De Gucht Outlines EU Regulatory Ideas for Talks with Washington

17 October 2013

Early indications have begun to emerge on how EU and US officials might approach regulatory cooperation in their bilateral trade talks, with EU Trade Commissioner Karel De Gucht outlining Brussels' priorities in a speech last week. Speaking in Prague on Thursday, the EU trade chief described a series of principles that Brussels is aiming to see in the final pact - including a proposal for a joint group of regulatory agency heads.

Trade observers have been watching closely to see how the EU and US will address this subject, given that regulations and standards are widely acknowledged to be the most complicated part of the talks, styming earlier attempts at deepening bilateral trade ties.

Regulatory cooperation was meant to be the subject of the second round of trade talks, which were originally slated for 7-11 October in Brussels. However, formal talks between the two trading partners - who together already have the world's largest trading relationship - remain temporarily on hold, due to the recent US federal government shutdown. No announcement had been made as to when this round will be held as Bridges went to press on Thursday morning. (See Bridges Weekly, 10 October 2013)

Single market

While noting the EU's history of successfully tackling regulatory convergence when it created its own bloc-wide single market, De Gucht acknowledged that the same outcome is not expected from the talks with Washington.

"Of course, we should not be under any illusions: the TTIP will not create a single market between the EU and the US," he said, adding that this is not the negotiation's objective.

As far as Europe is concerned, De Gucht said that Brussels will instead be searching for ways to cooperate on future regulations; how to make existing regulations more compatible; and supporting work in both areas with the appropriate institutions.

Citing automobile and food safety as two areas where Washington and Brussels should make their current regulations more compatible, De Gucht also made a specific reference to the need for addressing financial services - a subject that the US has said it would prefer to address elsewhere - in any deal, highlighting the global financial crisis as a key example of why countries must work together on this subject.

The US and EU, he added, together account for 70 percent of world trade in financial services.

"We have already seen examples of duplication of rules, and rules with extraterritorial effect," he noted, while acknowledging past progress in this area. "This has a cost: it weakens financial resilience and makes it more difficult for our economies to recover."

With regards to support institutions, De Gucht is proposing that the two sides establish a "Regulatory Cooperation Council" that would bring together the chiefs of key US and EU regulatory agencies, in order to monitor the implementation of existing commitments and evaluate new priorities.

"Strong institutions like this will be key to making the TTIP a living agreement that promotes greater compatibility of our regimes and accelerates the development of global approaches," he said.

EU institutions to still "set the rules," De Gucht says

The EU trade chief also stressed that the bilateral talks will not endanger the 28-nation bloc's "precautionary principle," which is part of the EU's Lisbon Treaty. The principle is designed to avert risk in areas involving human, animal, or plant health, as well as the environment, specifically where scientific review does not allow a full evaluation of such risk.

"To be very clear from a European perspective: the Commission, Parliament, and Member State governments will continue to set the rules. And given that the precautionary principle is enshrined in the Lisbon Treaty, nothing in the TTIP could possibly change that," De Gucht said.

Froman plan

The EU trade chief's speech comes within weeks of US Trade Representative Mike Froman's own remarks on the subject, where he laid out the contours of what Washington would like to see on regulations and standards. (See Bridges Weekly, 3 October 2013)

In his remarks in Brussels on 30 September, the US official highlighted US policies in the areas of transparency, accountability, and participation as examples of successful regulatory policies.

"Transparency, participation, accountability - these are core to the US regulatory system, but they are not uniquely American principles," he added, noting that the EU has similar "aspirations."  Trade observers had been quick to note that Froman's speech seemed to imply that Brussels should adapt its system more toward Washington's.

In what many analysts have perceived as an apparent response to Froman's remarks, De Gucht stressed last week that "a beauty contest will flatter no one," adding that neither side would benefit by imposing their system on the other.

Froman had also taken a seemingly different tone in addressing the perceived differences between the EU's precautionary principle and the US' own "cost-benefit" approach, saying that concerns the two only made decisions based on those respective policies were  "anachronistic."

ICTSD reporting.

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