European automakers welcome Obama’s announcement of comprehensive US-Euro trade talks; major focus on regulatory convergence
In his State of the Union (SOTU) address Tuesday night, President Barack Obama announced the launch of talks on a comprehensive Transatlantic Trade and Investment Partnership with the European Union. The European Association of Automobile Manufacturers (ACEA) welcomes the talks, one of the elements of which will be addressing regulatory issues and non-tariff barriers such as different safety or environmental standards for cars.
The goal of the talks, said the EU in a statement, will be to move towards a more integrated transatlantic marketplace, noting that: “Currently, producers who want to sell their products on both sides of the Atlantic often need to pay and comply with procedures twice to get their products approved. The goal of this trade deal is to reduce unnecessary costs and delays for companies, while maintaining high levels of health, safety, consumer and environmental protection....The regulatory area is where the highest potential benefit lies with these trade negotiations.”
The US and EU already have the largest bilateral relationship in the world, worth nearly €2 billion (US$2.7 billion) per day. The two economies represent half of the world’s GDP and a third of total trade flows.
In a speech at the North American International Auto Show in January, Matthias Wissmann, President of the VDA (Verband der Automobilindustrie, German Association of the Automotive Industry), said:
We expect to see especially positive effects from an agreement between the EU and the US. The negotiations are scheduled to start this spring. Here the most important aspect will be to dismantle regulatory barriers. At present this is still a vision: a joint EU-US market constituting around 40% of the global light vehicle market! Politicians in the US and Europe should make this vision their common aim in the negotiations. If we could determine common standards, i.e. move towards harmonization, which would release new economic energy on both continents. That would, furthermore, have an enormous impact on the rest of the world. There is special potential where completely new standards are defined, such as in the case of electric mobility. We should shape these rules jointly right from the outset.
In the aftermath of President Obama’s SOTU speech, the EU-US High Level Working Group on Jobs and Growth (HLWG), established at the EU-US Summit in November 2011 to agree on terms and objectives, revealed its final recommendations, including:
The HLWG has reached the conclusion that a comprehensive agreement that addresses a broad range of bilateral trade and investment issues, including regulatory issues, and contributes to the development of global rules, would provide the most significant mutual benefit of the various options we have considered. We therefore recommend to Leaders that each side initiate as soon as possible the formal domestic procedures necessary to launch negotiations on a comprehensive trade and investment agreement.
A comprehensive agreement would include ambitious reciprocal market opening in goods, services, and investment, and would address the challenges and opportunities of modernizing trade rules and enhancing the compatibility of regulatory regimes.—Final Report High Level Working Group on Jobs and Growth
The HLWG concluded that negotiations on a comprehensive trade and investment agreement should aim to achieve ambitious outcomes in three broad areas:
- market access;
- regulatory issues and non-tariff barriers; and
- rules, principles, and new modes of cooperation to address shared global trade challenges and opportunities.
Both sides agree on the importance of putting processes and mechanisms in place to reduce costs associated with regulatory differences by promoting greater compatibility, including, where appropriate, harmonization of future regulations, and to resolve concerns and reduce burdens arising from existing regulations through equivalence, mutual recognition, or other agreed means, as appropriate.—Final Report High Level Working Group on Jobs and Growth
Specifically, the HLWG recommended that the two sides should seek to negotiate:
An ambitious “SPS-plus” chapter, including establishing an on-going mechanism for improved dialogue and cooperation on addressing bilateral sanitary and phytosanitary (SPS) issues. The chapter will seek to build upon the key principles of the World Trade Organization (WTO) SPS Agreement, including the requirements that each side’s SPS measures be based on science and on international standards or scientific risk assessments, applied only to the extent necessary to protect human, animal, or plant life or health, and developed in a transparent manner, without undue delay.
An ambitious “TBT-plus” chapter, building on horizontal disciplines in the WTO Agreement on Technical Barriers to Trade (TBT), including establishing an ongoing mechanism for improved dialogue and cooperation for addressing bilateral TBT issues. The objectives of the chapter would be to yield greater openness, transparency, and convergence in regulatory approaches and requirements and related standards- development processes, as well as, inter alia, to reduce redundant and burdensome testing and certification requirements, promote confidence in our respective conformity assessment bodies, and enhance cooperation on conformity assessment and standardization issues globally.
Cross-cutting disciplines on regulatory coherence and transparency for the development and implementation of efficient, cost-effective, and more compatible regulations for goods and services, including early consultations on significant regulations, use of impact assessments, periodic review of existing regulatory measures, and application of good regulatory practices.
Provisions or annexes containing additional commitments or steps aimed at promoting regulatory compatibility in specific, mutually agreed goods and services sectors, with the objective of reducing costs stemming from regulatory differences in specific sectors, including consideration of approaches relating to regulatory harmonization, equivalence, or mutual recognition, where appropriate.
A framework for identifying opportunities for and guiding future regulatory cooperation, including provisions that provide an institutional basis for future progress.
A joint statement was later issued by President Barack Obama, European Council President Herman Van Rompuy and European Commission President José Manuel Barroso, highlighting their commitment to “making the relationship an even stronger driver of our prosperity.”
Both parties will now envisage starting internal procedures leading to the actual launch of negotiations at the earliest possible moment. On the EU side, the European Commission will present draft negotiating directives to Council, on which the latter has to decide. This is scheduled to take place towards the second half of March. The US administration plans to send a notification to Congress triggering a 90-day layover period. Both sides aim to advance fast once negotiations are started.