37th IAA World Advertising Congress 6th-9th June

Queen Elizabeth 2nd Conference Centre, Westminster

London 2000 - The new power of communication

Emma Bonino

"Is the market the ultimate champion of the consumer or is that the role of the legislator?"

I have been entrusted with a considerable task today: to define an ethical framework for the (sometimes perverse) effects of the market-legislator-consumer triangle. Is the market the ultimate champion of the consumer or is that the role of the legislator? - the answer is obvious: neither one nor the other. We must continually seek a balance between markets trends and forces and the task of arbitration and regulation that lies with the legislator. A balance which is easier to define than to apply, but to which the consumer can contribute in a decisive manner, not waiting for his ultimate champion to appear from the heavens but choosing an active role as the third actor together with the market (which tends by its very nature to prevaricate) and the legislator (who sometimes places the interests of his political party before those of society as a whole).

I will try to answer today's question by drawing on my personal experience in two different battles: the first for food safety within the European Union, and the second to free Italian consumers from the fetters of the statist culture that still characterises the majority of Italian political leaders, whatever their political colours.

Food safety is a top priority for the EU and for Europe's citizens. Their confidence has been shaken by a succession of crises - BSE, dioxin and sludge - to name but a few. This in turn has done considerable damage to the image of the Community and its commitment to the protection of key interests of its citizens.

There have been no winners in this process. Farmers and the food industry have paid a heavy price. I fully accept that in many respects food has never been safer. But the consumer's demands and expectations have never been higher.

Food safety has become a crucial concern for consumers because the market has failed to respond in all cases to this basic demand. This is regrettable because consumers have a fundamental right to safe food whatever the price or quality of the product. Consumers should be able to take for granted that farmers, industry and the public authorities have done everything to guarantee that the food they buy is safe.

This, in my view, should be a logical and collective response to the evolution of the market. The ways that food is produced and consumed nowadays are changing. New health threats are emerging, often linked to the intensification of production and to ever more complex food processing.

Increased competition and price constraints imposed on food producers are leading the food sector to react by reducing costs and intensifying production processes. Besides, the carelessness of some or the dishonesty of others may nowadays seriously endanger the health of a vast number of consumers. BSE, the dioxin crisis, or the use of sewage sludge in animal feed, are all examples of the unacceptable consequences of putting cost considerations before food safety.

Only a coherent set of well-implemented and enforced rules at national and industrial levels will provide a fertile ground on which the European agriculture and food industry can prosper in the new millennium.

In January this year, the present European Commission adopted a White Paper on Food Safety. It is part of a strategy aimed at ensuring a high degree of health protection for European citizens.

The main focus of my remarks today will concern the White Paper's proposals for the establishment of a European Food Safety Authority.

The Commission believes that the major structural change in establishing the Authority is a necessary one to protect public health and restore consumer confidence.

In the Commission's proposal the tasks of the Authority will concentrate on risk assessment and communication, leaving the task of risk management to the policy-makers. Rightly so. Because the very foundation on which food safety policy is based is risk analysis, made up of three different components: risk assessment, risk management and risk communication. I learnt from my experience that, while risk assessment is 'objective', based on information screening and scientific advice, risk management - which consists of regulation and control - implies a decision-making process in which the legislator has to take into account various factors relevant to the health protection of consumers and to the promotion of fair practices in food trade; factors like environmental considerations, ethical concerns, animal welfare, sustainable agriculture, consumers' expectations regarding product quality and so on.

There is an important area that needs to be examined: the interface between the Authority and national agencies and other scientific bodies. The EFA cannot work in isolation. It will need to draw upon the expertise and knowledge available in similar bodies in individual Member States and in other countries.

This issue became particularly topical late last year in the context of France's refusal to lift the ban on the import of UK beef produced under the Date Based Export Scheme. This dispute originated in divergent scientific advice given, on the one hand, by the French Agency, and, on the other hand, by the Scientific Steering Committee at EU level.

When we have a European Food Authority, such divergences should not occur any longer. Not because national governments will suddenly trust a body advising the Commission, but because the European Food Authority will be at the centre of a network linking the best available science across the European Union. If we can bring about such a system, in true partnership with national scientific bodies, there should be no room for divergent scientific views on essential matters of food safety.

I personally see very good reasons for separating risk assessment and risk management in the food safety area.

The present decision-making process, whereby proposals are formulated by the Commission and adopted through a procedure involving Member States and the European Parliament, provides a high degree of accountability and transparency. There is a risk that transferring this responsibility to an independent Authority could actually lead to a reduction in accountability.

In addition, transferring regulatory power to an Authority would probably require modification of the existing provisions of the EC Treaty.

There are certainly those who believe that the European Union should adopt the United States FDA model. Being part of the US administration, the FDA is both a risk assessor and a risk manager. This is the approach that the Americans took eighty years ago, and it has been successful for them in their constitutional and cultural context.

The Commission believes that this model is not appropriate in the context of the European Union. Risk management must remain the preserve of the Commission, Parliament and Council. The Treaty of the European Union confers on the Commission alone the right of initiative to propose legislation. The Council and the Parliament, exercising their democratic mandate, may adopt that legislation with or without amendment.

I do not believe that Europe's citizens would countenance risk management decisions being devolved to an unelected European Food Authority. The implementation of risk management decisions through legislation involves political choices and judgements based not only on science, that is risk assessment, but on a much wider appreciation of the wishes and needs of society.

This exercise of democratic accountability could not be replaced easily, and I have yet to hear any convincing argument to the contrary.

((( Let me point for a moment to genetically modified organisms where consumers' demands and concerns are high. This is because most of the GMOs currently on the market are not targeted to deliver clear benefits for the consumer, but rather to provide benefits for producers. So, here again, there is a need to reconcile what science and the market have to offer with what the consumers demand.

In this respect the results furnished in March by the Eurobarometer regarding the perception of biotechnology seem to be to be illuminating. The survey reveals above all that, compared to research carried out in 1996, European citizens are now aware that they do not have enough information about the use of biotechnology in food production, just as the first EU legislation on the issue is about to be introduced. This accounts for the clear diffidence demonstrated by the following figures:

Only 43% considered it useful to use modern biotechnology in the production of food (down 11% since 1996);

Only 37% of the respondents find it morally acceptable to apply biotechnology to food (down 13% since 1996);

Only 31% think that using modern biotechnology in food production should be encouraged (down 44% since 1996).

In this domain we need a science-based approach. Genetically modified products can only be placed on the European market after they have been scientifically tested and when, according to the latest scientific knowledge, they are considered to be safe for human health and for the environment. However, consumers have the right to know and to take informed decisions about what products they buy. In the European Union, this right to information is explicitly recognised by the Amsterdam Treaty, our new legal framework for European integration. Therefore, both GMO products and products derived from biotechnology should be clearly labelled.

In this respect, the present European legislation does not provide adequate protection for the consumer. This is demonstrated by the growing diffidence of citizens and the tendency of some member states (France and Sweden, for example) to pull back, adopting more restrictive measures on the issue of GMOs compared to those of the European Union. )))

The last part of my paper will be devoted to my own country, and in particular to the extremely slow transition of the Italian economy from a highly statist economic system to a more modern, market-based system.

Between the 1950s and the 1970s, when it was believed that the consumer could only be protected by a strong state presence in the economy, especially through nationalisation, all the most developed countries followed this path. Italy did so with particular enthusiasm, to the extent that at the end of the 1960s the state controlled 100% of railway transport, 100% of telephone services, 100% of Radio and TV services, 80% of air transport services, 100% of postal services, 100% of gas production, a monopoly over the sale of electrical energy, and 88% of private bank deposits, not to mention education, health, pensions and other services of "public interest".

It was only with the failure of this system that people realised that the state and the legislator always end up harming the consumer and the economic system when they try, maybe with the best intentions, to replace the market or to confine it in a cage of constrictive laws. At the same time it became clear that it was privatisation policies, wherever they had been implemented, that brought concrete advantages for consumers. Obviously no-one in the UK needs to be reminded of this. There is, however, an aspect that we must all bear in mind: while on one hand privatisation policies require the clear "deactivation" of the state and the legislator, on the other hand they impose a re-activation of the legislator, as an arbitrator rather than as a director, to allow the market, now free from artificial bonds, to function within a framework of definite rules.

Statism and dirigisme, however, do not lie down easily, even in the Western democracies. In a country like Italy, where the state has played and continues to play a powerful role in the economy, the reduction of this role - the necessary corollary of privatisation - is a difficult objective not only to realise but sometimes even to theorise. The Italian government, at the very moment it set out on the path of privatisation, was more concerned with protecting its power to plan and direct large-scale financial operations than with bringing about a true liberalisation of the market. When the law on the golden share was approved, for example, they were careful to present it as a typical liberal measure, based - we were reminded - on the policies of Margaret Thatcher, whose liberalism no-one could possibly doubt. It is a great pity, therefore, that the Italian version of the golden share, unlike Mrs. Thatcher's version, involves an absolutely discretionary and almost universal field of application, whether the pr

ivatised company is the telecom monopoly or a small local council-run company. Very few of us, at the time, fought against the law; nevertheless, we managed to organise an abrogative referendum in 1997 and to win the support of over 10 million people, whose vote was only rendered null and void by the high number of abstentions. We can take consolation in the fact that in the last few weeks the European Court of Justice has condemned Italy on the subject of this very law, considering it contrary to the principles and community laws on the single market.

Equally strong criticism could be directed at the privatisation in progress in other sectors, beginning with power (electricity and gas). It is no coincidence that now, after much trumpeting of the bold privatisation plans, the stock market share of the state-controlled companies is around 20% of the total.

This devotion to the statist culture is now proving to be a particularly serious handicap, during a phase marked by profound, rapid changes in the economy brought about by the new technologies. Laws and policies conceived for a system of production that no longer exists, the Taylorist or even post-Taylorist system, are depriving many European countries (and in Italy this is particularly evident) of the opportunities for growth offered by the so-called new economy: opportunities which, when they are grasped, as in the US, have led to a period of prosperity which after then years shows no signs of coming to an end. It has been remarked that if Bill Gates or Steve Jobs had set up their garage-based businesses in Italy, they would have been forced to close immediately, for having infringed health regulations for workers, perhaps, or for having used premises not officially registered as suitable for business purposes.

The distance to be caught up is so great that even after having discovered the new economy and the opportunities it offers, our political leaders are instinctively inclined to promote it, that is once again to direct it, rather than to support it and regulate it. Let me give you an example. The recent proposal by the Italian government, which we perhaps ought to pass off as a gaffe, to promote the new economy by offering the Italian people three " state portals ", one for the north, one for the centre, and one for the south.

This is why I said earlier that the Italian situation is an invaluable case to prove to the citizen-consumer that he cannot place himself passively in the hands of the market, and even less so in the hands of the legislator, but must become an active player, either as an individual or as part of an association of individuals. We Italians sometimes wonder which side the greatest dangers come from. From those who produce the goods we consume, or from those who "produce" the rules and the laws? Because - there is no point denying it - there is a fundamental difference in the relation between the producers and the consumers of goods produced through industrial technologies, and the relation between the producers and the consumers of rules fabricated, sometimes on a "production line", by those who hold power through legislative techniques.

The process of industrial production in the Western countries is still based on and supported by the initiative of private subjects, that is of individuals who cannot make use of the police or the army to force consumers to buy the products they place on the market. While they study how best to attract consumers (sometimes how best to deceive them), producers know that in order to avoid bankruptcy they must ultimately satisfy the consumers.

The public authorities, on the other hand, do not depend at all on consumers for their own survival, and can impose their own interests, to the detriment of the citizens and of rival businesses, by using coercive powers. They are, moreover, not doomed to failure if they do not meet the demands of the community, off-loading their losses onto the state budget, that is onto the very citizens to whom they are theoretically responsible. For the citizen-consumer, to control the production of legislation is obviously a hopeless task. And the observation that citizens exercise control and judgement by exercising their right to vote is not entirely convincing: such control is actually very weak and extremely indirect. All the more so because state intervention in the economy is often used precisely to win votes, sometimes from very specific sectors of the community.

(((One of the few weapons the citizen-consumer has at his disposal to fight directly against the excesses and the errors of the legislator is the abrogative referendum as provided for in the Italian Constitution. I say this without fear of the potential criticism or irony of observers who follow events in Italy and know all about the resounding defeat of the recent attempt by several political forces (including my own) to bring about the modernisation of certain aspects of the social and economic system by means of referendums.

I say it because))) experience continues to teach me that justice and rights, just like freedom and democracy, can never be considered as being established once and for all.

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