Regulatory Mutual Recognition Preferable to Harmonization in TTIP, Says British Industry Leader
The European Union prefers mutual recognition for cross-sector regulations in a final Transatlantic Trade and Investment Partnership, as opposed to harmonization of those regulations, said Director-General of the Confederation of British Industry John Cridland at the National Foreign Trade Council on March 24. Cridland hit back at concerns that big business wants to use the deal to lower standards.
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The mutual recognition approach will allow the U.S. and the European Union to wrap up negotiations in a “reasonable” timeframe, said Cridland. “I’m not speaking about every sector and every product range, but generally I think mutual recognition is the better way,” he said. NFTC President Bill Reinsch, also speaking at the March 24 event, said some sectors, potentially the electric car industry, could be aiming for harmonization in a TTIP deal. But Reinsch said a final agreement isn’t likely to harmonize regulations on traditional industry.
The two sides need to make substantial progress throughout 2015 in order to wrap up a deal by early next year, Cridland said. The deal is struggling with an image problem, and industry needs to boost efforts to sell TTIP as a boon to consumers and small and medium-sized businesses, he said. But progress so far has also been "slow," said Cridland, pointing to continued disagreement on genetically modified organisms and chlorinated chicken. The European public has shown skepticism and opposition to the deal, particularly over the inclusion of the investor-state dispute mechanism (see 1501140016).
The ISDS provision is a controversial element of a TTIP package (see 1503120011). Investors have confidence in the U.S. and EU investment environments, so the ISDS mechanism may not play the critical role in TTIP that it does with trade agreements involving political unstable and corrupt countries, said Cridland. The mechanism’s inclusion will set the rules for global trade, however, and it may serve an important role if other countries want to join the TTIP pact in the future, said Cridland. “The precedent issue is the most important factor,” he said. “The European Commission is making good progress through [Trade Commissioner Cecilia Malmstrom] in finding ways to show and rebuild confidence in the role of ISDS.” The Office of the U.S. Trade Representative argues the mechanism is necessary to safeguard foreign investor rights and against discrimination (see 14032721).