Lawmakers fear doubling of regulations from US-EU trade deal

Lawmakers are pushing the Obama administration to make sure that a U.S. trade deal with Europe doesn't subject American companies to a double set of regulations.

The deal being considered goes beyond reducing tariffs and fees to how regulations and standards on both sides of the Atlantic will interact with each other and whether one set of rules can substitute for another.

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Lawmakers and business groups from a wide variety of sectors worry that one outcome could force them to have to deal with two sets of regulators, making it harder for businesses to run smoothly and wasting taxpayer resources.

Some Democrats, however, warn that aligning regulations to prevent redundancy could lead to a race to the bottom and weaken critical American safety standards.

The trade deal, known as the Transatlantic Trade and Investment Partnership, “represents a historic opportunity for both sides to create greater openness, transparency and convergence in regulatory approaches and standards while reducing unnecessarily redundant requirements,” Rep. Lee Terry (R-Neb.) told a packed Energy and Commerce subcommittee hearing on Wednesday.

Trade between the U.S. and European Union adds up to about $2.7 billion a day, and that figure should only increase with the potential trade deal.

However, lawmakers worry that it will also lead both American and European regulators to perform the same inspections and subject their goods, services and facilities to the same tests.

For instance, if European officials inspect and certify that a pharmaceutical manufacturer is operating safely and soundly, the U.S. Food and Drug Administration (FDA) would be wasting everyone's time and taxpayer money by doing the same survey again, said Terry, chairman of the subcommittee on Commerce, Manufacturing and Trade.

Instead, he said, the FDA should accept the foreign regulator’s certification and spend its time on more pressing issues.

In their negotiations, administration officials will need to come up with ways to align regulations and determine which rules apply where, and whether actions by some European regulators will satisfy stateside agencies’ requirements.

Businesses reject the notion that negotiators should simply subject them to whichever regulation is stronger.

“We have no interest in harmonization to the most restrictive standard,” said Cal Dooley, head of the American Chemical Council, at the Wednesday hearing.

Instead, business trade groups want negotiators to cooperate and find a middle ground that avoids redundant standards and needless red tape.

“It’s an opportunity to make our processes more efficient and an opportunity for the government agencies to be able to focus where there is high risk,” added John Castellani, president and chief executive of the Pharmaceutical Research and Manufacturers of America.

Democrats and safety advocates want the administration to tread lightly and not eliminate needed American safety regulations.

“While we all agree that actual unnecessary trade barriers should be addressed, it is important to identify what qualifies as unnecessary, “ said Rep. Jan Schakowsky (Ill.), the top Democrat on the panel.

Greatly aligning regulations could lead the U.S. to adopt some of the less restrictive European rules, they worry, which could expose the public to new health and environmental hazards.

Food safety is one example.

Jean Halloran of the Consumers Union said that if the United States had accepted European standards when a recent case of mad cow disease was found in the United Kingdom, American regulators may have been unable to prevent European beef from being sold in U.S. stores.

“The U.S. could’ve been forced to keep taking European beef,” she said, despite concerns about the meat at the time.

There is at least one point of agreement between lawmakers in both parties, business groups and consumer advocates, however: opening up trade negotiations to the public.

The discussions and bargaining positions are currently crafted in private, which the administration says is needed to keep its cards close to the chest.

Even members of Congress are kept in the dark, much to some of their protests, and businesses want the chance to weigh in.

“Greater transparency in trans-Atlantic cooperative activity between regulators could help enhance stakeholder confidence and support for regulatory cooperation,” Dooley said in his written testimony.

Rep. John Dingell (D-Mich.) added that “a lot of sunshine is warranted.”