TABD seeks to bridge political divides

Date: 22/10/1998

By Peter Chapman

CHIEF executives are used to getting what they want. When they click their fingers, things get done. Otherwise, people tend to get fired.

But, unfortunately for the doyens of big business, politics work at a more leisurely pace.

Even when governments promise to do something to help companies, the action they have pledged often gets put on the back burner while other more important things like lawsuits over alleged sexual impropriety and elections get in the way.

Life is both simpler and more complicated for chief executive officers (CEOs). They must return a profit and give shareholders value. If they do not, they too can easily be dispensed with at the company's next annual general meeting.

It is, therefore, not hard to understand why the pinstriped ranks of the corporate élite get a bit impatient when their political cousins fail to deliver the goods.

The annual conference of the Transatlantic Business Dialogue (TABD) is industry's attempt to force the US and European governments and their teaming ranks of bureaucrats to step up the pace.

The latest TABD will be held next week in Charlotte, North Carolina, where organisers expect 100 CEOs from American and European firms, led by Daimler Benz' Jürgen Schrempp and Warner-Lambert's Lodewijk de Vink, to deliver a joint appeal to governments on both sides of the Atlantic to reduce the barriers which are coming between them and bigger profits.

Top political figures including US Trade Representative Charlene Barshefsky, Trade Commissioner Sir Leon Brittan and World Trade Organisation director-general Renato Ruggiero will also be there to hear the message from industry.

This collection of the 'great and the good' will be accompanied by a low-key delegation of top managers from small companies taking part in a separate forum known as the 'transatlantic small business initiative'.

The headline-making debates between the likes of Barshefsky, Brittan and business leaders will probably centre on big issues such as the Transatlantic Economic Partnership and the future role of the WTO in global competition policy.

But Hanns Glatz of Daimler Benz admits that most of the issues which the TABD will grapple with next week are likely to seem arcane to the casual onlooker.

The key issues to be addressed by the CEOs in Charlotte will range from the labelling of products by metric measurements and the laws governing data protection to mutual recognition agreements (MRAs), the complex accords which allow testing bodies in one country to endorse standards applied to goods in another.

None of these are topics which are likely to capture the general public's imagination. But, as Glatz points out, small or arcane things like an MRA often translate into significant sums of money.

MRAs allow firms to save a great deal of cash because they can arrange for all the safety and conformity tests on their products to be carried out in their own country, in one go, without having to grapple with further bureaucracy abroad.

The US and EU signed an agreement covering a slate of sectors from telecoms equipment to leisure boats back in May, after the TABD had carried out much of the groundwork.

However, the CEOs plan to take the US administration to task next week for allowing Congress to pass a law which will exclude a number of life-saving medical devices from the scope of the MRA. The US authorities subsequently claimed they could not implement the accord in its present form because it would be illegal.

Industry fears that in the worst-case scenario, a whole new deal might have to be struck, with new negotiations on replacements for products excluded from the list, which could delay ratification by up to a year.

TABD chiefs Schrempp and De Vink have written to both US President Bill Clinton and European Commission President Jacques Santer urging them to accept the current deal, minus the barred medical devices, without further ado.

"For the TABD, this delay is unacceptable and we wish to invite the responsible authorities to develop urgently a pragmatic solution to overcome these obstacles," they said.

The solution preferred by industry would be to put the current deal into place and then get the US Federal Drug Administration and the Commission to thrash out a new agreement on the medical devices sector.

Other issues on the TABD agenda where the aim is to reduce the red tape facing companies include calls for improvements in the way customs duties are charged on goods traded between the EU and US. This will include proposals to allow certain goods to be released by customs authorities before duties have been paid, in order to oil the wheels of international trade.

CEOs will also give their seal of approval to a completely new deal aimed at cutting the bureaucratic burden on firms competing for business in the world tyre market.

Manufacturers such as Italy's Pirelli, Japan's Bridgestone, France's Michelin and Germany's Continental want the US and EU governments to accept their proposal to agree on one common standard for tyres.

Industry representatives are also expected to focus on moves to boost the certification of new car technology, an area which is not surprisingly of keen interest to Daimler Benz' Glatz.

The TABD has lobbied at past events for an international deal to enable car firms across the world to comply with uniform standards for their components. An agreement to broaden an old United Nations treaty to cover the whole of a vehicle instead of just a few major components has now been brokered thanks to TABD pressure.

The US, which never signed up to the old treaty, has ratified the new accord and others, including the EU and Japan, are expected to do so soon. The CEOs will use next week's conference to urge more countries to accept the deal. If their pleas are heeded, says Glatz, it will count as a major TABD success.

"We have calculated that 5-10% of all research and development costs for a model are just adapting it to US standards," he said. "With our new 'S' class model, we could have saved 10% of our research costs if we had just been able to develop one standard.

"It is not that they were more demanding in the US. It is just that you had to have different things, like yellow brake lights instead of red ones, and you have to meet totally different emissions tests, even with the same engine."

If none of this succeeds in attracting widespread attention, TABD participants will have an ace card up their sleeves at this year's meeting which should do the trick.

To ensure that governments are paying attention to the industry's wishes, this year's meeting will see the launch of a 'score card' system to measure their progress in dismantling last year's TABD list of key barriers to trade.

"Governments on both sides claimed they have taken on board 80% or so of our recommendations. But our people in the TABD working groups said this is not true," explained Glatz.

The score card will list those TABD recommendations which governments have either implemented or come close to putting into force. "In May, Jürgen Schrempp said we would like to get this score card up to about 50% by the end of the year. But preliminary investigations suggest that we will get a figure of 40-45%," added Glatz.

Despite the shortfall, this seems like a reasonable return on the business community's investment at the TABD.

Major feature on the Transatlantic Business Dialogue and its annual conference, Charlotte, 5-7.11.98.