Peter Chase / Jul 2013
The US chief negotiator Dan Mullaney and his EU counterpart Ignacio Garcia Bercero for the transatlantic talks. Photo: European Union 2013
Some 120 U.S. and EU officials have just met in Washington to start negotiating the text for the Transatlantic Trade and Investment Partnership (TTIP). When completed, TTIP will be by far the world’s biggest and most ambitious free trade agreement, further integrating the world’s two largest economies, stimulating our $1 trillion trading relationship, and bringing badly-needed jobs to our citizens.
Many observers seem awed by the sheer magnitude of this undertaking, and focus on the problems, whether the insistence to exclude the movie and recording industries, or recent revelations about government access to personal data. We in the U.S. Chamber of Commerce, however, believe the United States and the European Union can succeed in negotiating this agreement, and can do so quickly, indeed even during the 18 months remaining in the term of Commission President Barroso and Trade Commissioner De Gucht, who had the vision to get the talks launched.
Regulatory differences that create obstacles to transatlantic trade are widely seen as the most daunting hurdle to success. But as someone who’s been involved in U.S.-EU regulatory discussions for over two decades, I believe we have come to the point where we can see real progress, both in the near-term and in the years to come.
It’s important first to recognize three attributes of the U.S.-EU relationship that underpin our regulatory cooperation – we are both high-income democracies, and we have uniquely deep investment ties. Having similar levels of income, our citizens demand similar levels of safety in the foods we eat, the cars we drive, the electronics we use, the banks we invest in. Being democracies, our citizens’ demands translate directly to our politicians, and from them to the officials and regulators who set the rules. And enjoying deep integration through $2 trillion of U.S. investment in Europe and $1.6 trillion in EU investment in the United States, our firms are deeply aware of the regulatory requirements in both markets.
Further, in both the United States and in the EU, our regulatory procedures have improved significantly over the past 20 years; our regulatory requirements in many areas have converged considerably; cooperation between our regulators has grown exponentially, not least as they face unprecedented volumes of imports they need to assure are safe; and our regulators know that a strong partnership with their counterpart can improve their efficiency and thus their effectiveness in carrying out their mandate to protect their people, environment and investors – especially when they face declining budgets.
TTIP should build on these foundations to “turbocharge” transatlantic regulatory cooperation by establishing a framework to guide the work of our regulators. In particular, TTIP should: establish a clear goal of overcoming regulatory divergences, largely through such instruments as mutual recognition; provide regulators tools to reach this goal; establish an oversight body to monitor and encourage progress; and create annexes to inventory and provide easy access to regulatory agreements in various sectors, from consumer products to pharmaceuticals to financial and other professional services. One of the tools this framework could provide, for instance, would be to require that when a proposed measure would affect a product or service in which there is significant U.S.-EU trade, as part of its normal impact assessment the regulator would compare its proposed approach with that on the other side of the Atlantic, and assess the costs and benefits of any difference. This would not determine the approach a regulator would take, but would ensure regulators act with an understanding of the other side.
This “turbo-charging” framework would be an integral part of the main TTIP agreement, which would also eliminate duties on goods, streamline customs procedures, liberalize trade in services, enhance investment opportunities, expand access to government procurement, strengthen intellectual property protection and facilitate travel between us.
This structure is critically important as it also ensures that regulator-to-regulator cooperation, while informed by the framework, would continue under our normal regulatory procedures, with public notice and comment and strong political oversight by Congress, the member states in the Council and the European Parliament. As with all good regulatory practice, transparency would be the guiding principle.
U.S. and EU regulators have already demonstrated repeatedly that they can work together, and can work in this “turbocharge” context. One of the best examples is in the area of large airplanes, arguably one of the most regulated pieces of equipment in the world. This is arguably also one of the most contentious areas in U.S.-EU trade relations, where we have the Boeing-Airbus dispute. Yet our regulators on both sides have agreed that an aircraft deemed safe on one side can be sold as is in the other market. We have a similar deal in the touchy area of agriculture, where a “bio” apple from Europe can be sold as organic produce in the United States.
U.S. and European companies know that reaching the level of trust and confidence needed to conclude such mutual recognition agreements will take time; we hope the TTIP negotiations will accelerate that process, and lead to smaller, but important steps along the way.
In the end, we all will gain with enhanced regulatory cooperation – our companies, our workers, our regulators and above all our citizens. The sooner we press ahead, the better for us all.