Industry chiefs push for cuts in red tape

Date: 21/10/1999

By Peter Chapman

CAPTAINS of industry in the EU and US are preparing, once more, to remind politicians who really holds the power and to rap them firmly over the knuckles for the red tape which still comes between businesses and more dollars and euro.

When 100 of the great and the good from the world's two largest trade blocs gathered in Charlotte, Virginia, this time last year, they warned that transatlantic trade rows over standards, different product testing regimes and a myriad of other bureaucratic hurdles were costing firms a fortune, and demanded swift action to dismantle them.

This year's Transatlantic Business Dialogue (TABD) meeting, which will bring together 112 chief executive officers in Berlin next Friday (29 October), will herald the progress achieved so far but insist that the politicians need to do more.

Hanging on their every word will be government ministers from both sides of the Atlantic including US Commerce Secretary Bill Daley and top officials such as new European Trade Commissioner Pascal Lamy.

Last year, the TABD called for action on a slate of crucial rules and regulations ranging from the EU's directives on labelling products in metric measurements and data protection to the implementation of 'mutual recognition agreements' - the complex accords which allow testing bodies in one country to endorse standards applied to goods in another.

When the big guns of industry speak with one voice, only the bravest of governments ignores their demands. Twelve months on, the results are there for all to see.

Industry has clinched the promise of a ten-year delay to the Union's metric-only labelling directive, which would have required all firms selling goods in the EU and US markets to produce two separate batches of goods - one with US Imperial measurements and the other with metric.

Another 'victory' came when the Americans managed to force the Union to postpone implementation of legislation banning many old aircraft fitted with noise-reduction 'hush kits' from Europe's skies.

The TABD is also taking credit for encouraging US and EU telecoms firms to bury their differences over a crucial standard for the next generation of mobile phone technology. Work on developing the system known as W-CDMA is now continuing apace after US and EU wireless technology firms Qualcomm and Ericsson agreed not to let a bitter dispute over intellectual property rights derail the whole process.

But the situation would undoubtedly have been even better had the US and EU not got bogged down in the sexual and political scandals which nearly ended President Bill Clinton's career and brought down the Santer Commission, respectively.

Such a vacuum at the top is just what the TABD dreads. While their masters have their minds on other things, it allows the bureaucrats in government departments and administrations below to dictate the pace of change. That pace is often painfully slow because many bureaucrats themselves have a vested interest in keeping barriers in place, according to Conrad Eckenschwiller, who oversees the activities of the myriad of European groups working on TABD issues.

“People say 'no' because saying 'no' keeps them in a job,” he claims. “There was, for example, a brilliant business agreement made at the TABD between fierce competitors in the tyre industry, including France's Michelin and the US' Goodyear. They agreed on a world standard for their tyres and it was supported at the highest level by US Trade Representative Charlene Barshefsky, former European Trade Commissioner Sir Leon Brittan and Bill Daley. But it has not been implemented by the administrators.”

Clinton may have regained his composure after the impeachment proceedings which nearly led to his downfall over the Monica Lewinksy affair. However, Eckenschwiller says the turmoil in the European Commission after the Santer team's resignation has severely disrupted the EU's efforts to meet the promises made in the aftermath of the Charlotte meeting.

“We have been living for half the year without a European Commission, and having people with their minds not exactly on their jobs. Up until recently we did not know who the directors-general would be at the time of the Berlin meeting,” he explains.

But Eckenschwiller, who is also international director of the influential Mouvement des Entreprise de France, says the new Commission - including President Romano Prodi - has already been fully briefed on TABD. “We have no doubt that people like Pascal Lamy will hit the ground running,” he adds.

Executives are loathe to highlight just a few key issues from the many they will discuss at this year's showcase event, pointing out that every tiny trade barrier or inch of red tape can cost firms a small fortune. However, there are a few topics which they regard as particularly important.

The CEOs will kick-off the Berlin meeting with a declaration on south east Europe, promising to invest in the run-down Balkan states affected by the Kosovo conflict provided that the public sector takes action to make sure “certain institutions” ensuring legal certainty are in place.

But the number one priority for the CEOs will be the millennium round talks under the auspices of the World Trade Organisation which are due to be launched in Seattle in late November.

At next week's event, industry will call on the EU and US to stop their bickering at the WTO level about relatively minor trade disputes and what should be included in the new round. “Of course a certain number of people are expecting a civil war but the TABD does not want that,” explained one executive, who said delegates would urge the two blocs to come together to target more serious trade barriers in other parts of the world and to focus on opening up the vast potential of markets such as India and China.

CEOs will also call for the speedy implementation of the 'early warning system' designed to identify and nip minor transatlantic spats in the bud before they turn into major trade wars. The TABD claims credit for coming up with the idea of such an early warning system - which was agreed in principle at last June's EU-US summit - and now wants to see it swing into action as quickly as possible.

“Who is paying the bill for these disputes?” asks Eckenschwiller. “It is business and when the US retaliates, people get hurt.”

Other priorities for TABD delegates, he adds, will be to push for further progress in the complex areas of mutual recognition agreements (MRAs) and accounting standards.

They will argue that the limited scope of the existing MRAs should be widened to include more controversial areas such as drugs and vehicle testing. “There is progress being made,” says Eckenschwiller, pointing out that a top official from the US Food and Drug Administration - which has so far opposed such moves - will attend the TABD meeting for the first time to listen to industry's views.

On accounting standards, CEOs will demand changes to rules which prevent listed firms from using 'international' standards in bourses such as the New York Stock Exchange, which insists on the use of US norms.

The business chiefs say they will not rest until this barrage of red tape is removed. But a question mark remains over whether governments and their top civil servants will be able to forget the distractions of the past year, settle down and deliver the goods.

CEOs hope that the answer will be 'yes', but they are not entirely confident yet. Their aim in Berlin will be to hammer that message home.