Quality requirements in the EU. Financial support for certificates
Anna Ogrodnik, European Advisory Department, Ernst & Young.
Background
One of the goals of the European Union is the creation of an Internal Market, in which goods, workers, services and capital can move freely. But efforts to achieve the free movement of goods and the elimination of trade barriers (i.e. removing the customs duty and quantitative import restrictions) have not always been enough to achieve that goal. Instead, another effective way has been the harmonization of existing goods quality standards and the procedures applied in production processes across the EU. However, it is generally believed that it is the market itself that best verifies the quality of products. That is why the legislator usually intervenes only when consumer safety or the natural environment are likely to be under threat.
The obligatory safety requirements
Two examples where the maintenance of certain quality standards for goods or production processes is imposed by the legislator are the CE mark and the HACCP system.
Before 1987, provisions regarding product safety set out detailed requirements for manufacturers. However, rapid technological progress led to an ever greater number of constantly changing provisions. As a result, the Commission decided that there was a need for a new approach, which resulted in the passing of over 20 of the - so called - New Approach Directives dealing with different groups of goods (toys, yachts, medical equipment, etc.). The main feature of this legislation is that it only lists mandatory standards that products must meet in order to offer a sufficient level of protection (further technical specifications that the producers can use to ensure compliance are drawn up by the European standards bodies). The directives also introduced the CE mark, which manufactured goods must be labeled with in order to be sold in the EU. By labeling a product with the CE mark, the producer is declaring that it is safe and complies with the New Approach Directives. After accession, the CE mark must also be displayed on goods covered by the directives and sold in Poland. It will replace the Polish safety mark 'B'.
Unlike the CE mark, the HACCP (Hazard Analysis and Critical Control Points) system does not deal with the safety or quality of a product itself, but the quality management systems used in the production process. In the EU, all food business operators must introduce it to comply with Directive 93/43/EEC of June 14, 1993, on food hygiene. As a result of the harmonization of Polish legislation with community law, in Poland it will be obligatory from January 1, 2004. The aim of the HACCP system is to incentivise the producer to act in such a way as to eliminate any potential health risks connected with foodstuffs - their preparation, processing, manufacturing, packaging, storage, transportation, distribution, sale, etc. The system is of a preventive nature and requires the dedication of all company personnel. It involves: analyzing potential hazards in business operations; identifying the points in those operations where food hazards may occur; deciding which of the points identified are critical to food safety; and - finally - identifying and implementing effective control and monitoring procedures at those critical points.
Quality management
systems
Although not obligatory, the introduction of quality managements systems and the obtaining of quality assurance certificates are increasingly popular among Polish companies. Some of the most popular ones are the ISO norms (drawn up by the International Organization for Standardization), especially the ISO 9001:2000 quality management system which, from December 15, 2003, will substitute the existing ISO norms series. They are widely applied because they suit all companies that want to prove their ability to provide products and services complying with the needs and expectations of clients. The system concentrates on the development and application of recurring procedures and is aimed at preventing defects from occurring, rather than their detection in the finished product. Many companies also implement the system with a view to its marketing potential and because their business partners require it. Large enterprises apply even higher and more complex system standards such as TQM (Total Quality Management).
Financial support possibilities
The clock measuring the time to Poland's accession to the EU is ticking. In order to be well prepared for competing in the EU market and to profit from the possibilities which it offers, companies must implement the obligatory requirements and consider the introduction of those standards which, although not obligatory, will have an influence on their position in the Internal Market. Especially as the costs connected with the implementation of universally recognizable quality standards can be financially supported from EU structural funds (within the framework of Sectoral Operational Programmes - SOP) and pre-accession funds.
Structural funds
SOP 'Improvement of competitiveness of enterprises' aims to support Small and Medium Size Enterprises (SMEs) through the provision of advice. Companies planning to use consultancy services, while implementing quality standards, may receive a grant covering up to 50 percent of the qualifying costs of projects (newly established companies using modern technologies can even receive 100 percent of the qualifying costs). Project proposals may be submitted from the third quarter of 2003 to the Ministry of Economy, Labour and Social Policy. Consultancy services are eligible for projects which cover the design, implementation or improvement of quality management systems and the methods for obtaining quality assurance certificates.
Another SOP - 'Restructuring and Modernisation in the Food Sector and Rural Development' - supports, among other things, investments for the improvement of agricultural product processing and marketing. Natural and legal persons who operate in the agricultural products market may receive grants for the implementation of quality management systems, system certification and product certification. The size of the grants will depend on the sector in which the applicant operates. Applications can be submitted in 2004 to the Agency for Restructuring and Modernization of Agriculture.
Pre-accession funds
The widest range of projects eligible for financial support are connected with quality and safety systems and are covered by PHARE 2000: 'Introduction to quality' (although in the next edition of PHARE the name of the quality supporting program may change, the support rules should be similar). This pre-accession fund offers, among other things, grants for: implementing quality systems; obtaining compliance certificates for products, raw materials, machinery and measurement devices; the assessment of compliance with EU directives; conferring the CE mark giving access to EU markets, (i.e. technical expertise necessary in some cases for the conferring of the mark); obtaining quality systems certificates in specific sectors of industry; improving management systems after obtaining certification, including training, consultancy and other services connected with the project.
SMEs should apply to the Regional Financing Institutions for grants. The amounts available range from €1,000 to 10,000 and are limited to 60 percent of the qualifying costs. Unfortunately, due to the draining of €8 million (zł. 36.7 million) of available funds from EU sources and €2.67 million (zł.12.2 million) from the Polish budget) the closest deadlines for filing the applications (in November, December and January) have been cancelled until further notice.
Yet another pre-accession fund - SAPARD - offers support for projects connected with quality management systems. Companies operating in the fruit/vegetables and meat processing sectors may receive financial support for the implementation of the HACCP system.
Summary
Consumers in the EU expect safe, high quality products that will satisfy their demands. Companies should not only be aware of obligatory requirements, such as HACCP or the New Approach Directives introducing the CE mark, but also of the advantages inherent in the implementation of high standard quality management systems. A tangible benefit to all is the free movement of goods, achieved partly thanks to their high quality and safety standards. This in turn leads to reduced trade costs and more dynamic economic development in the European Union.
