Businesses fear EU-US regulatory frenzy after election

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EU consumer groups are calling for transatlantic product standards legislation to be better enforced. But business representatives warn that regulatory cooperation is “not always very good” for industry.

Ahead of the US presidential elections on 4 November, EU consumer organisations called for transatlantic cooperation to be strengthened. 

“It is not just regulation that makes people feel safe. It must be enforced or consumers won’t feel safe at all,” Monique Goyens, director general of EU consumers’ organisation BEUC, told a 28 October conference on regulatory cooperation organised by BusinessEurope, the EU employers’ organisation. 

Consumer confidence had been “shaken” by the ongoing turmoil in financial markets, said Goyens, explaining that now would be a good time for governments and the establishment to prove that regulation was in place to keep them safe. 

But the European Commission does not necessarily see things in the same way, and appears to be wary of overburdening buisnesses with new rules. “The Commission does not embark on regulatory cooperation from a societal point of view,” explained Françoise Le Bail, deputy director general of the Commission’s enterprise and industry directorate and a member of the Transatlantic Economic Council (TEC). “What the EU institutions are negotiating is the elimination of technical barriers to trade.” 

For their part, business representatives expressed fears that more legislation would serve to increase costs by creating compliance problems. “Regulatory cooperation means more efficient and better regulation, not necessarily more or less,” argued Stanton D. Anderson, chairman of the Global Regulatory Cooperation Project at the US Chamber of Commerce

He cited the example of the Sarbanes-Oxley Act introduced in the US to respond to the Enron and WorldCom corporate accounting scandals of the beginning of the decade, which “created more problems.” 

Similarly, Adrian Harris of Orgalime, the association representing the EU engineering industry, spoke of “basic barriers” to harmonisation facing some companies, such as different electrical voltages and frequencies on each side of the Atlantic. Indeed, the electrical industry still faces such problems within Europe itself, he said, citing the voltage difference between the UK and the rest of the continent as an example. 

Moreover, Harris said environmental legislation often represented an obstacle for business. “In Europe, DG Environment has its own model of environmental standards,” he said, complaining that EU requirements differed from those of the US, where they even varied from state to state. He also said that different customs regulations made transatlantic trade “complicated” for business. 

Industry representatives also complained that they were not being consulted early enough in the legislative process. “[It] would be more helpful if people spoke before rather than after regulating,” said Orgalime’s Harris. “We are not getting very happy noises from US industry or regulators” on the need for further transatlantic cooperation, he added. 

Asked whether transatlantic trade relations would change after the upcoming presidential elections in the US, Anderson said he did not expect the outcome to make much difference. Instead, the TEC should address “horizontal issues” concerning the industrial sectors of the future to bring about more regulatory cooperation. 

“It is very difficult to change regulation that has already been in place for years,” he explained, identifying nanotech regulation as “a real area for change and cooperation” in this regard. 

The US will hold presidential elections on 4 November 2008. After eight years of the Republication administration headed by President George W. Bush, voters will be asked to choose between his would-be successor John McCain and his Democratic rival Barack Obama. Both candidates are expected to make an effort to repair relations with Europe after the divisions of the Bush years. 

"We want to make sure that we don't introduce additional legislation that creates additional legislative problems," said Françoise Le Bail, deputy director general of the European Commission's Enterprise and Industry DG and a member of the Transatlantic Economic Council (TEC). 

Nevertheless, she stressed the need to embark on further regulatory cooperation between the EU and the US, before warning: "The issues involved are very technical and we need to avoid getting too bogged down." 

Asked whether the TEC had made much tangible progress, Le Bail answered: "That's a good question. All [the matters it deals with] are rather long term. Regulatory cooperation and the standards debate are highly technical and involve a lot of people." 

Stanton D. Anderson, chairman of the Global Regulatory Cooperation Project at the US Chamber of Commerce, said the TEC provided "the best opportunity to address long-standing issues". But "[it] is not a negotiating mechanism," he warned, explaining that "neither side is a loser, nor is it a trade negotiation." 

Criticising the council, Anderson said "better criteria" were needed to identify relevant issues, calling for the process of how they get on the agenda to be addressed. 

Adrian Harris of Orgalime, the association representing the EU engineering industry, supports the goals of the TEC. "Anything we can do to eliminate unnecessary barriers is useful," he said. 

"We believe in opening markets but not at the expense of consumer protection," said Monique Goyens, director general of EU consumers' organisation BEUC. "Reducing trade barriers doesn't mean watering down consumer protection law," she continued, adding: "We have a different idea to business of what constitutes red tape." 

Tom Spencer, the executive director of the European Centre for Public Affairs and a former Conservative MEP, described transatlantic cooperation over regulatory issues as "worthy but unexciting," warning that "relations are in any case prone to a certain staleness induced by a limited number of people endlessly returning to the same issues". 

America and Europe cooperate on trade and other economic issues in the Transatlantic Economic Council (TEC). Established in April 2007 on the initiative of German Chancellor Angela Merkel and US President George W. Bush in a bid to reinvigorate economic relations, the TEC aims to clear away technical regulations and standards that substantially raise costs for companies wishing to trade and invest across the Atlantic (EURACTIV 02/05/07). 

Meanwhile, the Transatlantic Business Dialogue (TABD) offers an informal framework for cooperation between the transatlantic business community and the governments of the EU and the US. Comprising a coalition of CEOs of major companies, the TABD allows businesses and industry associations on both sides of the Atlantic to develop joint EU-US trade policy recommendations in conjunction with officials in both administrations. 

  • 4 Nov. 2008: Presidential elections in the US.

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