The EU was built on red tape. Now it wants to slash it.

BRUSSELS ― For decades, the European Union loved to regulate. Now, it wants to do the opposite.
Where once, the “Brussels Effect” saw the EU set laws and standards the rest of the world couldn’t help but follow, soon there will be a European commissioner for slashing red tape.
Commission President Ursula von der Leyen’s latest top job appointments signal she wants to pivot away from the bloc’s traditional focus on market rules, to focus on reviving the EU’s lackluster economic growth instead. The thinking is that the former might impede the latter.
At top levels of the EU, there’s recognition that being a first-mover regulator doesn’t necessarily translate into being a good one. This is most obvious in the digital sphere where rules like the Digital Services Act and the AI Act are seen as not having helped — and perhaps actively hindered — the development of Europe’s comparatively stunted digital economy.  
Mario Draghi, the former head of the European Central Bank tasked with developing a strategy to revive Europe’s economy, pointed out that since 2019, the EU had passed 13,000 pieces of legislation, compared to some 3,000 in the United States. 
Meanwhile, Europe’s economy has seen its fortunes gradually decline. The gap between the size of the EU’s economy and that of the U.S. is now 30 percent, from 15 percent in 2002. In the meantime, America has dominated the digital sphere, while Europe only has four of the top 50 largest technology companies. 
Von der Leyen says she takes the issue of overregulation seriously. In her start-of-mandate mission letters to commissioners, she included a section titled “Making Europe simpler and faster.” In it, she calls for a 25 percent reduction in reporting obligations for businesses, which goes up to 35 percent for small- and medium-sized enterprises.  
“You will ensure that existing rules are fit-for-purpose and focus on reducing administrative burdens and simplifying legislation,” she wrote. 
As recently as last year, the Commission president was bragging about EU legislation, claiming that the EU’s AI Act was “already a blueprint for the whole world.” 
Politics as well as economic realities have changed that. 
Her center-right European People’s Party group heaping pressure on her was key. Earlier this year von der Leyen began rowing back some of her landmark policies: In agriculture, she watered down the Farm to Fork Strategy, a push for less-intensive agriculture. And on the climate front, she backpedaled on what was her landmark Green Deal package. 
Brussels has also suffered embarrassments on the tech front after big players like Meta and Apple said that they would not be launching products with AI features, citing uncertainty around EU legislation. This culminated in a letter sent by a group of companies that includes Meta, Spotify and Ericsson, that said that “in recent times, regulatory decision-making has become fragmented and unpredictable” and that the EU risked missing out on AI technology that could “turbocharge productivity.”
Even French President Emmanuel Macron, usually a supporter of a muscular European response to U.S. supremacy, attacked the AI Act as anti-innovation.
Europe hoped to tame America’s Big Tech might — first in the courts with antitrust cases, and then through legislation, according to Cristina Caffarra, co-founder of the Competition Research Policy Network, an academic platform for the study of competition policy. That strategy failed. 
Perversely, legislation like the General Data Protection Regulation (GDPR) ends up burdening small local players more than the competition. “In Brussels no one wants to talk about GDPR anymore, but the reality is it worked against the interest of European firms,” she said. 
The new approach sketched out in von der Leyen’s mission letters is more carrot than stick. 
Details are still sparse. They’ll become clearer once the Commission unveils its Clean Industrial Deal. But what’s clear is that there will be less of an emphasis on regulation, and more on investment — whether through subsidy programs known as Important Projects of Common European Interest (IPCEIs), a recently announced competitiveness fund, or through a reform of public procurement rules. 
The structure of the Commission itself has changed. Commissioner titles cover overlapping clusters. Spain’s Teresa Ribera will look after competition and green issues. Henna Virkkunen’s mandate covers both the more economic “tech sovereignty” together with democracy and security.  
The idea seems to be less personal fiefdoms for each commissioner and instead an attempt at being joined-up to help revive the moribund economy. 
This approach isn’t without risks. Productive investment isn’t typically seen as an EU strength, with the Horizon research program a case in point. Many economists are suspicious of industrial policy precisely because it can allow for a corporate free-for-all at the expense of the public purse. 
There are already signs things aren’t working out. Construction of a microchip factory in Germany that was meant to be a cornerstone of the EU’s Chips Act was put on hold after its owner, Intel, ran into financial trouble. 
Rolling back unnecessary regulation — and therefore making it easier to do business in Europe, is another plank in this plan to accelerate the economy. 
Valdis Dombrovskis was reconfirmed as economy commissioner with an added responsibility: “implementation and simplification.” The biggest risk is the Commission ends up creating more red tape by trying not to. There’s precedent for this. In the U.S., the Paperwork Reduction Act is seen as having increased the amount of paperwork required of civil servants. 
Then there’s the fact that drafting regulation — with all the attendant strategic dialogues, impact assessments and consultations — has been at the very heart of the EU project. The Commission runs on it. 
Fredrik Erixon, director of the think tank European Centre for International Political Economy (ECIPE), said that there had been similar pushes to roll back bureaucracy in the past, and that they’d achieved few results. 
“If you truly want to simplify and cut regulations in Europe, you are going to become the most unpopular politician in town, and this isn’t a career that Dombrovskis is about to set out for himself,” he said.