17 May 2016

The TTIP-leaks[1]: Our first analysis of the regulatory cooperation chapter[2] shows that there is every reason to be worried.

The U.S proposals would severly impact existing and future regulations aimed at protecting consumers and the environment.

Rikard Allvin Policy Advisor on Trade, Swedish Greens


Regulatory cooperation has been the subject of much criticism since the early stages of the negotiations. Leaked EU proposals came under fire from civil society and has been described as the “ultimate tool to prevent or weaken future public interest standards for citizens, workers, consumers and the environment”[3]. The EU proposals are no doubt bad, but what the TTIP leaks show is that the  the U.S proposals are actually far worse.

Our analysis focus on the U.S brackets in the chapter on regulatory cooperation. This is a consolidated text, so it has not been finalised and it remains to be seen whether the U.S proposals makes it into the final agreement. So, lets have a look;

“Paralysis by analysis”

Article X.8 - Transparent Development of Regulations
Under this paragraph, the U.S seeks to impose a number of requirements on regulators (both EU and member state level).  They must publish the textual proposals of the regulations produced, an explanation of why the regulation is needed, how it achieves its objectives, the reasons behind the specific content, and present alternative solutions to reach those objectives (other than regulation). In addition, they must publish supporting evidence of the regulation and the name and contact information of an individual person who can answer questions about the regulation. And that's just a sample of all of the requirements the U.S wants to impose.

These requirements are further developed in Article X.13 where the U.S, among other things, want to set up a definition regarding impact assessments of new regulations, where again the need for the regulation is to be explained, reasonable alternative to regulation (not regulating at all) must be evaluated, etc. In short, any new regulation needs to be excessively justified, while the policy option  of doing nothing does not need to be justified at all. The US proposal is therefore inherently favouring “no regulation at all” and the preservation of status quo. The excessive demand for “evidence” in law-making is already taking place in the US and according to U.S consumer group Public Citizen this result in a regulative process defined by “paralysis by analysis".

The image of TTIP as a potentially effective tool to delay and inhibit new regulation is further strengthened by article X.9. Here, the U.S demands that the regulatory authority  has to assess the comments on the regulation sent from the other party or one person of the other party (corporation) regarding the effects of the proposed regulation on trade – and, the regulatory authority has to respond to it. This should be done before the regulation is sent for voting (eg. to parliament) so that it can be modified on the basis of the comments provided. At least 60 days should be given in order to receive comments and the party has to consider requests to extend this period further, in accordance with article X.8. In practice, this becomes a mandatory referral procedure for corporations, where their input has to be considered and adressed.

Article X.14. "Evidence-based decision making", introduces the same themes with the requirement that in conjunction with the presentation of a fully developed draft regulation, (in U.S definition on EU or Member State level), the party shall publish a detailed explanation of;
The proposed regulation, including its purpose, whether the proposed regulation achieves this purpose, how it can be supported by "data" and "evidence" used in connection with the development of the regulation, and identify the main alternatives to regulation (as in not regulating at all).  In article X.15,  the U.S wants to empower an "interested person" (corporation) to ask an regulatory authority to amend or withdraw a regulation that, according to the "person", has been ineffective in protecting health or safety, or, which is rather the real purpose, has become more burdensome than necessary to achieve its objective (including with respect to its impact on trade)." In addition, this also concerns regulations that "fails to take into account changed circumstances (such as fundamental changes in technology, or relevant scientific and

technical developments), or relies on incorrect or outdated information."  This should be seen in the light of the U.S history of depicting the EU's precautionary principle as “unscientific”.

Not only does the U.S want to impose these excessive requirements on new law-making, they also want existing regulations to be reviewed. Under Article X.16 "Retrospective Review of Regulations" the U.S expect the parties to continuosly review existing regulations in order to determine whether they need to be changed or withdrawn, either on the initiative of a regulatory authority or upon a request from a "person" (coroporation) in accordance with Article X.15.

What the United States proposed in the regulatory chapter of TTIP would most likely seriously delay, obstruct and/or potentially weaken new regulations aimed at strengthening the protection of consumers, the environment or the climate, both on EU and Member State level. In practice, it would bury regulatory authorities in adminsitrative work due to the requirements imposed on them with regard to “scientific evidence”, review, and the obligation to respond to comments and request from “interested persons”.  It would no doubt seriously alter the legislative process of the EU and specific Member States and potentially undermine the development of future regulations. This is a regulatory chill if ever there was one. 

It remains to be seen whether the EU will accept the U.S proposals. Trade Commissioner Cecilia Malmström has written on her blog[4] that "No EU trade agreement will ever lower our level of protection of consumers, or food safety, or of the environment". It is worth noting that this statement in no way adresses the concerns raised in this article, since the regulatory cooperation would primarily affect future regulation and make it very difficult to “strenghten” these standards.

On the contrary, Malmström speaks of the exact same preservation of status quo embedded within the U.S proposals. 

If you are looking for a single reason to oppose TTIP, regulatory cooperation might be it.





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