Prevention, not cure, to be TEC’s future focus
By Brian Beary in Washington | Wednesday 28 October 2009
Following months of speculation about the future of the Transatlantic Economic Council (TEC), it seems, after the 27 October TEC meeting in Washington, that the body will survive but with a new focus. “After a trial and error phase, we have now a clear direction. We do not try to solve trade disputes or trade irritants. Instead, we try to find common ground for regulatory approaches,” TEC Co-Chair and European Commission Vice-President Günter Verheugen said. The main instrument that will be used, he added, was mutual recognition because “if you try to harmonise, it does not work”.
The priority sectors, said Michael Froman, US TEC co-chair from the White House-based National Security Council (NSC) and National Economic Council, would include “nanotechnology, labelling and energy efficiency”. Verheugen added to that list the US’ 100% scanning rule for inbound maritime containers due to be implemented by 2012, and double testing requirements for low voltage electrical equipment. The TEC joint statement also mentions financial sector regulation and innovation policy. The statement says that a “detailed work programme” will be adopted at the next TEC meeting.
While no clashes were apparent this time round, doubts linger about US President Barack Obama’s interest in the TEC, a body set up by his predecessor, George Bush, and German Chancellor Angela Merkel, in April 2007, to remove regulatory barriers to EU-US trade. The NSC, which organised the meeting, could only provide scant information on the agenda, with several sources telling
Europoliticsit remains understaffed nearly a year after Obama was elected. US Trade Representative Ron Kirk did not attend the TEC as he was on a visit to China and India. Asked how likely it was the EU and US would sign a free trade agreement (FTA), Commissioner Verheugen said he did “not see it in the foreseeable future,” adding that an FTA “would not help how we legislate”.
Meanwhile, Washington is pushing ahead with its regulatory package for the financial sector. An official appointed by President Obama to curb excessive banker bonuses unveiled a blueprint last week. In the US Congress, the House Financial Services Committee recently approved the creation of a Consumer Financial Protection Agency, which will try to prevent predatory lending practices.
The TEC was preceded, on 26 October, by the EU-US High Level Regulatory Forum, a gathering of about a hundred EU and US regulators, industry representatives and government officials hosted by the US Chamber of Commerce. The keynote speaker at the forum, EU Trade Commissioner Catherine Ashton, played down expectations of what the TEC can achieve, at least in the short term. She said she was “conscious of the challenges” the Obama administration faced, adding that “the American debate on open trade is difficult”. Protectionism “has not got out of hand” but vigilance was needed, she said. Citing regulation of nanotechnologies as a good area for the TEC to work on, she said “we need small successes to gradually build up confidence in each others’ systems”.
In a question-and-answer session, Ashton found herself fielding many non-TEC questions as attendees tried to learn how she was progressing in the EU talks for new bilateral free trade agreements with Canada, India, South Korea and the South-East Asian or ASEAN trading block. She would not go into detail on these negotiations, trying instead to focus on the transatlantic agenda. She noted how the US invested three times more in the EU than it did in Asia, while the EU invested twelve times more in the US than in China. Trade tariffs were no longer a real problem in the EU-US relationship, amounting to a weighted average of 2-3%, Ashton noted. Rather, regulatory divergences were the big challenge. “Just as we have a transatlantic market for goods, we should have a transatlantic market for regulation,” she said.
THINK TANKS WEIGH IN
Prior to the TEC, think tanks were making recommendations on how to make it work better. A joint policy memo
(1)from the Washington-based Atlantic Council and the Brussels-based Bertalsmann Foundation urged the TEC to be directed by the European Commission president and the US vice-president. The TEC’s agenda should focus on energy, they said, notably on shifting to a low carbon economy; making EU and US ‘cap and trade’ systems interoperable; and transferring ‘green’ technologies, while respecting intellectual property (IP) rights. Making online medical records of patients interoperable was also mentioned, as were financial services and investment and food safety - specifically sanitary and phytosanitary import compliance standards. The TEC should involve lawmakers, consumers and the business community more and should map the 27 working groups currently working on TEC-related dossiers.
The TEC’s focus on regulatory barriers was a “positive move” but it had “few achievements” so far, said Jean Pisani-Ferry, director of the Brussels think tank, the Bruegel Institute. It may have been hampered by a lack of ownership and a tendency to get lost in detail, Pisani-Ferry told the Brookings Institution, a Washington think tank, on 26 October. He said the EU and the US were presently the “regulators of the world” on everything from technical standards to make products safe, to financial reporting, to IP rights to competition decisions. They also virtually monopolise the world’s currency and capital markets and had greatly increased EU-US capital flows. That said, with emerging markets like China rapidly industrialising, the EU and US’ share of world trade in goods was shrinking, presently about 40% of the global economy and set to fall to about 25% by 2050, he suggested.
While no clashes were apparent this time round, doubts linger about US President Barack Obama’s interest in the TEC(1) The full study is at