Reform of the General Product Safety Directive

Chris Hodges considers the proposed revisions

Background to the Directive

The GPS Directive came into effect on 29 June 1994. Every two years, the Commission is required to submit a report to the European Parliament and the Council on the implementation of the Directive (Article 15). The Commission must also report on the experience acquired, together with appropriate proposals for amendment, such that four years after 29 June 1994, the Council has to decide whether to adjust the Directive (Article 16). The Commission has not in fact submitted a report on the experience of the Directive, although two studies are being undertaken during 1999. Directorate-General XXIV of the Commission has now produced a Discussion Paper on proposals to reform the Directive.1

The overview of the Directive is as follows. It
places obligations on producers and distributors of consumer products. The following are the main obligations on producers:

• To place only safe products on the market.
• To provide consumers with relevant information to enable them to assess the risks inherent in a product throughout the normal or reasonably foreseeable period of its use.
• To adopt measures commensurate with the characteristics of their products, to enable them to be informed of risks which these products might present.
• To take appropriate action including, if necessary, withdrawing the product from the market to avoid risks.

Some or all of the obligations under the GPS Directive do not apply insofar as a Directive is covered by other rules of Community law governing the safety of the products concerned: this interface between vertical, sectoral product regulation and the horizontal provisions of the GPS Directive has given rise to considerable confusion.

There is a considerable variation in the laws of Member States which transpose this Directive.2 Broadly, some Member States have adopted previous legislation or had comprehensive previous vertical legislation on foodstuffs and consumer products which remained largely undisturbed, and others have created new legislation which uses largely identical wording to the Directive and might adopt a vertical approach to consumer products (e.g. Austria, Italy, Denmark, Ireland and Belgium). There are instances in which national legislation differs from the Directive, either by omitting parts of the Directive or by going beyond it. Some important divergences are the exclusion of certain product sectors, exclusion of immovable property, variation in obligations imposed on producers and distributors, exclusion of a power of national authorities to withdraw products from the market, and other variations in enforcement powers. Notable instances where some national laws give a higher degree of protection to consumers than that granted by the Directive include the inclusion of services, the imposition of heavier obligations on distributors, the imposition of an obligation to inform the authorities of risk posed by products, and the power to prohibit exports of products or to require the refunding, repair or replacement of products.
DGXXIV’s reform proposals

The Discussion Paper states that the Directive does not need major reshaping, but only reinforcement, clarification and improvement of particular aspects. Nevertheless, DGXXIV is proposing over 20 amendments to the Directive. The basis for these amendments is said to be experience gained by Member States, standardisation bodies and representatives of consumers: these views have not been published so cannot be evaluated. The Commission has also attracted criticism for proceeding with proposed amendments to the Directive in advance of completion of an assessment of the implementation and functioning of the Directive, which has yet to be published. DGXXIV also asserts that “an overall, systematic, detailed and quantified appraisal of the functioning of the Directive and of its amendments, including their cost-benefit analysis, would not be an appropriate analytical approach in this case”. Many would disagree with that statement. The following summary groups some of these proposals together according to their subject matter.

Scope of the Directive and overlap with other Directives

DGXXIV had initially proposed that the Directive should apply to services. It has now concluded that inclusion of services in this Directive would be premature and should be dealt with under separate, specific initiatives. However, it is proposed to extend the Directive by including products intended to be used in the context of services provided to consumers, as far as those products have a direct relevance for consumer health and safety. The meaning of this is unclear.

The Directive currently covers products which are intended for consumers or likely to be used by consumers. It is proposed that this should be extended to include products which were not originally intended for or likely to be used by consumers, but which are supplied to consumers or used by them. Laser pens developed for the consumer market are mentioned as an example. Industry finds this proposal difficult, since it does not know whether a given product which is intended for industrial use might end up being used by consumers. Accordingly, industry is unable to arrange for appropriate product information, or post-marketing surveillance systems, or recall systems.

It is proposed to clarify the issue of the overlap between GPS obligations and vertical, sectoral Directives. This provision is not objectionable and clarifies the existing understanding. There are various examples of confusion in practice and differences in national laws on the overlap issue which do need to be clarified.

Conformity assessment criteria: inclusion of harmonised standards

In deciding whether a product is safe for the purposes of this Directive, Article 4 specifies a hierarchic order of national standards transposing European standards, Community technical specifications, national standards, codes of good practice, state of the art and technology, and the safety which consumers may reasonably expect. This rather generalised approach gives rise to uncertainty. The Commission recognises that “it will clearly not be possible to introduce in the Directive itself detailed safety requirements covering in a sufficient manner all the products falling into its wide scope”. Neither could it include specific “essential requirements” for the various product categories and risks which are covered, as is the case in “new approach” Directives. It therefore proposes to establish a procedure for granting standardisation mandates under this Directive so as to produce harmonised standards which have legal status, possibly including presumption of conformity, under this Directive. It is recognised that such standards could not be prepared quickly and, as an interim solution, certain Community technical specifications might be adopted.

The precautionary principle

The definition of what is a safe product currently includes the statement that a product should not present any risk, or only the minimum risks compatible with its use considered as acceptable and consistent with a high level of protection for the safety and health of persons, under normal or reasonable foreseeable conditions of use. The Commission believes that decisions have sometimes to be taken in the absence of complete, definitive and quantitative scientific knowledge about the risks posed by a product. In such cases, risk management decisions must be taken in a situation of scientific uncertainty (the example of toys containing phthalates is given). In order to overcome this problem, the Commission proposes to add that there should be taken into account the precautionary principle. No proposed definition of a precautionary principle is included, so the meaning and relevance of this addition is unclear. The Commission merely says that the principle is to be applied in order to prevent potentially serious risks even in the absence of full scientific knowledge.

The precautionary principle has evolved within the Commission’s response to the BSE crisis in the late 1990s in order to guide the response of regulatory authorities in deciding what action to take in response to a possible post-marketing safety issue. In contrast, the current proposal would be to incorporate the precautionary principle within the pre-marketing assessment of safety. It is quite unclear how this would work.

The introduction of the precautionary principle creates uncertainty over the pre-marketing standard of safety which is to applied. The level of safety on which this Directive is based is “a high level of protection” of health and safety (Article 2(b)) which, as the first preamble makes clear, is based on the legal requirement in Article 95 (formerly 100a) of the EC Treaty. The inclusion of the precautionary principle seems to alter that level of safety by clearly altering the definition of safe product in Article 2(b). If that level of safety were not intended to be altered, there would be no point in including the reference to the precautionary principle. But that level of safety cannot legally be altered as it is specified by Article 95. Furthermore, that level of safety is also required in all other sectoral Directives made under Article 95 (such as all New Approach Directives). If the precautionary principle were to be included in the GPS Directive, thereby altering its level of safety, there would be inconsistency between the levels of safety required under the GPS Directive and New Approach Directives. This would be an impossible result.

Moreover, there is an inherent conceptual contradiction between the existing definition of safety in the GPS Directive in terms of minimum risk and the application of a precautionary principle. The current definition assumes that risks have been identified, assessed and found to be acceptable and consistent with a high level of protection. In contrast, the precautionary principle assumes that the level of risk is unknown. Whatever the theoretical incompatibilities of approach here, it is clear that the proposed inclusion of the precautionary principle in the definition of a safe product is intended to be restrictive. It may be that significant numbers of products which are regarded as being acceptably safe would fail the precautionary principle. Considerable further thought needs to be given to these issues.

On the other hand, the Directive would be amended to clarify that where a European standard or technical specification has been applied to a product, it should be deemed safe as far as the aspect covered by the standard or technical specification. It is proposed that the Commission, acting together with a new advisory committee of member states representatives, may establish guidelines for the assessment of risks posed by certain products. It is not clear why a new committee should be needed: the Directive already provides for one committee of representatives of member states, albeit limited to acting in emergency situations (Article 10).

Market surveillance: strengthening of Member States’ powers

The Commission believes that there are serious weaknesses in market surveillance under this Directive. The Commission criticises the empowerment by Member States of competent authorities as being in some cases “weak, insufficient or ineffective”. There is also an absence of formal requirements for arrangements for collaboration between market surveillance authorities, which should be structured and systematic. “The market is unified but the surveillance is fragmented”. The Commission is seeking to establish comparable levels of performance and proceed on the basis of equivalent principles and approaches.

Some of the larger member states have had product safety regulation for some years prior to the Directive and therefore have well-established legal and practical mechanisms. On the other hand, other member states, particularly those of southern Europe, have very limited central or local structures, budgets or manpower for consumer product safety, surveillance and enforcement. By increasing the obligations on member states under this Directive, DGXXIV hopes to force Governments to provide greater resources for this task.

The Commission proposes to expand Articles 5 and 6 to include the following elements representing the establishment of a European Product Safety Network:

• a detailed definition of the tasks, powers, working procedures and organisation of market surveillance competent authorities;
• a requirement for adequate human, technical and financial resources to be allocated, based on a review of tasks to be performed and a definition of objectives to be achieved;
• implementation by market surveillance authorities of structured management systems including auditing procedures and working procedures;
• establishment of sectoral surveillance programmes with yearly updating, and publication of yearly reports on surveillance activities, findings and results;
• implementation of procedures to receive, consider, follow-up and answer complaints from consumers and other stake holders;
• exchange of information between Member States on surveillance activities, test programmes and test results;
• joint surveillance projects between surveillance authorities;
• appointment of market surveillance contact points.

It is also proposed that member states have the responsibility of imposing effective, proportional and dissuasive sanctions where producers or distributors fail to comply with the Directive. Member states are to have the necessary powers and take the necessary action in accordance with the degree of risk. The power of a member state to organise withdrawal of a product is to be clarified so that it can be taken in relation to a product type and to extend to the recall of products already sold and destruction of relevant products. There are extensive proposals in relation to the practical organisation of market surveillance, including definition by member states of precise tasks, organisation and powers of their authorities, establishment of management systems including quality assurance for their operation, adoption of annual sectoral surveillance programmes by product categories and/or risks and annual reports. Provisions are also proposed on collaboration between market surveillance authorities of the member states.

The “safeguard clause” procedure for taking emergency action against unsafe products (Article 8) is to be slightly simplified, and it is proposed to ensure that information on measures taken by a member state is rapidly provided to the other member states, as well as any modifications to them, since there is a communication gap and heavy administrative burden on the Commission. The Article 7 procedure is regarded as difficult to manage: for the period 1994/98 only 27% of notifications under Article 7 reached the last stage of the procedure. Voluntary measures or agreements should be notified under the RAPEX system, which would also have improved follow-up procedures and more effective and efficient practical arrangements. The possibility of participation in the RAPEX system by non-EEA members is proposed.

New obligations on producers and distributors

It is proposed that when producers or distributors discover, or are informed of, risks which are presented by the products which they supply, they shall immediately notify the member states’ authorities. Some sort of similar obligation already exists in Austria, Belgium and Finland, which extends to informing of any voluntary measures taken to deal with the risk. Further, producers and distributors are to be obliged to collaborate, within the limits of their respective activities, with the competent authorities on action taken in order to avoid the risks posed.

The Commission makes the simple statement that experience has shown that changes in the perception of risk associated with a consumer product occur quite often but the authorities are not always informed of producers’/distributors’ findings and measures, which limits the possibility for the authorities to make the necessary checks on similar products and exchange the relevant information with other Member States and the Commission.

These proposals would establish an enormous and costly bureaucracy for consumer products at member state level. No evidence has been produced that there is a need for such an enormous increase in regulatory involvement, particularly on a cost-benefit basis. These proposals go way beyond the stated objective of achieving a level playing field amongst national surveillance authorities.
This obligation would also impose on producers and distributors an obligation to carry out an exhaustive risk analysis on a product and to repeat it throughout its entire life. No such regulatory obligation exists at present and this would constitute a massive increase in cost. A producer or distributor could never be sure that every risk had been identified and would constantly need to inform the authorities of even minor or potential risks. There would be no scope for the application of common sense to whether a potential risk which might have been postulated by one individual was in fact worthy of further consideration.

The reality of the situation is this. Risks are inherent in the use of each and every product. Producers and distributors constantly receive post-marketing information which fine-tunes their knowledge and understanding of the risks involved. It is only when there is a significant increase in risk that action needs to be taken, whether by an improvement in the design or production of the product or change in its labelling/warnings. These amendments are undertaken regularly within industry and the involvement of competent authorities is simply not required. The current proposal would mean that every single new piece of information about product safety would need to be communicated to the competent authorities. This would be a continuous task involving huge cost and massive bureaucracy, both amongst producers, distributors and authorities. It is simply not justified.

The Commission also proposes that the Directive should be amended to improve an obligation on producers and distributors to ensure appropriate co-operation, within the limits of their responsibilities, with market surveillance authorities, so as to avoid risks posed by the products they supply. It is also proposed that recall of products already sold should explicitly be included as an obligation within the Directive. Recall might lead to replacement, repair or refund, as appropriate.

Emergency enforcement action

It is proposed to amend the current criterion for taking emergency action from “serious and immediate risk” to the existence of “serious risk requiring immediate intervention” from a product or product type in relation to the health and safety of consumers (Article 9). This is because action could not be taken for serious but longer term risks, such as toys containing phthalates.
The Commission believes that the system for exchange of information amongst Member States (Article 8) has not worked well, with only 182 notifications received from Member States in the first four years and reactions made by Member States in only 50% of 47 notifications in 1998. It is proposed to strengthen the requirements for information about the danger and description of the product, its origin and manufacturer and to provide for direct transmission between Member States. It is also proposed that the conditions for adopting a Community-wide emergency measure (which has never been adopted so far) be reformulated.
It is proposed to add that temporary measures “shall be intended to ensure a high level of consumer health and safety protection in the light of the precautionary principle”. As discussed above, the precautionary principle is not defined and its application is quite unclear.

Confidentiality

The Directive currently states that member states and the Commission are required to ensure that their officials and agents do not disclose professionally secret information (Article 12). It is proposed to add that professional secrecy may not be invoked when it limits the effectiveness of market surveillance activities or prevents the information on consumers on the risks and characteristics of products which have been found to be dangerous and on the measures taken concerning those products (Article 12).

Ban on exports

It is proposed that exports from the Community to third countries of dangerous products shall be prohibited. Such a power already exists in Austria, Belgium, France and Sweden. And under Directives 87/357/EEC (products which appear to be other than they are) and 92/52/EEC (infant formulae). The Commission accepts that the safety of products intended for industrial or professional use may depend significantly on the context in which they are used, but asserts that it is less evident how a consumer product which is dangerous in the EC would be safe in a third country.

This is, however, objectionable in principle as an unjustified attempt to impose European standards of safety on other governments and cultures. The cost-benefit balance, which is inherent in any risk assessment, may be quite different for the same products in different parts of the world. Acceptability and product information (especially warnings) may, for example, vary considerably. Differences exist on requirements for simple measurements or, for example, fireworks. A simple ban would be harmful to European industry and would usurp the function of foreign regulators.

Conclusion

It is clear that these proposals by DGXXIV represent very extensive and significant proposals for producers and distributors. Strenuous lobbying should be undertaken in order to present the views of producers, distributors and insurers to the Member States and the Commission on these proposals.