16 December 2013

WSJ: US and EU dive into divisive trade topic - Your rules versus ours

As a part of trade talks launched this year, the US and the EU are getting down to the nitty-gritty issue that divides officials and citizens on opposite sides of the Atlantic: who has the better rules for businesses and consumers.

The US trade representative's office said negotiations this week in Washington will attack something known as "cross-cutting regulatory coherence", and perhaps a bit of "regulatory compatibility in specific sectors", meaning that the negotiators will be looking at how they can bridge the gap between wildly different approaches to setting the rules for everything from the environment and chemical safety to investment banks.

The goal is to get rid of arbitrary differences in rules that no one cares much about, since a single set of regulations for a given industry can help companies operate more efficiently in both markets, leading to potentially higher economic growth and greater employment. The different rules are a key issue in the talks to form the Transatlantic Trade and Investment Partnership, or TTIP.

The problem is that for many industries, politicians (and their constituents) feel passionately about the rules they helped write. In places as far apart as New Mexico and Poland, some regulations have evolved along specific cultural or political lines. Some Democratic US lawmakers are concerned TTIP could end up diluting the Dodd-Frank financial law designed to rein in Wall Street after the financial crisis. US officials say Dodd-Frank rules aren’t on the table. At the same time, Europeans feel they have superior rules in chemical safety, food ingredients and other areas.

The negotiators gathering in Washington are eying which industries are ripe for "harmonising" the rules, while at the same time developing a framework so that officials can work together in the future to create similar rules in other areas. In some industries, officials may back "mutual recognition", which means businesses can produce products or offer services in both markets as long as they meet one set of rules or the other.

"The goal of TTIP round three is to delve into greater detail across the range of issues expected to be addressed in the agreement, working to build upon a number of convergences in approach", a USTR spokeswoman said. Besides the philosophical talk about rulemaking, the spokeswoman said TTIP negotiators this week are also looking at barriers to trade beyond existing tariffs, which are quite low between the US and Europe, and the perennially prickly issue of agricultural and food safety.

Full article

© Wall Street Journal