TTIP and common regulatory standards

Over
the last years, NSA spying revelations and anxieties over the “Pivot
to Asia” have cast a new shadow over the transatlantic relationship. In
response, US and EU policymakers are attempting to forge a comprehensive
Transatlantic Trade and Investment Partnership (or TTIP), which promises to
deepen trade and jumpstart the transatlantic economy. But to its seemingly
rising chorus of opponents, TTIP is an attempt by the powers-that-be to impose
a neoliberal agenda on Europe through the back door of opaque negotiations and
shadowy private courts.

The
participants of the European Students Conference (ESC) at Yale that took place
in February 2015 took stock of the debate and came to their own conclusions,
seeing TTIP as a unique opportunity to dramatically boost Europe’s economy while
upholding Europe’s commitments to transparency and regulation. What
follows is the second of two student presentations on their sub-theme’s
findings: here, Kate Tepper argues that the European Commission should take a
hard stance and insist on European standards, while looking for novel ways in
which to break down “behind-the-border” barriers to trade.

ESC
formal conclusions can be accessed at the website of European Horizons, the
think tank founded at the conference, but the following text deepens and
contextualizes the positions taken. For more arguments—on ISDS, transatlantic
energy markets, and more—visit the conference homepage. The European Students
Conference was financially supported by the EU through the Erasmus+ program.

In
the course of TTIP’s negotiations, it has become clear that regulation of
industries central to the European economy—for example, in the form of
auto-safety requirements, chemical sales, pharmaceuticals and food safety—are
effectively duplicated in the US. The cost of American or European companies
complying with two different sets of regulation to serve the same purpose
raises trade costs immensely and reduces trade between nations. However, while
sector-specific negotiations between the US and EU to standardize regulations
are critically important to boosting trade, the highest common denominator
principle, or the highest level of consumer and industry protection available,
must be applied. This doesn’t necessarily mean creating new regulations—in
sectors where regulations are significantly different, but achieve similar
levels of protection, mutual recognition would achieve the same objective.

At
the root of these superficial differences is a deficit of trust between
European and American regulators. Cooperative partnerships between each
continents' regulatory agencies, in the vein of existing partnerships like that
between the American FDA and the European Medicines Agency, would discourage
superficial differences from emerging in the future.

Standard
convergence

However,
negotiators must accept that unified standards may not be reached in every
sector, given differences in regulation that are too great to realistically be
tolerated by either side. A prime example of this is the difference between the
EU and the USA on the sale and use of genetically modified organisms, or GMOs,
in food products.

But
just comparing under these ad hoc circumstances isn’t enough—creating a common
database to compare and contrast American and European standards in major
industries accessible to businesses, negotiators and consumers alike would make
clear where the two sides of the Atlantic agree, and where they should rather
agree to disagree. Increased eSignature verification to increase digital
security cooperation and reduce transatlantic cybercrime would also be a step
in the right direction.

Customs
procedures and tariffs are a major obstacle to fast, inexpensive trade between
the US and Europe, with customs duties of up to 32% on some products. Aiming to
eliminate all tariffs on the trade of goods between the United States and
Europe within a decade is ambitious, but would bring significant benefits.

Specifically,
the phasing out of tariffs by cutting rates by 400 basis points per year, with
the highest tariff (32%) eliminated within eight years, is a steep but
structured way to go about this. Streamlining customs procedures, through
information exchange and enhanced cooperation between custom authorities, would
also boost trade.

But
the more insidious manifestations of protectionism need to be eliminated along
with the more obviously apparent ones. Domestic preference programs create
restrictions for cross-border public procurement projects, and with the EU and
US as, respectively, the largest and second-largest public procurement
markets in the world, programs such as the “Buy-American” clauses keep domestic
companies uncompetitive.

An
addition to the WTO Agreement on Government Procurement to treat European and
American companies as domestic in relation to one another for protectionist
clauses, and the creation of a joint database to provide information on the
complex regulatory framework of public procurement tenders, would help in
fixing that problem.

Along
similar lines as duplication between regulations, there is a great divergence
in labor standards between the EU and US in many areas, including paid annual
leave, unjust termination, worker representation, workplace safety and maximum
working hours. In order to increase labor convergence, the Subgroup proposes
that the United States pass legislation matching the European levels of
protection, requiring companies to provide temporary workers with equal labor
treatment regarding pay, overtime, breaks, rest periods, night work and
holidays. Furthermore, the Subgroup recognizes the need for the US and EU to
find common ground on both worker protection and representation.

Finally,
to truly make trade between the United States and the European Union cheaper,
simpler and faster, it is important to address the onerous visa regimes for
businesspeople traveling frequently back and forth. In order to increase labor
mobility, it is imperative to allow those business travelers who provide a
certain level of mutual economic benefit to visit both areas sans visa to ensure that trade and
commerce flow unimpeded.

More
specifically, the Subgroup proposes that all EU citizens be treated alike in
American immigration policies, as well as that the US cap on H-1B visas for
European citizens is removed, with the possibility of unlimited renewal every
two years. To further streamline business travel, the Subgroup proposes the
development of a “Transatlantic Expedited Entry” program through the creation
of a supranational electronic document submission database, similar to the US
Customs and Border Protection program for expedited border crossings. In
addition, the Subgroup proposes the exemption of intra-company transferees from
obtaining H-1B visas for up to a year, with special preference to traders,
investors and employees with specialized expertise.

Conclusion

TTIP,
like any agreement that has the potential to dramatically alter how economies
like those of the EU and US are governed, needs to be debated, its proponents
challenged, its arguments scoured. But just because negotiations maintain
aspects of intransparency does not mean that a conspiracy is afoot, let alone
that the process cannot be salvaged by even its biggest detractors. Instead of shouting
TTIP down, Europe should take control of the process and insist on getting the
growth-oriented but responsible deal citizens deserve.