AK | July 2015
The planned regulatory cooperation between the European Union and Canada and the USA according to the CETA and TTIP drafts
by Peter-Tobias Stoll, Till Patrik Holterhus, Henner Gött
This legal opinion focuses on the institutionalized regulatory cooperation envisaged in CETA and TTIP. It examines how these agreements jeopardize or safeguard the interests of workers, consumers and the environment.
1. In addition to lowering and abolishing customs duties (tariff-based barriers to trade) CETA and TTIP aim to remove restrictions to trade through policy measures (nontariff barriers to trade). One way of achieving this is through regulatory cooperation.
2. Regulatory cooperation here means future cooperation between the contracting parties on regulatory matters (for example through measures such as harmonization, mutual recognition or conformity assessments) after CETA and TTIP have been ratified.
3. Apart from a few exceptions, the scope of application of regulatory cooperation in CETA und TTIP includes all regulations relevant to trade in goods and services. On the EU side, this includes both regulations of the European Union and those of the Member States.
4. Many of these regulations also serve to protect workers, consumers and the environment.
5. CETA and TTIP each contain a chapter with general provisions regarding regulatory cooperation. These are supplemented or modified for application in specific areas by special provisions in other chapters.
6. Particular importance is given to each of the primary committees envisaged in CETA and TTIP (CETA Joint Committee and TTIP Joint Ministerial Body) as well as to the sub-committees that deal specifically with regulatory cooperation (CETA Regulatory Cooperation Forum and TTIP Regulatory Cooperation Body). Each of these committees has representatives of both contracting parties who adopt decisions unanimously.
7. The above-mentioned committees deal with regulations of both sides, either in place or planned, according to their own work program. Harmonization, mutual recognition, and conformity assessment are the regulatory cooperation methods provided for overcoming divergences that inhibit trade.
8. Atypically, the TTIP also mentions simplification as a tool. This term does not come from foreign trade and economics, but rather is commonly seen in the context of debate surrounding the introduction of reforms to reduce bureaucracy and simplify administration. Regulatory cooperation in the TTIP is thus not limited to overcoming divergences that pose barriers to trade; it also strives to reduce other, unnecessarily cumbersome regulations.
9. Regulatory cooperation in the TTIP also extends to regulations that are in the drafting stage by both contracting parties. In this respect, it provides for mechanisms such as obligatory information sharing and the right to comment that can make regulatory projects the object of regulatory cooperation at an early stage.
10. The primary committee (CETA) can make decisions that are binding under international law. This also applies to amendments to annexes, appendices, protocols and comments. In the context of regulatory cooperation this could lead to a significant further development of the agreement. Ultimately, however, it is still unclear how far the authority to make binding decisions extends in the context of regulatory cooperation. This is a matter that urgently requires clarification.
11. Moreover, it is not sufficiently clear whether and in which cases decisions made by the primary committee (CETA), which are binding under international law, require the consent of the competent internal organs of the contracting parties, in particular of the EU Parliament. A sufficient level of involvement of the EU Parliament should be ensured, especially when it comes to decisions of far-reaching importance.
12. CETA and TTIP stipulate that the regulatory sovereignty (right to regulate) of the contracting parties should not in any way be affected by regulatory cooperation. However, this absolute imperative is hardly attainable. Logically, the mere existence of binding regulations regarding regulatory cooperation in itself limits the contracting parties’ regulatory sovereignty to a certain extent. It is therefore of crucial importance how each party’s regulatory sovereignty is positioned and protected in the context of regulatory cooperation.
13. In addition to regulatory sovereignty, CETA and TTIP emphasize efforts aimed at ensuring the highest protection standards possible. But in the context of provisions that apply to regulatory cooperation, comparatively little weight is given to these requirements. The inclusion of regulatory sovereignty and protection standards in the agreement texts are either subject to restrictions or vaguely worded. This calls for improvement.
14. The precautionary principle is a core element of European regulatory policy, but it is practically absent from CETA and the parts of TTIP that have been made public to date. Exception clauses that address precaution in a very specific manner are to be found only in CETA and concern occupational health and safety and environmental protection. Reference to, or the incorporation of WTO law simply does not make up for the absence of the precautionary principle from the two agreements because, according to WTO law, only temporary provisional regulations may be based on precautionary aspects while all other regulations require a science-based approach. Efforts must therefore be made to work towards a general establishment of the precautionary principle that extends beyond exception clauses.
15. The fact that CETA and TTIP provide special chapters on sustainable development concerning work standards and environmental protection is to be welcomed. However, these chapters and the activities envisioned therein stand largely isolated and unconnected to regulatory cooperation. Since the realization of sustainable development is particularly dependent on regulations, this also needs improvement.
16. The drafts of both agreements envision the involvement of social groups in various contexts, but do not provide specifics. To ensure appropriate representation of civil society and societal partners, the regulations, which are often sketchy at best, must be formulated more precisely. Moreover, the representation of civil society groups must be ensured in activities and committees that are relevant to their work, and their involvement must be given ample opportunity to influence results.
17. The European Parliament will consider these issues only once, at the time of the conclusion of the agreements. This is not enough to confer democratic legitimacy on the far-reaching possible actions and results of future regulatory cooperation (living agreements). In any case, in view of significant aspects of regulatory cooperation, the European Parliament should also participate in decision-making after the agreements are concluded.
18. CETA and TTIP affect (also in the context of regulatory cooperation) areas, which according to EU law, fall within the jurisdiction of the Member States. At the same time, as things currently stand, only the EU itself, but not the Member States, is directly involved in regulatory cooperation. In this respect, in the relations of the EU with its Member States there is a conflict between the need for the EU to maintain a unified foreign policy stance in CETA and TTIP on one hand, and on the other, the right of the Member States to autonomously exercise the competencies they are entitled to. In order to establish a balance between these conflicting interests, an appropriate agreement between the EU and its Member States appears advisable.