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US pushes for greater transparency in EU business regulation

Financial Times | February 23, 2014

US pushes for greater transparency in EU business regulation

By Shawn Donnan in London

The US is using transatlantic trade negotiations to push for a fundamental change in the way business regulations are drafted in the EU to allow business groups greater input earlier in the process.

The move is likely to face resistance in Brussels and draw the ire of critics in Europe already concerned that a proposed Transatlantic Trade and Investment Partnership would weaken consumer regulations and give US corporations the right to challenge European laws as trade barriers.

With tariffs on both sides of the Atlantic already low the main focus of EU-US trade negotiations launched last year has been on easing regulatory barriers to trade.

The US push for greater transparency in EU regulations was first made in broad terms by Michael Froman, US trade representative, in a speech in Brussels last September. But in specific proposals put forward in closed-door negotiations in recent weeks the US has stepped up the campaign and made clear that it is one of Washington’s main negotiating priorities, according to people close to the talks.

US negotiators argue that the TTIP provides an opportunity to update the way the EU does business and that such a move would help avoid transatlantic differences in future regulations.

There is, they argue, too little transparency in the current European process, with businesses given too few opportunities to see or comment on proposed regulations.

US companies also complain that they are often shut out of the regulatory process in Europe because the EU system can depend on closed consultations with local industry groups that make it difficult for outsiders to register their concerns.

And, because European companies can take advantage of public comment periods during the drafting of regulation in the US, officials there argue that the current imbalance is unfair.

“There is no one way to do this,” said Michael Punke, US ambassador to the World Trade Organisation, who is overseeing the EU-US talks. “But we think that processes that are transparent, participatory and accountable – where it is clear what regulations are being considered, all interested stakeholders have input and the final products are based on science or evidence – are most likely to produce the best regulations, ones that minimise unnecessary divergences.”

The US has proposed that EU regulators be required to publish the proposed texts of regulations and open them to public comment. It also wants regulators to be required to consider comments and explain why they had adopted – or failed to adopt – outside suggestions when they finalise regulations.

US officials argue that there is a growing emphasis on transparency in regulation and greater public consultations are increasingly important.

The proposal is facing some resistance in Brussels. Karel De Gucht, European trade commissioner, said adopting a US-style “consult and comment” regulatory system was “impossible”.

But in an interview with the Financial Times. Mr De Gucht also conceded that the EU’s current public consultation system did need to be revised and said the EU would be willing to make some changes. “We are ready to work in that direction but we cannot completely copy their [the US] system,” he said.

Peter Chase, the representative in Brussels for the US Chamber of Commerce, said the concerns of US business over the current system were shared by many European companies.

“Both European and American businesses want to provide meaningful analysis for proposed EU legislation and regulation, but to do this we need to see and comment on the actual text that is being considered,” he said.

The US push on behalf of business also comes amid increasingly vocal opposition in Europe to the proposed deal, with much of the criticism based on the belief that the negotiations are being driven by a business agenda.

Alberto Alemanno, an expert on EU regulation at HEC Paris and the New York University Law School, said the US push for greater consultation would allow consumer and other civil society groups a louder voice as well.

But he said it nonetheless risked giving ammunition to critics, many of whom would see it as a ploy to open the door to more lobbying by US companies in Brussels.

While greater public consultations were required by the EU’s 2009 Lisbon treaty it was not clear whether the publishing of draft regulations would actually be allowed by the EU’s constitution, Mr Alemanno said.

“I am not very optimistic that the Americans can convince the Europeans to do this,” he said.

 source: FT