EU Non-Tariff Barriers, Standards Cited as Top Problems at House Hearing

The hearing focused on: (1) potential issues presented by differences in approaches to regulatory standards; (2) ways to advance the World Trade Organization’s (WTO) Doha Round of international trade negotiations; (3) opportunities for greater engagement between Congress and the European Parliament; and (4) ways to take advantage of existing structures to promote economic collaboration.

Officials from business councils, the U.S. Chamber of Commerce, and the Center for Strategic and International Studies testified at the hearing. Highlights of their testimony are as follows:

U.S.-EU Trade Relationship is Generally Balanced

Unlike trade with other regions and countries, the EU-U.S. trade relationship is generally balanced and equal. And it is underpinned by shared values and common experiences, unlike those the U.S. has with any other region. The U.S. and EU states also have a track record of high labor and environmental standards, as well as support for transparency and accountability in both public and private institutions.

EU’s Non-Tariff Barriers are Costly, Limit Trade

The U.S. must attack frontally the main barrier to improving U.S.-EU trade relations -- the non-tariff barriers (NTBs) to trade and investment which continue to hinder the transatlantic marketplace. These include product licensing, risk assessment rules and divergent standards.

An example is the EU’s regulation of chemicals and goods containing them. In the EU, many NTBs occur in the area of environmental and health regulation. An over-emphasis on the precautionary principle, and the absence of an EU Administrative Procedures Act, results in the adoption of restrictions that are not always scientifically justified. These impose substantial additional costs on transatlantic business activities and limit the global reach of transatlantic firms.

U.S. and EU Should Negotiate an Agreement for Mutual Acceptance of Standards

It was recommended that the EU and U.S. negotiate an executive agreement which sets a mutual goal of achieving the same degree of mutual acceptance of standards between the U.S. and EU as the EU has done in establishing its internal market. The general principle would be mutual recognition of standards and regulations as the expected practice, with opt-outs permitted in explicit cases.

This would allow the U.S. and EU to accept each others’ best practices and to make a virtue of the fact that they do not always progress at the same pace on all fronts with respect to standards. Regulatory agencies on both sides of the Atlantic should be urged to include a transatlantic impact statement for all regulations over a certain economic impact.

There are three practical ways of achieving this objective, depending upon the sector: (1) harmonization and agreement upon common standards wherever possible; ( 2) interoperability of product standards so they can work equally well on both sides of the Atlantic; and (3) Mutual Recognition Agreements (MRAs).

U.S. and EU Should Reach Agreement on Process for New Rules, Regulations

It was also recommended that the U.S and the EU conclude an Agreement on Regulatory Cooperation. An ARC would ensure that U.S. and EU rule makers operate under a common set of regulatory principles and core beliefs. The ARC would include: (1) an agreement on key principles of transparency and an open process to allow regulatory agencies and industries on both sides of the Atlantic to comment; (2) a commitment to minimize divergences of future regulation by adopting each others’ best practices; (3) an agreement on the methodology of cost/impact assessment, including in the compilation, quality, and processing of data for regulatory purposes; (4) a commitment to assess the cost/impact of forthcoming regulations on transatlantic commerce; (5) a requirement for regulators to state the justification for any regulatory divergences; and (6) some post-implementation review.