Why Regulatory Harmonization Will not Equal Regulatory Erosion
While free trade can serve as a stimulus to our struggling economies that does not involve fiscal sacrifices, many critics of TTIP point to a feature of the proposed agreement that they believe is a price too steep to pay: regulatory harmonization. However, public assurances, official negotiating positions, as well as past and present practice seem to contradict most of the concerns associated with harmonizing sanitary and phytosanitary (SPS) regulations.
In order to put these fears into context, it is important to see why we need TTIP. After the financial crisis and the ensuing Euro crisis, Europe is experiencing a period of low growth, high unemployment and high public debt. TTIP and free trade is an opportunity to intensify the existing transatlantic trade and investment relationship and to create jobs and growth on both sides - without having to spend more public money. The main gains can be achieved through the mutual recognition or harmonization of technical regulations, standards and norms. TTIP may be able to reduce double testing requirements, and to make approval and registration processes easier. This will lead to lower transaction costs, which is particularly important for small and medium-size enterprises (SMEs). But to be clear, making regulations more compatible does not mean that the lowest common denominator will prevail, but rather allows negotiators and consumers to see where they differ unnecessarily.
The debate in Germany, however, centers less about technical standards and more about sanitary and phytosanitary standards, which concern food safety and consumer protection issues. It is often feared that TTIP will force the EU to adapt US standards and to lift all import bans on controversial food such as hormone beef, GMOs or chlorinated chicken. Are these fears justified? The European Commission has stressed on its website that "Basic laws, like those relating to GMOs or which are there to protect human life and health, animal health and welfare, or environment and consumer interests will not be part of the negotiations." The evidence so far supports this statement. The EU has never negotiated an agreement in which the food safety standards were compromised. This is also true for the last free trade agreement which the EU negotiated with Canada (CETA) in which existing EU hygiene and health standards were preserved. In line with the compromise of the hormone beef trade war between the EU and US/Canada from 2012, Canada is not allowed to import any hormone-treated beef into the EU. In return, the quota for hormone-free beef imports from Canada was increased. The same will be the case in TTIP.
In addition, the EU has never changed its GMO approval system despite several cases at the WTO. And the designated Health and Food Safety Commissioner Vytenis Povilas Andriukaitis of Lithuania as well as Chancellor Merkel pointed out that the GMO approval system will not be touched by TTIP and that chlorinated chicken will not be imported – regardless of the fact that there is no evidence that chlorine treatment is actually harmful for the consumers. Even the German Federal Institute for Risk Assessment (BfR) sees advantages in this kind of treatment. All these cases show that regulatory independence – also with regard to food safety - will be retained in TTIP.
Another point to be made is that American standards are often wrongly perceived as lower than those of the EU. This holds neither true for technical standards nor for health and hygiene standards and food safety issues. For example, the US prohibits the import of raw milk products because of serious health concerns, e.g. Listeria or Salmonella. Therefore both the EU and the US are not keen on agreeing on lower levels of protection in food safety.
TTIP should be seen as a chance for growth and jobs in Europe. Through mutual recognition and harmonization, TTIP can reduce transaction costs and intensify the transatlantic relationship. And so far, there has never been any evidence that the European Commission has compromised our food safety standards. In contrast, the EU has always upheld our standards even though there is sometimes no scientific evidence in place that supports a ban. TTIP is a chance to establish high global standards and this opportunity should be seized.
Dr. Claudia Schmucker is the head of the globalization and world economy program at the German Council of Foreign Relations (DGAP).
This article was published in the second of three theme weeks for our project "TTIP: Myths vs Reality". An introduction of the articles for the week can be found here, and introductions of the other two weeks can be found at the top of the TTIP Forum.
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