016 http://ec.europa.eu/smart-
regulation/roadmaps/index_en.htm
Statistics and databases
Eurostat, Structural business statistics (SBS), available at:
http://ec.europa.eu/eurostat/web/structural-business-statistics;
Eurostat, Prodcom Statistics, available at:

http://ec.europa.eu/eurostat/web/prodcom/overview;
Eurostat, EU trade since 1988 by Standard International Trade Classification (SITC),

available at: http://ec.europa.eu/eurostat/web/international-trade-in-
goods/data/database;
Eurostat, Intra and Extra-EU trade by Member State and by product group, available at:
http://ec.europa.eu/eurostat/en/web/products-datasets/-/EXT_LT_INTRATRD;
138
Eurostat, Sold production, exports and imports by PRODCOM List (NACE Rev. 2) – annual
data (DS-066341) and the Total production by PRODCOM list (NACE Rev. 2) – annual data
(DS-066342), available at: http://ec.europa.eu/eurostat/web/prodcom/data/database,
following the sequence: Statistics on the production of manufactured goods (prom) >
Detailed data by PRODCOM list (NACE Rev. 2) (prom2).
Technical Regulations Information Systems database, available at: http://ec.europa.eu/growth/tools-
databases/tris/en/search/
139
HOW TO OBTAIN EU PUBLICATIONS
Free publications:
• one copy:
via EU Bookshop (http://bookshop.europa.eu);
• more than one copy or posters/maps:
from the European Union’s representations (http://ec.europa.eu/represent_en.htm);
from the delegations in non-EU countries
(http://eeas.europa.eu/delegations/index_en.htm);
by contacting the Europe Direct service (http://europa.eu/europedirect/index_en.htm)
or calling 00 800 6 7 8 9 10 11 (freephone number from anywhere in the EU) (*).
(*) The information given is free, as are most calls (though some operators, phone boxes or hotels may
charge you).
Priced publications:
• via EU Bookshop (http://bookshop.europa.eu).
Priced subscriptions:
• via one of the sales agents of the Publications Office of the European Union
(http://publications.europa.eu/others/agents/index_en.htm).
ET-01-18-118-EN-N
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Study on the costs and

benefits of the revision of the

Written by EY with the support of Tech4i2, Time.lex, and CEPS

Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs

Study on the costs and benefits

Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs

BIS Business Innovation & Skills

Le principe de reconnaissance mutuelle, énoncé dans les articles 34 et 36 du TFUE, s'applique

Des études précédentes soulignent que le fonctionnement actuel de la reconnaissance

Dans ce contexte, la Commission a identifié la nécessité de réviser l'application du principe

L'analyse combine différentes méthodes et outils de recherche documentaire et sur le terrain,

3 Et sous réserve de l'article 28 du Traité sur le fonctionnement de l'Union européenne (TFUE).

Produktionssektor) miteinander kombiniert. Der Jahresdurchschnittswert der Intra-EU-

Die kostenbezogene Tragweite einer sub-optimalen Funktionsweise der gegenseitigen

1.1 Objectives and scope of the Study

The scope of the study was defined as follows:

 Legislation: Regulation (EC) 764/2008 (‘the Mutual Recognition Regulation’) laying

1.2 Structure of the report

 The classification of harmonised, non-harmonised (or partially) harmonised sectors

2.1.1 Methodology for the market analysis

 Step 1. Identification of EU legislative acts introducing harmonised product rules (i.e.

 Annex 8.1 presents the list of harmonised, non-harmonised (or partially)

Box 1: Food and drink products

 Manufacture of rubber and plastic product;

2.1.2 Methodology for the estimation of the magnitude of the problem

2.1.3 Methodology for case studies

 Interviews to collect information on the implementation of mutual recognition in the

2.1.4 Methodology for the assessment of the policy options

The following steps have been performed:

2.2 Tools for data collection

2.2.1 Desk research

2.2.2 Field research

 Providing an understanding of stakeholders’ perceptions of the policy options

2.3 Main limitations and mitigating measures

Task/activity Limitation Mitigating measure

Task/activity Limitation Mitigating measure

 Limited availability of data

3 THE STATE OF PLAY OF MUTUAL RECOGNITION

3.1 Size of the market for mutual recognition

3.1.1 Analysis at the sectorial level

Dimension Indicator Definition

With regard to the sectorial analysis it is important to underline that:

Non (or partially) Harmonised Manufacturing Non (or partially)

Total % Total % (a)/(b)

Micro 43.158 12.8% 104.026 7.3% 3.0%

Large 136.272 40.5% 754.117 53.2% 9.6%

336.485 100.0% 1,417.17 (b) 100.0% 23.7%

Micro 772,730 128,872 11.1% 319,955 5.6% 2.3%

Large 3,629 495,825 42.8% 3,344,326 58.8% 8.7%

Non (or part)

1,011,835 1,158,016 100.0% 5,690,019 (b) 100.0% 20.4%

3.1.2 Analysis at product level

Indicator Definition Geographical Timeframe Source

Value of intra EU This indicator provides the EU-28 2008 - EU trade

Value of production This indicator provides the EU-28 2008 - PRODCOM

Value of extra EU This indicator provides the EU-28 2008 - PRODCOM

Sectors NACE DIVISION

Manufacture of textiles, apparel, leather and related products 13 to 15