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News Release from: Federation of Small Businesses
Edited by the Manufacturingtalk Editorial
Team on 18 August 2006
Business objects to GBP 37bn EU
transport plan
The Federation of Small Businesses has criticised EU draft Regulation on enhancing supply chain security - it will cost SMEs some EUR 55 billion (GBP 37 billion) - with no clear benefits.
The Federation of Small Businesses (FSB) has 'hit out' at a European Union draft Regulation on enhancing supply chain security The proposal, should it be approved, will cost small and medium-sized enterprises (SMEs) across all sectors EUR 55 billion (GBP 37 billion) without any clear benefits
This article was originally published on Manufacturingtalk on 6 Jan 2004 at 8.00am (UK)
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The European Commission's proposal aims to protect freight transport by road, rail and inland waterways against terrorist attacks.
The proposal is that member states should be obliged to create a 'quality label' for security.
Firms can subsequently be granted the status of 'secure operator' but, to be recognised as such, they must prove that there are no security gaps in their areas of responsibility.
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This will include screening employees and costly audits.
The proposal foresees a voluntary phase running from 2006-2008, after which it would become compulsory.
The regulation would apply not only to goods coming in to the EU from abroad or travelling between EU member states but to items being transported within one country.
Therefore, even small firms taking their products from Leeds to London would be affected.
It would also affect businesses across all sectors from manufacturing to retail because each is a step in the supply chain from factory to shop.
However, the passenger transport system is the weak link in the chain, as demonstrated in the past and again in recent days.
The business community is keen to play its part in fighting terrorism but does not support disproportionate action that will have a huge impact for little return.
This is even more so when law-makers do not have the courage to propose a similar draconian system on passenger transport.
It is due to be discussed on the fourth of September by the Council of Ministers where the FSB hopes it will be rejected.
However, the proposal is being fast-tracked and the FSB fears that this will increase the likelihood of it being poorly implemented, hitting businesses very hard.
Tina Sommer, FSB European Affairs chairman, said: "When British businesses, especially manufacturers, are competing against firms from the Far East or the US the last thing they need is disproportionate EU legislation like this as a millstone around their neck." She added: "The FSB is very concerned that the struggle to defeat terrorism, which we all of course support, is being misused to create a heavy-handed and bureaucratic system that will put many people out of work without actually increasing security." She noted: "A founding principle of the EU is the free movement of goods and people.
This proposal threatens to put a huge number of firms out of business, put up costs to the consumer and increase 'red tape' on other companies.
It also directly contradicts this founding principle of the EU with no tangible benefit.
It must be dropped immediately." * Background notes.
1 - The cost estimate of GBP 37 billion is for the whole of the EU and comes from the European Commission's own impact assessment of their proposal.
The assessment conceded that this measure will create a glass ceiling to business growth.
2 - The assessment found that the scheme would require an audit agency with an audit costing a business an estimated EUR 800 (GBP 590) per day.
The scheme would also cost each firm in the supply chain a one-off 'start-up' fee of EUR 135,000 (GBP 91,000) and a further yearly cost of EUR 131,000 (GBP 88,000).
This is unsustainable for many small firms.
3 - The FSB is concerned that this proposal is looking at business simply because the electorate would not stand for similar measures in public transport, where the risk has historically been higher.
4 - The UK Government is also contesting whether this is an EU competence or whether, in law, it should be reserved to member states for action.
5 - A more in-depth briefing of the proposal's aims and intentions, the FSB's concerns and potential costs to businesses can be obtained by e-mailing press@fsb.org.uk.
6 - The FSB is Britain's biggest business organisation with 195,000 members.
It exists to protect and promote the interests of the self-employed, and all those who run their own business.
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