Bid to melt freeze in EU-US trade relations

Date: 11/04/02

By Peter Chapman

FLAGGING transatlantic trade relations could get a boost next month with the approval of new rules designed to pre-empt potential disputes.

Diplomats say the EU will sign off on a long-awaited new early warning system that would allow stakeholders on both sides of the Atlantic to air their views on draft rules and regulations before they are adopted.

'This has been a very big item for us since 1998,' said Jeff Werner, US director of the Transatlantic Business Dialogue - an organisation of CEOs.

'It's certainly not the silver bullet...but it will have a positive effect on a lot of sectors.'

The European Commission is currently circulating the draft agreement to member states and is scheduled to sign off on the deal on 12 May - soon after the 1-3 May EU-US Washington summit.

Under the new 'guidelines for regulatory cooperation and transparency', already agreed in principle by Washington, US-based companies would have the right to be consulted, and to make comments on draft EU laws, while there is still a chance to influence the process.

EU firms would also be able to vet US laws and draft decisions by federal agencies.

Trade relations have been severely strained in recent months thanks to disputes over US tax breaks, EU bans on hormone-treated beef and US duties on foreign steel.

Washington did more damage last week by insisting that defence chiefs should pre-approve EU take-overs of US firms.

Though experts say the new system will not prevent all such disputes in the future, they say it could stop some of them - and help get rid of hundreds of other regulatory niggles that cause companies grief but rarely make the headlines. Both sides agree the time is ripe for such a move.

The US last week attacked the lack of openness of EU decision making and accused it of limiting many consultations to a select band of 'invited stakeholders'.

Washington said 'a growing number of US trade concerns stem from the lack of transparency and the process by which the EU develops technical regulations'.

The World Trade Organisation obliged members to give interested parties 'a meaningful opportunity to comment on draft regulations'.

'Unfortunately,' the US claims, 'under current EU procedures, notifications of proposed technical regulations are only made to the WTO after the European Commission has finalised its proposal.

'As a result, in most cases, the United States and other interested members are unlikely to have a meaningful opportunity to have concerns addressed or reflected in legislative provisions.'

The EU, meanwhile, has attacked decisions taken by certain US agencies, such as the Food and Drug Administration and the Occupational Safety and Health Administration (OSHA), said Thomas Hagdahl, an advisor to outgoing Electrolux CEO Michael Treschow - TABD's European boss in 2001.

Diplomats say the four-year delay in approving the new early warning system was due to the EU side's failure to agree the precise levels of 'operational transparency' that would apply.

But US State Department officials were reluctant to point the finger at their EU counterparts.

They said that the delays had more to do with the EU's genuine desire to ensure a consistent approach with the forthcoming consultation guidelines, aimed primarily at EU-based stakeholders, than any desire to keep secrets from Washington.

Flagging transatlantic trade relations are due to get a boost with the approval of new rules designed to pre-empt potential disputes.