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This week, negotiators from the United States and the European Union gathered in Brussels for the 12th round of negotiations for the Transatlantic Trade and Investment Partnership (TTIP). Among the issues dominating the talks this week were regulatory cooperation, investment protection, and market access.
U.S. and EU officials recognize the need to generate momentum towards a successful deal—regardless of whether the final agreement can be concluded this year. From the perspective of the business community, the substance of the negotiations will determine the timing. With that in mind, the Chamber is encouraging negotiators to pick up the pace and maintain the high ambitions with which the TTIP was launched.
The case for ambition is especially powerful in the area of regulatory cooperation, which promises a large share of the agreement’s benefits. Regulatory cooperation can help officials protect health, safety, and the environment while lowering costs for businesses and consumers. It allows for more effective deployment of public resources and makes it easier for companies, especially small and medium-sized firms, to take advantage of an increasingly integrated transatlantic marketplace.
The concept of regulatory cooperation is anything but new. American and European regulators have been working cooperatively for years through numerous standing dialogues on issues from financial stability to product safety to agriculture.
We can learn from the examples of existing mutual recognition agreements covering issues such as organic food labeling and airline safety protocols. Whether we fly on Boeing or Airbus aircraft, we implicitly demonstrate our trust in the U.S. and European regulatory regimes: Regulators on one side of the Atlantic understand that there is no need to re-test aircraft deemed air-worthy by their counterparts on the other side. This model of cooperation is proven, and we need to do it more often.
A few years ago, in the face of terrorist threats involving liquids in passenger airplanes, U.S. and EU regulators determined that liquids carried onto planes had to be in quantities less than either 100 milliliters or 3 ounces. Even though these measurements are not, in fact, identical, the regulators determined that there was no discernable difference in passenger safety arising from the difference. Instead of forcing regulators on either side to accept a different standard, they simply acknowledged the equivalence of the two approaches. This is what we should strive for in as many areas of the TTIP agreement as possible.
Regulatory cooperation can and does bring real benefits for our citizens and our economies without an adverse impact on health, safety, or the environment and without undermining a country’s right to regulate. But we need more of it. Officials should ask themselves: Are different requirements with functionally equivalent regulatory outcomes actually protecting anyone, or do “distinctions without a difference” just raise costs for manufacturers, especially the small and medium-sized ones? Sometimes, it’s one seemingly small regulatory difference that prevents a small firm from exporting at all. Shouldn’t we build a robust system into this agreement to help alleviate some of those concerns?
To give an example from the pharmaceutical industry, imagine the benefits of greater regulatory dialogue between the United States and the EU in approving medicines. Patients in need could receive innovative medicines sooner if drugs developed in Europe didn’t have to also be re-tested by the FDA. Or American patients could take advantage of new and innovative cures from European drugmakers without having to constantly recertify and reconfirm the effectiveness of 28 member-state regulatory agencies.
Through TTIP, the United States and the EU have the opportunity to improve our cooperation on regulations across all sectors. This cooperation can range from increased information sharing, mutual recognition of functionally equivalent regulations, to jointly addressing new issues as they arise.
TTIP is also an excellent opportunity to improve the regulatory policymaking process, encourage stakeholder engagement, and insist upon effective impact assessments. The European Union’s recently-announced Better Regulation package is a good step here, and it should be encouraged and expanded upon. The Trans-Pacific Partnership’s (TPP) regulatory coherence chapter has much to offer as well.
Finally, we should address a few of the common complaints about regulatory cooperation. There is nothing in what the business community is proposing that would, or should, guarantee specific regulatory outcomes. Regulatory cooperation should never lead to a “lower” level of protection for workers, consumers, or the environment.
In fact, precisely the opposite: Regulatory cooperation can deliver better and more efficient regulatory outcomes. When there is a valid political or economic reason for the United States and the EU to take divergent positions, nothing in TTIP should prevent that. The agreement should only insist upon an actual conversation between regulators before such differences arise.
By increasing the quality and availability of information about the costs and benefits of regulations in the United States and EU, and by improving stakeholder engagement throughout the regulatory policymaking process, both sides will be able to make better-informed decisions about whether and how to effectively regulate.
TTIP’s ultimate success will be judged in part by whether it has served as a catalyst for deeper levels of trust and understanding between regulators, avoidance of unnecessary divergences, increased consumer confidence on both sides, and a more seamless flow of goods and services across the Atlantic as result of streamlined compliance. It’s an opportunity to cut unnecessary red tape and eliminate duplicative requirements that do nothing to benefit consumers or protect the environment—and to create a framework to deal with emerging issues together as the global economy evolves.
The U.S. Chamber of Commerce—and the Business Coalition for Transatlantic Trade—remain as committed as ever to reaching an ambitious, comprehensive, and high-standard TTIP agreement. Success won’t come from sticking to a predetermined timeline—political or otherwise. Rather, our focus must be on securing the maximum possible benefits for citizens, companies, and the economies on both sides of the Atlantic.