The BCTT Regulatory Cooperation Working Group includes companies and associations representing a diverse spectrum of sectors. The Working Group will 1) focus on overcoming longstanding technical barriers to trade (TBTs), 2) develop new regulatory coherence and cooperation obligations, and 3) support the framework necessary for the development of sectoral annexes addressing specific regulatory divergences.
Why Regulatory Cooperation Matters
The United States and the European Union are the world’s largest economies, each producing about $15 trillion in goods and services a year. Each is also the other’s largest trading partners, with more than $1.5 trillion in goods, services, and income receipts flowing across the North Atlantic annually. Despite the depth and breadth of this commercial relationship, differences in regulation are overwhelmingly cited as the primary obstacle to enhanced bilateral trade.
Many of these regulatory differences are unnecessary, as the U.S. and EU, democratic societies with comparable levels of income and wealth, strive to provide similar levels of consumer, environment and investor protection. That is, U.S. and EU regulatory outcomes are often similar, even if procedures vary.
Regulatory cooperation is good for consumers. The required level of regulatory protection remains the same, while enforcement for regulators and compliance for business becomes easier and trade and investment flows expand, bringing jobs and economic growth.
In fact, according to a 2007 Pew Study, roughly 80% of Americans and Europeans surveyed support making regulations “as similar as possible” for products and services. In the end, regulatory cooperation is largely about process. Where we have better processes, we can expect better outcomes.
An exhaustive study of these differences in 23 different sectors estimates that reducing even half of these divergences would lead to GDP increases for the EU and the United States of more than $200 billion per year, with exports increasing substantially in both.
In short, regulatory cooperation is not about less regulation nor is it about more regulation. It simply seeks better regulation that is effective, but also not market-distorting. Further, regulatory cooperation is about competitiveness. An optimal regulatory environment allows the market to be more competitive and innovative. With regard to standards, nothing facilitates trade in goods and services easier than voluntary consensus-based standards.
Objectives for the TTIP Negotiations
- Strengthen and more effectively implement good regulatory practices and principles already agreed to bilaterally, including ensuring that regulations are risk-based, evidenced-based, and incorporate cost-benefit analysis. These best practices should extend to all sectors, including financial services, in order to maximize the benefits of an agreement.
- Establish a clear goal of having counterpart U.S. and EU regulators, in coordination with engaged stakeholders and affected industries, determine where their regulatory regimes have common values and compatible regulatory objectives. Leverage those common elements to focus on more efficient, coordinated processes so that a product or service sold in one market can be made available for purchase in the other. This will ensure that regulators aim for compatibility and equivalence wherever possible and alternatively ensure better transparency and justification for divergent approaches.
- Provide new tools and a governing process to guide regulatory cooperation on both a cross-cutting and sector-specific basis that will address issues earlier in the process for both existing regulations and future regulatory measures.
- Incorporate an institutional mechanism that enables the TTIP to be a “living agreement” to implement the agreed upon regulatory cooperation commitments. The TTIP should preserve regulatory autonomy, while ensuring adherence to a regulatory cooperation process, including improved transparency and stakeholder consultation.
- The TTIP should lead to broader transatlantic agreement and flexibility on important regulations and standards issues, including a common definition of international standards established by referencing the WTO TBT Committee Decisions; more open and direct participation in standards development; and on the indirect referencing of equivalent standards as part of New Approach Directives. Such an open and flexible approach will help to ensure that international standards referenced in regulations are selected upon the excellence and performance of the standards and their relevance to world market conditions. Agreement on these issues will better equip the EU and U.S. to respond to new global regulatory and standards challenges – while advancing transatlantic trade and economic growth.
- Develop, wherever possible, detailed sector-specific regulatory coherence and cooperation commitments.
For more information about this working group, contact any of the following association co-chairs:
National Association of Manufacturers