EU-US TRADE DEREGULATION
The TEP of the Iceberg:
How the New Transatlantic Marketplace Became
the New Transatlantic Economic Partnership
Those who thought the French government had blocked the European Commissions crusade for the New Transatlantic Marketplace (NTM) were in for a big surprise when the results of the EU-US Summit on May 18th became known. At a joint press conference, US President Clinton, EU Commission President Santer and UK Prime Minister Blair announced the birth of the New Transatlantic Economic Partnership (NTEP). A new comprehensive trade initiative in which the EU and the US, as President Clinton put it, will work to dismantle trade barriers, both bilateral and multilateral [...] in about a dozen areas in all.1
In September, the European Commission revealed more details in its TEP Action Plan. Although less ambitious than the NTM, the NTEP poses serious threats to democracy as well as environmental, safety and health regulations on both sides of the Atlantic.
Killing the NTM?
The French government was publicly and blatantly resistant to the New Transatlantic Marketplace (NTM), EU Commissioner Sir Leon Brittans ambitious proposal for speeding up the removal of trade and investment barriers between the EU and the US with the ultimate goal of bi-continental marketplace by 2010 (see Favourable Winds for Transatlantic Free Trade in the previous issue of the CEObserver). French foreign affairs minister Hubert Vedrine expressed his deep disagreement on the substance of the initiative and was quite hostile to it.2 The French government feared, among other things, that the US would use negotiations with the European Commission to pry open the European audiovisual and agricultural sectors. Moreover, the French were angry because they had not been properly consulted by Brittan, who started discussing the NTM with the US government before receiving a mandate from the EU member states. At the Council of EU Foreign Affairs ministers on April 27th, the French blocked the start of negotiations on the NTM. Brittan did not seem particularly discouraged, and it soon became clear why. He pointed out that his proposal was a beginning, not an end.
Although the summit concluded that negotiations on the NTM could not begin, the EU ministers did agree to take forward the New Transatlantic Agenda (NTA) signed in 1995, taking full account of Member States sensitivities with the aim of promoting multilateral liberalization, as well as enhanced bilateral cooperation, by progressively reducing or eliminating barriers that hinder the flow of goods, services and capital. In the two weeks between the meeting in Luxembourg and the EU-US Summit, intense negotiations took place first within the Senior High Level Group (which brings together senior trade and economic officials from both sides of the Atlantic) and the Committee of EU Permanent Representatives (Coreper), and later between the British and the US government. An internal communique from the Senior High Level Group shows the French government indicating that they were in fact not fundamentally opposed to launching NTM-style negotiations; their fierce language at the EU Ministers meeting was for public consumption.3 At the May EU-US Summit, although the NTM was not discussed by name, there was a proposal to launch negotiations on the New Transatlantic Economic Partnership (NTEP). As an EU source put it: It is saving face for everyone. France gets to kill the NTM, but the summit will still discuss trade liberalization, so the pieces of the NTM will live on.4
Whats New in the TEP?
As part of the Transatlantic Economic Partnership (TEP) the new seems to have been dropped the EU and the US will start negotiations on the reduction and elimination of barriers to trade as well as increased regulatory cooperation in a large number of areas, aiming to achieve substantial results by the year 2000. Services, industrial tariffs, intellectual property rights, investment, government procurement and the agricultural sector will all be given attention. Rather than the NTMs high profile plans for trade liberalization and deregulation with a clear deadline of 2010, a big bang as Sir Leon Brittan calls it5 the TEP aims for a quieter process with the same results through a framework for ongoing consultation, cooperation and negotiations. The emphasis is on those barriers that really matter, or those [...] that hinder market opportunities, both for goods and for services, beginning with what is achievable within the next two years. One major instrument will be mutual recognition of testing and approval procedures, of equivalence of technical and other requirements and progressive alignment and the adoption of the same standards, regulatory requirements and procedures. The TEP document is only four pages and rather general. The details were somewhat amplified in the September Action Plan, prepared the European Commission and the US government, which includes a timetable.
In contrast to the NTM, the TEP proposal does not include a dispute settlement mechanism, which would have been a very controversial point. A fundamental element of the TEP is thus that EU and US bureaucrats should work closely to prevent the emergence of trade conflicts, and to this end joint sector-specific committees to solve potential problems will be established. Whereas the NTM in fact a proposal for a transatlantic free trade zone was politically too controversial, the TEP is far less likely to run into major public opposition. Although the aims are practically the same, the TEP agenda of step-by-step removal of barriers to trade and investment efficiently moves the process away from the political and into the technical sphere. Controversial words like harmonization, not to mention common market or free trade area, are carefully avoided. Nonetheless, although the process of creating joint regulation is avoided, the TEP will result in harmonization: the aim being to eliminate or, failing this, reduce to minimum all regulatory requirements ... which come in addition to or differ from those normally required in the territory of origin of the goods.6 The TEP builds on the approach and recommendations of the Transatlantic Business Dialogue, which since 1995 has operated to identify barriers to transatlantic trade and investment (see article elsewhere in this newsletter). Undoubtedly, the EU and US administrations have learned from their experience with the Multilateral Agreement on Investment (MAI), a typical big bang treaty committing the signatory countries to the end goal of full-scale investment liberalization. The MAI ran into unprecedented opposition from a wide-ranging global coalition of social movements. The proposed NTM was also very vulnerable because of its ambitious 2010 deadline for the removal of all barriers to transatlantic trade and investment.
Public Procurement and Biotechnology
It appears that public procurement and biotechnology are first in the queue of issues to be tackled within the TEP. The TEP Action Plan sets the stage for gradual increases in market access opportunities for both sides with the ultimate goal of procuring national treatment for suppliers and providers of services. Within what will in effect be a EU-US single market for public procurement, national, regional and local governments will be obliged to offer contracts to the EU or US company with the best bid, regardless of its place of origin. This granting of national treatment to any EU or US based corporation will mean the end of buy local and other provisions for strengthening local economies that have survived previous liberalization waves.7
Concerning biotechnology, the Action Plan proposes the setting in place of an early warning system to help to minimize disputes in areas such as food safety and genetically modified crops.8 The US government explained that the TEP will facilitate exports and reduce trade friction in our $15 billion two-way agricultural trade, with soybeans, corn, consumer foods and animal feed among the top US agricultural crops.9 According to the US Trade Representative, the NTEP will improve the efficiency and effectiveness of regulatory procedures with regard to food safety and the approval of biotechnology products. This might sound benign, but a look at what biotechnology crusaders in both US industry and government hope to achieve from the TEP unveils a disturbing scenario.
US Government and Industry Ambitions
A US Congressional hearing in July, for instance, clarified that US industry welcomes the TEP because of the possibilities it offers for undermining cumbersome European regulations. Mary Sophos from the Grocery Manufacturers of America (GMA) made no secret of the fact that she sees the TEP as an opportunity to reduce government intervention in the agro-food sector.10 On behalf of GMA the worlds largest association of food, beverage and consumer product companies with annual US sales of more than US$430 billion she launched an attack on EU regulations for market access for genetically modified products. Arguing for the harmonization between the two trade partners, she proposed that the TEP start with making the relevant US and EU regulatory processes transparent, predictable and compatible.
David Aaron, the US Under-Secretary of Commerce for International Trade, was even more explicit. Unfortunately, he explained, the European Union, which is a major market for US foods, feed ingredients, and other agricultural products, has a slow and unpredictable process for approving new US agricultural products developed through advanced biotechnology.11 Aaron described the hurdles of obtaining market access for Monsantos Roundup Ready soybean and Novartis Bt maize and concluded that the EU approval process for the products of biotechnology is non-transparent and overly political. We need to work closely with the EU to finalize approval and develop, for future biotech crops, a workable, timely, and transparent approval process.12 He was optimistic, as the European Commission (EC) appears to understand our frustration with the EU approval process and is trying to make up for lost sales as we speak by opening up more corn tenders this year. As an illustration of how such transatlantic cooperation works, Aaron mentioned that US negotiators are meeting with the Europeans this week to help clear guidelines on when products must be labelled. GMO labelling and the EU approval process for GMOs will also be taken up in the Biotech Group of the Transatlantic Economic Partnership.13
As the basic purpose of increased EU-US regulatory cooperation in the field of biotechnology and food safety is to remove barriers to the flow of food products, there is every reason for concern. The TEP aims to put an end to the conflicts which have raged over the past years on market access for products such as hormone containing beef and genetically manipulated foodstuffs. The TEP agreement repeatedly states that high standards of safety and protection for health, consumers and the environment will be maintained. But what are these promises worth in reality? Existing EU procedures for approval of biotechnological products within the single market are heavily criticized by citizens groups for being undemocratic and biased towards the interests of industry. And creating procedures for harmonizing regulations on the EU-US level is likely to only aggravate these problems.
This poses a fundamental problem. US industry and government ambitions for European deregulation are by no means limited to biotechnology environmental and consumer protection laws are also threatened. Aaron targeted EU data privacy legislation as being far more protective than parallel US laws which favour self-regulatory privacy efforts by the private sector, and pointed out that the TEP could also influence implementation of the EU Broadcast Directive by allowing preferences for European programming to be challenged. Sophos, on behalf of the Grocery Manufacturers Association, pinpointed European eco-labelling schemes as ripe targets under the TEP. Eco-labels generally reflect local cultural values and environmental concerns and discriminate against international competition, she pointed out.14 She also attacked the EU Packaging Directive, and particularly the German recycling system as constituting barriers to trade, instead advocating shared responsibility and voluntary cooperative programs.15 Nutritional labelling systems and the very restrictive food additive laws in the EU were also singled out for deregulation in Sophos testimony.
Approved Once, Accepted Everywhere
Mutual Recognition Agreements (MRAs) are a central element of the Transatlantic Economic Partnership (TEP). One US NGO, the Community Nutrition Institute (CNI), expressed its deep reservations regarding the negotiation and implementation of the Mutual Recognition Agreements due to their potential to lower health, safety, and environmental standards in both the US and the EU.16
CNI further points out that MRAs will make it increasingly difficult for regulatory authorities to uphold their statutory obligations to ensure the health and safety of people in the US.17 This is not surprising, as the primary goal of MRAs is to increase trade flows by removing barriers. Furthermore, MRAs are initiated by agencies with the primary aim of ensuring market access rather than implementing high environmental, safety and health standards.
The fact that MRAs are agreed upon as package deals further undermines the transparency of the process. CNI quotes a US Commerce Department official saying that the Europeans want access to our pharmaceutical industry; we want access to their telecommunications industry. We need an umbrella MRA to ensure that everything stays tied together.18 As a result, CNI concludes, inspection and safety procedures for medical devices and pharmaceuticals are linked to inspection procedures for recreational boats!19
MRAs and the other instruments used as shortcuts to harmonization in the TEP move the setting of environmental, safety and health standards further away from the political arena, depoliticizing what should be political choices by moving them into the technical sphere.
Few people, even within the environment and consumers movements, are aware of the fact that the first basket of MRAs, covering six sectors, was signed at the EU-US Summit last May. The six sectors covered by these MRAs include telecommunications, medical devices, electromagnetic compatibility, electrical safety, recreational craft and pharmaceuticals. Next on the wish list of the TABD (Transatlantic Business Dialogue) is an MRA on chemicals.
Our negotiators will finish work on a set of mutual recognition agreements, which will abolish requirements that a broad range of products, including telecommunications and medical equipment, be reinspected and recertified for each others markets. I want to especially thank the Transatlantic Business Dialogue for their leadership in these agreements.
US President Bill Clinton 20
The TABD said it was important; we heard them and acted.
US Commerce Secretary William M. Daley 21
The TABD clearly had a great deal of influence in bringing about this latest step in transatlantic trade liberalization. Having been in the pipeline for a number of years since the inception of the TABD and the New Transatlantic Agenda22 in 1995, MRAs were singled out as top priority by the TABDs Joint EU-US Working Group on Standards and Regulatory Policy when it seemed that government was dragging its feet on the issue.23 According to Mr. Hollner of the European Commission, the first basket of MRAs mainly deals with testing procedures. Mutually recognized tests means that a EU-based exporter can use US testing procedures in Europe for the products it wants to export to the United States. Mr. Hollner stresses that it is still the importing country that sets the standards; nonetheless, ambitions for future MRAs are much larger.
The TABD seeks to have a transatlantic, and eventually a multilateral, goal of approved once, accepted everywhere. The next TABD strategy is to develop similar MRAs with third countries as well, so as to develop a worldwide network of bilateral agreements with identical conformity procedures. 24 The EU has already made a similar agreement with Canada and has plans for agreements with Japan and Korea.25 The TABD is likely developing proposals for further expansion of the MRAs to be tabled at the November TABD annual meeting in the US.
EU-US: Global Partners
The TEP does more than simply construct a common EU-US market. The second pillar in the agreement is an equally ambitious agenda for multilateral action, in which the EU and the US reaffirm their determination to maintain open markets, resist protectionism and sustain the momentum of liberalization. The EU and US will give priority to pursuing their objectives together with other trading partners through the World Trade Organization (WTO). Like Brittans NTM initiative, the TEP was also meant as signal to the May WTO Ministerial Conference that pressure for further multilateral liberalization there must also be increased. During a EU-US Summit press conference, EU Commission President Santer commented on the WTO Ministerial Conference starting that same day in Geneva: Our agreement this morning sends a powerful message of transatlantic support to that meeting and to the further development of multilateral liberalization. The EU is pushing for the beginning of a new round of WTO negotiations, a so-called Millennium Round, to achieve further trade and investment liberalization within the WTOs 130 member states. Many Third World countries oppose this agenda, pointing to the problems they face implementing previous commitments and moreover that previous WTO agreements have not worked out in their interest.
The TEP Action Plan established a regular and structural dialogue to achieve common goals within the WTO. The commitment to work in tandem with the WTO is far-reaching: If possible we will establish common positions, or we will draft proposals to be submitted during multilateral negotiations. This increased cooperation will in fact formalize and accelerate a situation which has existed since the early 1990s. Joint positions on WTO issues have been negotiated for years within the so-called Quad, which includes the EU, US, Japan and Canada, and at previous EU-US summits. When the worlds largest economies have agreed upon their common interests, it has in most cases proved impossible for Third World governments to resist. This is in part why WTO agreements are so biased towards the interests of Northern governments and their transnational corporations.
Participation in the NTEP
Another difference with the NTM is that the participation of civil society has been given a somewhat higher profile in the TEP. Following bilateral trade and investment liberalization and closer EU-US cooperation in setting the WTOs agenda, the third pillar of the TEP is encouraging participation among business, labour, consumers and environmental interests. Clinton announced at the press conference in London after the May EU-US Summit that the EU and the US will make an effort to give all the stakeholders in our economic lives, environmental stakeholders, labour stakeholders, other elements of civil society, a chance to be heard in these negotiations. The TEP proposal invites interested non-governmental organizations to participate and extend this dialogue on consumer protection, scientific, safety and environmental issues relevant to international trade as a constructive contribution to policy making.
There are good reasons to be suspicious about the motives behind this invitation to NGOs to participate in the TEP. In the first place, the invitation comes very late the TEP has already been shaped in great detail and the Transatlantic Business Dialogue has been underway for three years. It also comes at a time when the EU and US governments face unprecedented opposition against their agendas for trade and investment liberalization, as has been seen with the OECDs Multilateral Agreement on Investment and the refusal of the US Congress to grant fast-track powers over US trade policy to President Clinton. Seen in this light, the invitation to participate looks like a classic cooptation strategy forged in order to minimize opposition to the transatlantic liberalization agenda.
In fact, the invitation to participate is not new. A Transatlantic Dialogue for Sustainable Development began in 1997, and was followed by a Transatlantic Labour Dialogue. A Transatlantic Consumer Dialogue and a Transatlantic Environment Dialogue will soon follow. Although NGOs seem happy to accept the invitation, there are major differences between the different dialogues. The Transatlantic Labour Dialogue, coordinated by the AFL-CIO in US and the European Trade Union Confederation (ETUC) in Europe, met for the first time in April 1998. This dialogue hopes to be able to address the EU-US Summit, a right enjoyed by the Transatlantic Business Dialogue since 1995.
The Transatlantic Dialogue for Sustainable Development which began in June 1997 with a conference in Portugal consists of representatives of governments, NGOs and business. European Partners for the Environment, which was set up to increase dialogue between environmental NGOs and industry, is the European coordinator of this dialogue. Among the active corporations and funders of this dialogue are Monsanto and Dupont. The Transatlantic Consumer Dialogue, which first met in September 1998, is coordinated by the Consumers Federation of America for the US and Consumers International for Europe. The consumers dialogue aims to present a list of important issues to the government leaders at EU-US Summits. This goal is shared by the NGOs currently involved in setting up the Transatlantic Environmental Dialogue (TED). The European Environment Bureau (EEB) and the National Wildlife Fund (NWF) were appointed by the European Commission and the US government respectively to set up the TED. The NGOs involved in the TED do seem aware of the risk of legitimizing an agenda that is not theirs, and want to use the process to attack fundamental elements of the TEP, for instance the threats arising from MRAs.
Greenwashing the TEP?
The participation offered to NGOs would by no means correct imbalances in the TEP. And NGOs have certainly not been offered the same participation that business has enjoyed through the TABD since 1995, which involved their identification of barriers followed by government commitments to remove these barriers. NGOs would enter a pre-designed framework with an end goal that lacks a democratic mandate, that of transatlantic free trade. NGO participation in the TEP would legitimize this project and undermine effective democratic control. This would be a serious mistake.
US Trade Representative Barshefsky claims the TEP will contribute directly to more affordable goods, services, job creation and economic growth for both Europeans and Americans.26 Apart from the likely lowering of environment, safety and health standards, the TEP will also speed up the processes of corporate concentration, merger mania and the expansion of TNCs reach at the expense of local producers. An EU Commission representative explained to the European Parliament that a significant incentive for wanting further transatlantic deregulation is that 20-30% of the trade between the EU and US takes place within transnational corporations which have branches both places.27 The TEP will make this intra-TNC trade far smoother.
If NGOs decide to participate in the TEP because of the possibility of presenting their concerns to the EU-US Summit, they risk contributing to the survival of a project which lacks a popular mandate and could be stopped. The global upsurge of grassroots campaigning against the MAI shows that social movements have far more power than they tend to think when they dare to reject and organize against the illegitimate projects of the powers that be.
1. Press Conference Statement. |Back to Text|
2. EU/United States: France Confirms to Council its Rejection of Sir Leon Brittans Ideas on New Transatlantic Market, Brussels, 30/03/1998, Agence Europe. |Back to Text|
3. Notes by Lori Wallach, Public Citizen, who was able to read this internal report, Alert: New Transatlantic Marketplace (NTM) Lives, May 9th 1998. |Back to Text|
4. Inside US Trade, 1 May 1998, p. 5. |Back to Text|
5. Sir Leon Brittan at a speech at the Centre for European Policy Studies, Agence Europe 15/09/1998). |Back to Text|
6. Agence Europe, Strasbourg, 16/9/98. |Back to Text|
7. For examples, see for instance US Barriers to Trade and Investment in Corporate Europe Observer, April 1998. |Back to Text|
8. Agence Europe, Strasbourg 16/9/98. |Back to Text|
9. White House press statement, New Transatlantic Economic Partnership to Accelerate Trade Growth, 18 May 1998. |Back to Text|
10. Testimony of Mary C. Sophos, Senior Vice President Government Affairs, Grocery Manufacturers of America, Inc. before the Committee on Ways and Means, Subcommittee on Trade, 28 July 1998. |Back to Text|
11. Under-Secretary of Commerce for International Trade David Aaron, testimony on US-EU Trade Relations, before the House Ways and Means Trade Subcommittee, 28 July 1998. |Back to Text|
12. Ibidem. |Back to Text|
13. Ibidem. |Back to Text|
14. Testimony of Mary C. Sophos, Senior Vice President Government Affairs, Grocery Manufacturers of America, Inc. before the Committee on Ways and Means, Subcommittee on Trade, 28 July 1998. |Back to Text|
15. Ibidem. |Back to Text|
16. Letter from Community Nutrition Institute to the US Trade Representative (USTR) commenting on the TEP, 6 July 1998. |Back to Text|
17. Ibidem. |Back to Text|
18. Ibidem. |Back to Text|
19. Ibidem. |Back to Text|
20. President Clinton at a News Briefing on 16 December 1996. |Back to Text|
21. US Dept. of Commerce Press Release entitled US and EU Reach Agreement on Mutual Recognition of Product Testing & Approval Requirements, 13 June 1997. |Back to Text|
22. The New Transatlantic Agenda was adopted at the 1995 Madrid Summit which laid out an action plan to enhance political and economic relations between the EU and the US. Central to it is the Transatlantic Business Dialogue. |Back to Text|
23. Negotiations have been ongoing for several years, but have intensified in recent months after becoming a top priority of the Transatlantic Business Dialogue. TABD Press Release entitled Transatlantic Business Dialogue Praises Successful Conclusion of Mutual Recognition Agreement, 13 June 1997. |Back to Text|
24. Langer, Dr. Horst. Member of the Managing Board of Siemens AG in an address to the European-American Chamber of Commerce in the US entitled Transatlantic Business Dialogue (TABD) A Step Toward Better Economic Relations, New York, 10 March 1998. |Back to Text|
25. Ibidem. |Back to Text|
26. White House press statement New Transatlantic Economic Partnership to Accelerate Trade Growth, 18 May 1998. |Back to Text|
27. Quoted in a briefing by the EU representative of the Danish Parliament. |Back to Text|