EU, US trade talks seek to advance regulatory pillar

USTR Michael Froman and Ignacio Garcia Bercero, the EU's chief negotiator for TTIP.

Set to meet in New York next week (20-24 April) for the ninth round of talks on the Transatlantic Trade and Investment Partnership (TTIP), negotiators are determined to make progress on all strands of the deal, but particularly on regulatory cooperation.

“We will discuss most of the issues we are negotiating within TTIP. But we will try to advance as much as possible on the regulatory component of TTIP—the most economically relevant complex and labour intensive,” said chief EU TTIP negotiator Ignacio Garcia Bercero, in an interview with EURACTIV.

Pushed by political leaders to end the talks before the United States enters campaign mode next year, negotiators are working around the clock to make sure they do whatever it takes to hammer out a deal which is supposed to cut down costs and open markets, especially for SMEs.

“Whether it is going to be possible to conclude TTIP or not, I will not make a prediction on that. But it is clear that we will try to bring those negotiations as far as possible in 2015,” commented Bercero, saying he received assurance from his counterpart that the Obama administration would still be able to negotiate in 2016.

Both the EU and the US have submitted their own proposal on Technical Barriers to Trade (TBT) for next week’s round of negotiatians, and they will try to reconcile the two positions. The same is happening on sanitary and phytosanitary measures (SPS), and regulatory cooperation.

“On some areas, we are quite close, on others there are still divergences,” Bercero said, refusing to disclose yet areas of agreement.

Qualitative leap

Regulatory cooperation has been a highly contentious part of the deal-making. The Commission’s proposal to introduce a new regulatory body that would structure cooperation has sparked fears that such an instrument would bypass national governments, by centralizing decision-making powers in the hands of Brussels and Washington.

>> Read: Brussels, Washington seen seizing new regulatory powers through TTIP

Trade Commissioner Cecilia Malmström tried to dampen the controversy, by stating that the EU and the US are looking at ways of encouraging regulators to work together, including through a joint regulatory cooperation body. “We want to do this in a way that in no way compromises our freedom to make policy in the public interest,” she explained in a recent speech.

Regulatory cooperation has happened over the years, but has produced meaningless results, concurred Bercero. “There are 13 areas where we have managed to achieve some tangible results, but clearly we are below the potential,” he added, saying the objective is to make a qualitative leap.

Limits to regulatory cooperation

Large chunks of regulation will not be included, such as, for example, on social security issues or working conditions. Negotiators have singled out nine sectors on which to reach concrete regulatory compatibility within TTIP (cars, pharmaceuticals, medical devices, cosmetics, pesticides, ICT, chemicals, and engineering).

At the moment, companies must design and manufacture two lines of products for the markets on both sides of the Atlantic, even though there are equivalent levels of health safety, security and environmental protection.

“Cars is probably the sector where we have the most ambitious goals,” argued Bercero, explaining that regulators are trying to identify a number of laws in the EU and the US which provide an equivalent level of protection.

On pharmaceuticals, regulators work closely together, with the aim of limiting the duplication of inspections. Similar discussions are taking place on medical devices, and also food products.

In other areas, cooperation is limited because of the significant differences in the regulatory regimes—for example, on chemicals.

“Regulations on chemicals in the US is much less strict than in Europe. We have REACH. They have the TSCA, which does not require the same type of examination of chemicals. The scope for doing regulatory cooperation is very limited,” explained Bercero.

Central coordination

When it comes to structuring regulatory cooperation, the Commission has submitted a proposal for a regulatory body at the last negotiating round.

Details on how the body would operate remain sketchy. However, it would have different ad hoc configurations, depending on the regulatory sector, and draw personnel from existing European and member state regulators. Bercero said there were no plans to create a large secretariat, or EU agency.

>> Read: EU, US negotiators mull concrete steps for TTIP

The body will probably meet once a year, establish a work programme, and monitor what has been done in different sectors, he added.

“That would create an incentive to make sure that regulators continue to attach importance to this regulatory cooperation. Indeed the main problem is that most of the time, regulators do not want to cooperate, faced with loads of constraints they don’t find it natural to cooperate transnationally,” Bercero continued.

The joint body could be led at the US level by USTR and the Office of Information and Regulatory Affairs (OIRA), and on the EU side by DG Trade and the Secretariat General, analysts told EURACTIV.

According to the US Chamber of Commerce, having TTIP speak to the importance of a central coordinating body could spur important regulatory reform in other countries.

Ultimately, if the EU and the US start by cooperating on a number of sectors, they can create a modus operandi which will affect other markets. The idea is to create an institutional mechanism that will allow for transatlantic enhanced regulatory cooperation over time and possibly spark new thinking within the World Trade Organisation (WTO).

Negotiations between the United States and the European Union to forge an ambitious Transatlantic Trade and Investment Partnership (TTIP) started in July 2013.

If successful, the deal would cover more than 40% of global GDP and account for large shares of world trade and foreign direct investment.

The EU-US trade relationship is already the biggest in the world. Traded goods and services between the two partners are worth €2 billion daily.

Brussels and Washington have set an ambitious goal of completing negotiations by the end of 2015.

>> Read our LinksDossier: TTIP for dummies

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