The ninth round of negotiations for a Transatlantic Trade and Investment Partnership (TTIP) agreement took place in New York from April 20-24, where the focus was on moving forward on regulatory cooperation. According to EU Chief TTIP negotiator Ignacio Garcia Bercero, discussions at the round on this issue covered the pharmaceutical sector, the automobile industry, medical devices, and energy and raw materials.
Prior to the round, Mr Garcia Bercero called regulatory cooperation “the most economically relevant” element in the negotiations – and not by accident. The European Commission estimates that 80 percent of total potential gains from TTIP will come from eliminating “non-tariff barriers” to trade. Reducing regulatory barriers to trade and enhancing cooperation between regulators will encourage trade between the EU and the US, bringing a timely boost to the EU economy and increasing consumer choice.
There has been some concern among opposition – including at the stakeholders’ meeting organised during the round on April 23 – that TTIP would somehow lead to a “race to the bottom” on standards, forcing Europeans to compromise on our strict safety and environmental protections. Many business organisations like AmCham EU are opposed to leveraging TTIP to lower protection levels, and in any event, in a number of sectors, protection levels are higher in the US than they are in Europe.
Crucially, however, this is not what TTIP is about. We should not confuse cooperation with harmonisation or mutual recognition of standards. The EU and the US currently have very different regulatory environments with their own high levels of protection. However, the methods used can be different. In cases where we have similarly high standards, regulators can find ways to improve the trading environment for businesses. A more appropriate analogy might be a “sprint to the top,” with regulators sharing information and working together to make regulation between the EU and the US more compatible.
Duplicative requirements result in needless extra costs for businesses that are reflected in the price and range of goods offered to consumers. In some cases, these are minor regulations that prohibit goods being traded without additional requirements. Many European cars, for example, cannot be sold in the US without complying with unnecessary extra compliance procedures. But the EU and the US both have the same standards – and ambitions – when it comes to car safety. There are also many diverse examples of SMEs who would benefit from TTIP, from Italian cheese manufacturers to British hair treatment start-ups to French oyster producers.
TTIP will be especially beneficial for small businesses. An EU survey of 900 EU SMEs found numerous costly administrative procedures that EU SMEs face when exporting to the US. They more than larger companies suffer from long waiting periods at customs, administrative formalities and additional costs to tap into the US market – time and resources that most SMEs cannot afford. Harnessing the potential of SMEs, who account for 99 percent of businesses in the EU, is a key driver for the European economy.
Negotiators recognise that technological and other developments mean opportunities for collaboration will present themselves well after any agreement is concluded. That is why a regulatory body will be set up so that regulators can continue to positively influence the process. This type of “living” agreement will ensure TTIP remains a modern agreement that reflects the future world that we live in. It could also inspire important reform in other parts of the world.
It is important to note that this body will not have decision-making powers – rather it will serve as a forum for information-sharing and best practices. It’s about empowering regulators to make better regulation, not imposing on them or governments in any way restrictions on how to regulate. It will not impact democratic processes on either side of the Atlantic.AmCham EU Trade