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May 3, 2011

Department of Commerce International Trade Administration Seeks Comments Concerning Regulatory Cooperation between the U.S. and EU

Bergeson & Campbell, P.C.

In an important and little noticed May 3, 2011, Federal Register notice, the U.S. Department of Commerce International Trade Administration (ITA) requested public comments concerning regulatory cooperation between the U.S. and the European Union (EU) that would help eliminate or reduce unnecessary divergences in regulation and in standards used in regulation that impede U.S. exports. Of critical importance, the ITA plainly recognizes and acknowledges that the main impediments to greater trade and investment between the U.S. and EU “are not tariffs or quotas, but rather differences in regulatory measures.” The ITA seeks public input to help identify divergences in regulatory measures in the transatlantic marketplace, “so that the U.S. Government can work cooperatively with the European Union to address them.” This notice offers an important opportunity to educate the ITA on subtle, yet significant trade impacts that are derivative of regulatory and/or competitive issues. Comments are due June 2, 2011.

The notice states that President Obama linked trade to job creation when he announced the National Export Initiative (NEI) in his 2010 State of the Union address and “set the ambitious goal of doubling U.S. exports in the next five years to support millions of jobs here at home.” Since 2005, the U.S. has worked with the European Commission (EC), within the framework of the U.S.-EU High Level Regulatory Cooperation Forum (HLRCF), to strengthen regulatory cooperation, promote better regulation, and reduce or eliminate unnecessary regulatory differences that hinder trade and reduce competitiveness. In December 2010, the Transatlantic Economic Council, comprised of Cabinet-level officials from the U.S. and the EU, endorsed several initiatives intended to promote U.S.-EU regulatory cooperation, including directing the HLRCF to develop a process for identifying sectors in which the U.S. and EU “could pursue upstream regulatory cooperation.”

According to the ITA, trade between the U.S. and EU may be impeded because countries apply different standards or technical requirements to address common environmental, health, safety, or other concerns with respect to certain products or product categories. In some instances, the divergences may be arbitrary and could lead to delays, additional costs, and burdens on U.S. suppliers, making it difficult for U.S. suppliers to penetrate foreign markets. The ITA states that in other cases, however, the divergences “may be necessary to achieve legitimate objectives such as the protection of the environment and public health and safety.” Cooperation with respect to regulation and standards used in regulation can help reduce unjustified divergences and lower costs and burdens for businesses, as well as for governments and consumers.

ITA uses an example of regulators in different countries legally sharing full data, studies, and other information on specific regulatory issues, stating that, in such cases, the regulators “are more likely to reach similar conclusions, such as on the risks associated with a particular product, appropriate measures to mitigate those risks, and the costs and benefits associated with alternative regulatory approaches.” According to ITA, this can lead regulators to adopt regulatory measures that are more aligned with each other, allow producers to develop economies of scale, reduce compliance costs associated with divergent regulatory measures, and pass on cost savings to consumers.

ITA specifically requests public comment on the following possible types of cooperative regulatory activities between the U.S. and the EU:

  • Information-sharing agreements; technical assistance; memoranda of understanding, mutual recognition agreements;
  • Collaboration between regulators before initiating rulemaking proceedings; agreements to align particular regulatory measures;
  • Equivalency arrangements; and
  • Accreditation of testing laboratories or other conformity assessment bodies.

ITA also seeks recommendations for existing or emerging industry or product sectors that may benefit from regulatory cooperation between the U.S. and the EU. ITA asks that submitters be as specific as possible in describing the relevant product or product sector in which they believe there is an opportunity to facilitate trade without undermining U.S. public health, safety, environmental, and other legitimate policy objectives. ITA states that it is interested in receiving recommendations concerning any product sector that, due to the volume of trade between the U.S. and EU, “is a justifiable focus of enhanced regulatory cooperation.” ITA encourages submitters to work with counterparts and other interested stakeholders in the U.S. and EU to submit comments jointly. ITA “will give positive consideration to recommendations that demonstrate strong support from stakeholders in both the United States and the European Union.”

The notice provides an invaluable opportunity to focus ITA’s attention on subtle yet significant imbalances that can disproportionately impact trade, competitive, commercial, and regulatory issues. These might include lack of World Trade Organization notification, lack of transparency, lack of clarity, failure to reflect fully international standards, discriminatory impacts of imported products, among a host of other issues. Clients and friends are urged to provide comment. As noted, the comment period ends on June 2, 2011.