From Audi to Zappa: Trade talks offer new chance to change rules
U.S. and European Union negotiators are seeking to replace a patchwork of rules and regulations with common standards governing everything from how motorists dim their headlights to how much the trust that owns the rights to the late Frank Zappa’s work is paid for playing one of his songs.
WASHINGTON — For years Audi has sought to get U.S. regulators to allow its futuristic headlights, which automatically dim for oncoming drivers, to be sold in the United States.
The company — and any other manufacturer that wants to use advanced lighting systems — can’t do so because a 45-year-old U.S. rule for headlights doesn’t permit the 21st century technology.
That could change if negotiations that started Monday in Washington, D.C., result in a trade accord between the United States and the European Union. In addition to reducing $10.5 billion in annual tariffs, the pact could streamline disparate regulations on either side of the Atlantic to facilitate trade.
Some companies see it as an opportunity to eliminate burdensome rules — a rare second chance to achieve on a global scale what they’ve been unable to win from individual governments. That has safety and consumer advocates warning that hard-fought protections could be diluted or eliminated.
“We don’t want a trade agreement to become an opportunity for a race to the bottom, to take the weakest law on each side of the pond and make that the only law forever,” said Ed Mierzwinski, consumer-program director for the U.S. Public Interest Research Group in Washington, D.C.
The proposed pact, carrying the unwieldy title of the Trans-Atlantic Trade and Investment Partnership, would create the world’s largest free-trade zone, with 29 nations representing about a third of world commerce and a cumulative gross domestic product of $33 trillion. Negotiators are seeking to replace a patchwork of rules and regulations with common standards governing everything from how motorists dim their headlights to how much the trust that owns the rights to Frank Zappa’s work is paid for “Don’t Eat the Yellow Snow” when it is played on the radio. Zappa died in 1993.
“This proposed agreement would be a perfect place” to end an anomaly in U.S. law regarding royalty payments, artist groups and the Recording Industry Association of America, said in a letter filed with the Office of the U.S. Trade Representative in May.
Record labels want AM and FM radio broadcasters in the United States to pay artists for their performances as the EU does, not just for their songwriting, as is done in the U.S. The groups acknowledged Congress must ultimately decide the matter.
To achieve success, negotiators will have to overcome entrenched interests and protectionist instincts. There are already signs of trouble. France persuaded its EU partners to pass a resolution supporting the nation’s ability to protect its film industry from Hollywood in the trade talks.
Revelations that the U.S. had spied on EU diplomats haven’t helped build trust. French President François Hollande demanded the talks be delayed as a result, though his partners disagreed.
“The reason why we decided to hold the talk now is we are convinced that this deal is good for Europe,” European Trade Commissioner Karel De Gucht said Monday during a news conference in Geneva. “We will, of course, meet a lot of problems and stumbling stones, but if we reach an agreement, it would be a historic one — so let us work now.”
A review of hundreds of documents filed with U.S. and European officials reveals long and contradictory wish lists, hinting both at the difficult negotiations ahead and the potential impact of a deal to workers, businesses and consumers.
European contractors, for example, want to compete for U.S. government work despite buy-American preferences in many jurisdictions. Ship lines such as AP Moeller-Maersk of Copenhagen, owner of the world’s largest container line, want to be able to move more cargo between U.S. ports under their own flags, essentially nullifying parts of a 93-year-old U.S. law that limit that work to ships built in the U.S. and crewed by Americans.
American farmers want greater access to EU markets for their wares, including genetically modified foods that European consumer groups fiercely oppose. Pharmaceutical companies want the guaranteed 12-year protection for data on biologic drugs they enjoy in the U.S., which consumer advocates say inflates prices and limits access to generic drugs.
“There are going to be sensitivities on both sides,” President Obama said June 17 during the official start of the talks at the Group of Eight summit in Northern Ireland. “I’m hopeful we can achieve the kind of high-standard, comprehensive agreement that the global trading system is looking to us to develop.”
Negotiators planned to meet through Friday at government buildings within the White House complex. They then plan to meet every few months, with a goal of reaching an agreement within two years. When a deal is struck, it must be approved by both the U.S. Congress and the European Parliament and European Council. Member states of the EU are Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Malta, Luxembourg, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and Britain.
The U.S. and EU already have the world’s largest bilateral economic relationship, with $4.5 trillion in trade and investment passing between them a year. Historical and cultural ties bind the two continents, though industry groups for years have lived with a fragmented trans-Atlantic regulatory network.
The global economic turmoil that began in 2008 — and the ensuing sovereign debt crisis that has threatened the existence of the euro — changed everything. With economic growth sluggish on both sides of the Atlantic, the Doha round of global trade talks stalled, and all eyes on China’s rise in global commerce, politicians and business leaders see now as the time to cement their trading ties.
“This is a once-in-a-generation prize and we are determined to seize it,” British Prime Minister David Cameron said at the G-8 Summit last month.
Though officials from the EU and U.S. have been meeting since November 2011 to discuss the prospects for a potential accord, the process began in earnest in February, when Obama announced during his State of the Union address the intent of the U.S. to join in a trans-Atlantic trade deal.
In April, corporate and government officials crammed inside a room of the U.S. Capitol for the start of the Business Coalition for Transatlantic Trade, a lobbying behemoth that includes Citigroup, Dow Chemical, Ford, FedEx, General Electric Intel Corp., JPMorgan Chase and United Parcel Service. It’s run by the U.S. Chamber of Commerce, which last year spent $136 million on lobbying all issues — more than the five next top spenders combined, according to the Center for Responsive Politics, a D.C.-based watchdog group.
Consumer advocates and labor unions say they’re worried the corporate influence on the trade talks will lead to backdoor deregulation, watering down standards designed to protect public health and safety.
“Such standards should not be subject to negotiations heavily influenced by corporations that would profit from the dismantling of those standards,” said Ben Beachy, research director for trade issues at Public Citizen in D.C.
The San Francisco-based Sierra Club said in a report last month that regulators should adopt common standards only if they are tightening regulation, not relaxing it. The group warned against potential efforts to weaken European limits on greenhouse-gas emissions, food-safety rules and chemical regulations.
Business groups and officials on both sides say cutting red tape and other regulatory barriers would boost wealth and help unsteady economies heal. Achieving that will mean finding common ground on hundreds of issues dear to individual constituencies, from mail carriers to merchant mariners.
Even before the talks started, participants began to rope off areas of disagreement. France last month won a nonbinding exclusion to retain subsidies for its filmmakers and other artists. The U.S. Treasury wants some aspects of financial regulation to be dealt with outside of the talks.
EU Trade Commissioner De Gucht has said he’ll respect the “precautionary principle” that some European governments have used to limit agricultural imports on grounds of public safety concerns.
“It’s easier to negotiate with one country than 27 countries,” Gary Doer, Canada’s ambassador to the U.S. said June 19 in D.C.
His nation has been trying to complete a trade deal with the EU since 2009 and the talks have been at an impasse over issues including market access for agricultural goods.
“You’re going to have an interesting time in the United States with Europe,” he said.