Since I wrote to you on 24 October 2007[38] and the clearance of scrutiny by the committee in June last year, there has been signficant progress on the draft text.

  As you may recall, the draft Regulation will facilitate the free movement of goods in the internal market by reducing barriers to trade imposed by national technical rules on non-harmonised goods that are lawfully sold elsewhere in the EU. The Commission estimate that the Regulation will result in a 10% increase in trade in the goods covered. A more conservative estimate of an increase of between 1% and 5% would lead to estimated annual benefits to the UK economy of between 0.4 billion and £2.02 billion. SMEs are likely to be the key beneficiaries as they do not have the resources to research up to 26 national legal regimes to find out if there are technical rules that need to be complied with.

  The Slovenian Presidency has maintained the Portuguese Presidency's desire to achieve a first reading agreement. At working groups, we have succeeded in ensuring that our remaining concerns on hallmarking and health and safety were met:

— HALLMARKING: the proposal maintains Member States' authority to require that certain products complete prior authorisation procedures that serve public interest objectives (recognised by Community Law) before being placed on the market e.g. precious metals can continue to be hallmarked in the UK so consumers are certain of the fineness of the metal they are purchasing; and

— HEALTH AND SAFETY: the proposal ensures that products that are generally prohibited on grounds of public security or public morality can be immediately withdrawn from the market.

  The European Parliament completed its first reading of the proposal in February adopting a series of amendments in line with text developed under the Portuguese and Slovenian presidencies, including addressing our concerns. We anticipate that the Regulation will be adopted as a `first reading deal' without substantive change in the near future.

26 March 2008