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TTIP’s Dangerous Regulatory Duet

TTIP – the Transatlantic Trade and Investment Partnership – is a trade deal under negotiations between the EU and the US since July 2013. But TTIP is not new, it has a long and chequered past.

Raising serious concerns in public debate across the EU, critics have pointed to the anti-democratic nature of its proposed corporate courts (Investor State Dispute Settlement) and dialogues known as “regulatory cooperation”. The trade deal would make this process compulsory but it has been happening on a voluntary basis for more than twenty years.

Regulatory cooperation aims to remove impediments to trade. The goal is to reduce differences over the long term between the rules governing the EU and US markets. This is to be achieved through dialogues between regulators and stakeholders from both sides of the Atlantic.

Despite what seem like technical procedures and an apolitical aim, regulatory cooperation is likely to have bleak consequences for environmental and social rights and consumer protection.

Threatening the Public Interest

Past dialogues on regulations between the US and the EU have been highly influenced by the transatlantic business community. Its power has far outweighed the capacity of consumer, environment and labour groups to make their voices heard.

In November 1995, for instance, during an EU-US summit, the business community, organised as the Transatlantic Business Dialogue (TABD) and was given privileged access to EU-US dialogues, the forebears of today regulatory cooperation plans in TTIP. “We will support and encourage the development of the transatlantic business relationship, as an integral part of our wider efforts to strengthen our bilateral dialogue” were the conclusions of the 1995 EU-US Summit. And this privileged access has strengthened over the years.

In 1999, it was estimated that 50% of TABD recommendations were successfully integrated into EU policy. In 2003, following a high-level meeting with US Secretary of Commerce Ron Evans, EU Industry Commissioner Erkki Liikanen said that “the EU and the US have joined in commitment to review and implement recommendations coming from the TABD.”

The significant influence of big business over regulatory cooperation was never balanced with a similar interest from trade negotiators in consumer, environmental or labour concerns. Compared to the TABD, the lifetime of other transatlantic dialogues has been very short: 8 years approximately for the transatlantic labour dialogue (1998-2006) and 2 years for its environmental counterpart (1998-2000). The transatlantic environmental dialogue was set up after the US Environmental Protection Agency alerted NGOs that TABD plans could impact policy and damage the environment.

Out of the three dialogues created to represent public interest voices, only the transatlantic consumer dialogue survived. In 2001, when the transatlantic environmental dialogue was already dead, the transatlantic consumer dialogue (TACD) disagreed categorically with draft proposals for EU guidelines on regulatory cooperation and transparency. The TACD even tabled alternative proposals. But all suggestions were rejected, and neither the US nor the EU bothered consulting with the TACD on the guidelines again.

A short-lived labour and environmental dialogue, a neglected consumer conversation but a reinforced business-government relationship. The track record of transatlantic regulatory cooperation is grim and does not inspire much confidence in its potential consequences, especially for the urgency to improve and uphold our standards.

Danger Ahead for Green Law-Making?

Considering the imbalance in access to decision-makers, it comes as no surprise that the results of regulatory cooperation have favoured big business at the expense of environmental protection.

Take electronic waste for instance. In 1998, a proposal from the Commission included plans to ban hazardous substances in electronic waste. This proposal had the support of the EU Environmental Ministers, the European parliament, the Environment Commissioner and the Environment department of the Commission. However, a transatlantic dialogue began the same year. Part of the European Commission, big business (TABD) and the US Trade Representative fought the proposal. In this battle, the opposition of the US business community soon became the US government official line. Trade concerns, represented by those interests, finally won the battle.

In 2002, the waste directive was adopted, but the hazardous substances proposal was significantly weakened. In 2008, after a court case, a substance which was to be banned in the original proposal (deca-BDE), was finally taken off the EU market. It took a legal conflict with the Danish government and the European parliament for a ban to be enacted, 10 years after it was first proposed. The TABD, allied with part of the European Commission, had demonstrated its power to weaken and delay environmental legislation in the EU.

Unfortunately, there are other examples of how regulatory cooperation has weakened environmental standards. The Montreal Protocol, for instance, is an international agreement to phase out ozone depleting substances. In 1997, the EU Environment Commissioner wanted to move the phase out deadlines forward, before international plans. This move was made impossible by transatlantic dialogues.

Soon after the EU proposal, two industry groupings, the Air Conditioning and Refrigeration Institute in the US and the European Chemical Industry Council in the EU teamed up. Both were members of the TABD.

According to a representative of Air Conditioning and Refrigeration Institute: “We had credibility just by virtually being in the TABD. So if I called up the people in the Commerce Department and [said] I am part of the refrigerants group within the TABD – I could really express our concerns and they would say “No problem, what time would you like to come?” Had we not had that entry way through the TABD I think it would have been more difficult to connect even with our own government representative.” Once again, thanks to the TABD, the position of US industry on this early phase out of ozone depleting substances became the US government’s official line. Finally, as a result of regulatory exchanges, and the influence of TABD, the ban was pushed back by two years. The European Parliament did not manage to roll back this concession to the US government and the TABD.

Enshrining a Bad Habit in TTIP

Emboldened by its record of success, the TABD, as well as other big business groups, now wants transatlantic regulatory dialogues to be more permanent and regular. TTIP provides them with the perfect opportunity to fulfil this ambition.

In the words of two key business lobby groups, BusinessEurope and the US Chamber of Commerce, in late 2012, regulatory cooperation in TTIP would allow them to “co-write regulation”. For the US Chamber of Commerce specifically, it would be “a gift that keeps on giving”.

And indeed, the latest EU proposals on regulatory cooperation give wide and extensive powers to the business community in transatlantic regulatory dialogues. A natural step forward for a long and close relationship.

According to the co-chair of the TACD (consumer dialogue), Monique Goyens, proposals amount to a “surreal institutionalisation of lobbying” – the institutionalisation of an unbalanced and undemocratic process that started more than twenty five years ago.

TTIP is supposed to become a living agreement. The work of trade negotiators, and their business allies, will continue in new institutions such as private courts that privilege corporate power or through regulatory cooperation.

Those processes though have no democratic oversight and little concern for social and environmental issues. This is why these four letters – TTIP – have become so notorious: their direct association with threats to citizens and massive opportunities for big corporations.

For more information and to read the entire LobbyControl/CEO report on regulatory cooperation, visit here.