Select Committee on European Scrutiny Second Report


COM(00) 639

Draft Council Directive modifying Council Directive 94/25/EC on the approximation of the laws, regulations and administrative provisions of the Member States relating to recreational craft.

Legal base: Article 95 EC; co-decision; qualified majority voting
Department: Trade and Industry
Basis of consideration: Third SEM of 15 October 2001
Previous consideration: HC 28-iv (2000-01), paragraph 5 (24 January 2001), HC 28-xii (2000-01), paragraph 2 (25 April 2001) and HC 152-i (2001-02), paragraph 21 (18 July 2001)
To be discussed in Council: 29 October 2001
Committee's assessment: Politically important
Committee's decision: Cleared


15.1 Council Directive 94/25/EC[41] lays down design and construction standards for recreational craft, and was originally adopted as part of the creation of the Single Market. However, a number of Member States have since introduced national measures to control exhaust and noise emissions from such craft, and this has given rise to concern that these might constitute an obstacle to free trade. As a consequence, the Commission put forward in October 2000 proposals to harmonise within the Community provisions on exhaust and noise emissions from engines intended to be installed on recreational craft.

15.2 The justification for these proposals is set out more fully in our predecessors' Reports of 24 January and 25 April 2001, but in essence they would set a range of exhaust emission requirements for carbon monoxide, hydrocarbons and nitrogen oxides depending on the type of engine, with maximum noise levels related to engine power also being set. They also contain conformity assessment procedures, similar to those in other Community emissions legislation, and, in order to reduce the cost involved, particularly for small and medium-sized enterprises (SMEs), would include a "reference boat" concept, so as to avoid boat builders having to test each and every boat or engine.

15.3 Although the UK considered that there were strong grounds for adopting these measures in order to prevent the break-up of the single market for recreational and personal watercraft, there were concerns that the requirements, particularly on noise emissions, could impose disproportionate costs on the SME boat builder, and that a traditional boat builder not following the same design each time might need to have each craft tested and certified by a third-party conformity body. A requirement on the Commission to report on "in use" compliance testing was a further cause for concern, as it was thought likely to result in craft being subject to annual tests similar to existing vehicle testing.

15.4 The Minister concerned — the Parliamentary Under-Secretary of State for Science at the Department of Trade and Industry (Lord Sainsbury of Turville) — provided on 20 April 2001 a detailed Regulatory Impact Assessment as regards engine manufacturers (who will be responsible for meeting the exhaust emission requirements, and, in the case of outboard-engined craft, the noise requirements), craft manufacturers (who will be responsible for meeting the noise requirements for boats powered by stern drive and inboard engines), and boat owners.

15.5 As our predecessors noted on 25 April, this indicated that the main costs were likely to fall on boat owners, with the engine manufacturers and the larger boat builders being reasonably confident of meeting the new conditions without undue difficulty. However, in the case of the 180 or so SME boat builders, the Assessment also said that, whilst most were "hopeful" that they could meet the limits with little design modification, a more detailed examination suggested that as many as one-fifth of small and medium boat builders would be at serious risk of closure as a result of the extra costs and limitations imposed by the proposal. In view of this, our predecessors concluded that it would be premature to clear the proposal, and said that they would like the Government to keep them informed of the progress of the negotiations on it.

15.6 As a result, the Minister provided with his Second Supplementary Explanatory Memorandum of 5 July 2001 a Regulatory Impact Assessment which sought to address the impact of the proposal on small and medium-sized boat builders. This confirmed that most considered that the cost of certifying noise tests could not be passed on to customers, and that more than one-third expected this to reduce their sales by anything between a few percent and one half (of which some might go to the bigger builders). Furthermore, as a result of this and ongoing costs, 17% feared they would be put out of business, and a further 14% expected to have to leave the industry. Concerns were also expressed that a requirement to install engines according to manufacturers' instructions might limit the range of new design options offered to customers. The Minister commented that these costs, and those falling on engine builders, would be "considerable", and that the UK negotiating strategy was to reduce these as far as possible.

15.7 In our Report of 18 July 2001, we said that, in view of what the Minister had said, and of the concerns expressed earlier about "in use" compliance testing, we endorsed our predecessors' view that it would be premature to clear this document. We added that we would like the Minister to keep us informed of any significant developments in the negotiations, particularly as they might affect the position on compliance testing and the viability of the small and medium-sized builders.

Third Supplementary Explanatory Memorandum of 15 October 2001

15.8 In his Third Supplementary Explanatory Memorandum of 15 October 2001, the Minister says that, as a result of further discussion, it now seems likely that the problem of traditional boat builders having to have each individual craft noise-tested (paragraph 15.3 above) can be avoided by exempting vessels which fall below a certain power/displacement ratio, set at levels which provide environmental protection but without subjecting boats with much lower noise levels to the need for expensive testing requirements. He adds that those boats still required to undergo noise tests are likely to be constructed by larger builders who will be able to spread the costs over longer production runs, and that the same is likely to apply on the gas emissions side as well.

15.9 The Minister also deals with the other point in paragraph 15.3 above about "in use" compliance tests. He says that the original interpretation of the wording of the proposal, which had led to the fears that this would involve annual testing as with vehicles, has now been clarified satisfactorily. As a result of all these changes, the estimate of the costs falling on boat builders as a result of the proposal has been halved, and there would also be major reductions in the costs falling on boat owners as a result of the above exemption and of greater flexibility in the application of the proposal to engine refurbishment. Indeed, he points out that the latter costs would be removed altogether if, as seems likely, the proposal is amended to exempt altogether the refurbishment of existing engines.


15.10 Although some of the changes mentioned by the Minister have still to be finally agreed, it does seem from the information he has now supplied that the proposal is likely to be amended to produce a better balance between the environmental benefits it provides and the costs it would impose on the smaller boat builders and on boat owners seeking to refurbish their craft. We are therefore now clearing it.

41   OJ No. L 164, 30.6.94, p.15. Back

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