In addition to improved market access and modern investment protection, transatlantic cooperation on regulation and standards has a high priority for industry. Every day the European Union and the United States exchange goods and services worth more than $3 billion. The two are thus each other’s most important trading partner. However, not only tariffs but especially non-tariff trade barriers continue to place considerable constraints on trade.
Medium-sized manufacturers in particular would benefit if non-tariff trade barriers and thus red-tape could be reduced, as they are specifically burdened by duplicate processes and procedures and ensuing administrative costs. Often, these costs are de facto barriers for smaller businesses to entering the market. The Transatlantic Trade and Investment Partnership (TTIP) has the potential to reduce these costs and to open up new market opportunities for businesses. Research shows that dismantling non-tariff trade barriers especially can lead to greater economic growth and employment – in fact considerably more effectively than lowering tariffs. Improving regulatory cooperation is therefore a top priority for German industry.
Principles and proposals
Open up new market opportunities for German companiesA good Transatlantic Trade and Investment Partnership (TTIP) will lower the costs of market entry and open up new opportunities for businesses. The fundamental objective of regulatory cooperation is for the European Union and the United States to inform one another more effectively about the development and implementation of regulations and thus be able to make them more compatible. Medium-sized industrial companies would particularly benefit from reductions in administrative costs.
Develop sector-specific solutionsThere are no one-size fits-all solutions in regulatory cooperation. TTIP offers the opportunity to negotiate mutual recognition of conformity assessment bodies and conformity assessments in individual branches and sectors. In others, technical product standards could be negotiated. Yet, in certain branches both the regulations and the regulatory structures are so different that mutual recognition will not be possible.
Safeguard European standards of protectionThe precondition for harmonisation or mutual recognition of processes, rules, or products is a comparable level of health, consumer, and environmental protection, product safety, and data protection, and security. The success of German industry at home and abroad is based on safe, high-quality products “made in Germany”. Lowering standards would harm German businesses and consumers.
Strengthen future transatlantic cooperationDespite numerous initiatives since the 1990s, the balance of transatlantic regulatory cooperation is at best mixed. Any initiative, however well-meaning, is condemned to failure if it lacks clear objectives and if there are no institutions charged with implementation. A bilateral cooperation mechanism should therefore be established to promote regular exchange between the regulatory agencies, develop joint regulatory initiatives, monitor the implementation of agreements, and ensure greater transparency in regulatory cooperation – without limiting the regulatory space for parliaments and governments.
Develop regulations in a transparent, structured, and inclusive mannerRegulatory cooperation and the process of developing regulations should be made more transparent, more structured, and more inclusive than in the past. Clear rules and new mechanisms need to be created. The European Commission proposes more transparency across the board in the preparation of laws and regulations. Accordingly, all potentially affected economic actors, including consumers, NGOs, companies, and business associations, shall have the opportunity to join the consultation at an early stage and submit opinions. German Industry supports this approach.
Safeguard the political leeway of the EU and its member-statesThe process should in no sense be about curtailing national or European legislative powers. The European Union and the United States should continue to regulate environmental, safety, and health matters as they see fit to protect the public. Regulatory cooperation does not mean preventing any of the parties from regulating independently. Even under TTIP, the European Union and the United States can still decide how they wish to protect their own citizens. Regulatory cooperation must not demand particular outcomes of either the United States or the European Union and its member states. TTIP must not call into question or bypass the principles of regulatory work, the autonomy of the regulators, or their democratic control. A glance at the texts of existing free trade agreements, European law, and TTIP negotiating proposals shows that concerns that TTIP could lead to a race to the bottom and a regulatory freeze are just as unwarranted as the fear that TTIP would harm democracy.
Examples from selected branches and sectors
Car industryIn the car industry, different requirements apply in the European Union and the United States, for example in relation to rear indicators, crash test regulations, occupant protection, wing mirrors, safety belts, seat belt mounting, and steering systems. The objective of TTIP should be to mutually recognise the respective regulations as equivalent if their equivalence can be demonstrated.
Mechanical and electrical engineeringIn the mechanical and electrical engineering sectors, mutual recognition of certificates and product tests and testing methods would greatly simplify production for the respective other market. However, the great fragmentation of the U.S. market for technical norms means that mutual recognition of the norms themselves is currently not possible or desirable.
ChemicalsThe European Union and the United States regulate chemical safety so differently that mutual recognition of rules is not possible. Nonetheless, the possibilities for cooperation should be examined – for example to harmonise classification and labelling (for example for warning labels and symbols).
Medical devicesBetter transatlantic cooperation would contribute to bringing medical devices onto the market more quickly and improving patients’ access to innovative and safe technologies. The current European procedures for placing medical devices onto the market will continue to be in effect.