You are here

Standardization

Concerns about TTIP and “Lowering Standards” in the EU

The objective of a Free Trade Agreement (FTA) is to remove barriers to trade in goods and services between two or more of the contracting parties. The World Trade Organization (WTO) pursues this goal on a multilateral basis between its 160 members, whereas bilateral agreements such as the proposed EU – USA “Transatlantic Trade and Investment Partnership” (TTIP) pursues this objective on a bilateral basis. The justification for negotiating these additional and distinct bilateral agreements lies in the fact that advanced and already highly-integrated economies have specific needs, notably in terms of market access and regulation so as to strengthen trade between them.

TTIP would not aim to merely remove customs duties as a means of facilitating trade, nor would TTIP be limited to general principles of non-discrimination. It will build on the WTO, and then go much further by aiming to progressively remove “non-tariff barriers” (NTB’s), being the generic term for behind-the-border measures which relate to the way a product is produced, processed, labeled, tested for compliance, and so on. Often, such sanitary or technical rules are intended to protect the safety and health of the consumers and their environment. And that is the origin of what appears to be the fear expressed in the public debate concerning TTIP, that the removal of barriers to trade would imply the removal of various safety or environmental measures aimed at protecting the public. The fear is that TTIP would lower the (presumably high) standard at which the EU consumer is protected. AmCham Belgium, however, is of the view that, as regards the standardization elements of TTIP, it is possible to "have one's cake and eat it too".  This is because a carefully crafted chapter on regulatory convergence will generate benefits from smoothing out market barriers, without compromising health, safety and environmental concerns.

Within the TTIP debate, it is however oftentimes difficult to pinpoint which standards would allegedly be "lowered" by cooperating with the US. Of primary concern seems to be the EU standards which relate to EU consumer and product-related legislation. Specifically, within the European Union, there are more than 4000 standards which directly relate to 39 EU Directives and Regulations such as the general Product Safety Directive, the Toy Safety Directive, the Construction Products Regulation, and so on. We shall focus of the potential impact of TTIP on standards related to these instruments.

How does Standardization in the EU Work?

In the aforementioned various EU laws governing product standards, the EU legislator (i.e., the European Parliament and the Council) has laid down “essential requirements” which a product must respect so that it is considered appropriate to be marketed within the European Union. A European Standard (referred to by the acronym, "EN") is a document containing a high level of technical detail in order to flesh out these binding “essential requirements” more concretely. Perhaps more widely known are international standards, known by their "ISO" reference. It should be noted, however, that in the EU, standards are not “binding” in the same way as EU legislation is, but their legal significance stems from the fact that, when a product conforms to the EU standard, the product will benefit from a presumption of compliance with the legally binding essential (safety, health,....) requirement set by the EU legislator. Manufacturers can externally demonstrate this by applying to place the “CE”-marking on their product, after having followed the appropriate certification procedure. In this way, the consumer will also know that the product concerned lives up to the requisite level of safety, health, etc. required by EU law.

An Example: The EU Toy Safety Directive

Regardless of the final negotiated text of TTIP, the European Commission is truthful when it states that TTIP will not now, nor in the future, preclude the EU and its Member States from pursuing their public policy, health, safety or security objectives in the way described in the previous paragraph. Indeed, it should be emphasized that the European Commission has been quite forthcoming and transparent by publishing the actual textual proposals it has made to the USA in January 2015. In the following paragraphs, we will use the negotiation text to develop a concrete example of EU standardization in toys. It is intended to illustrate that businesses will benefit from TTIP, and that the consumer need not fear for the safety of their children as a result of TTIP.

In 2009, the EU adopted the Toy Safety Directive. In this binding piece of EU legislation, it was agreed that, for toys, it is an “essential requirement” that, when the “intended user” (i.e., children) can physically go into/enter a toy (a toy house, a play tent…), the child should be able to easily exit this toy. In other words, a three-year old girl or boy should be able to exit their playhouse using the physical force and abilities they possess at that age. Subsequently, a European standard was adopted fleshing out concretely what that means: essentially a toy house or tent should not use fasteners, zippers or buttons on the door since the child is likely unable to open them; and the door (if there is one) should only require a very low level of physical strength to open it.

TTIP does not seek mutual recognition, but mutually advantageous cooperation in technical standards.

The easy-exit requirement for toy houses marketed in the EU can be termed a barrier to trade, insofar as US toy houses would have been designed and manufactured to align to a US standard. It is then possible that this US standard does not match the essential safety requirement set in the EU Toy Safety Directive. Marketing the product in the EU could therefore require a separate design, or a more complex production line, which may in turn make international export unattractive or in some cases impossible: hence the barrier to international trade. Despite that barrier, it must then be noted that, when TTIP will aim at removing this barrier to trade, it will not aim to remove the safety requirement for our childrens’ toys altogether. As we can note from the TTIP negotiating text published by the Commission in January 2015, the text does not seek “mutual recognition”. In other words, under the EU-USA free trade agreement, the Commission does not pursue a rule whereby the safety requirement and standard set out in the USA for toy houses would be simply considered as living up to the level of safety and standard set by the EU legislator.

What the European Commission is rather pursuing is equally clear from the January 2015 negotiating text: in essence, the Commission aims at a structured and institutionalized form of a priori information exchange, and stronger collaboration on future standards, in which both parties agree in advance that issue-specific convergence can be beneficial.

Such collaboration should not endanger the high level of safety, health and consumer protection currently in place within the EU. Rather the opposite.  Through TTIP, the EU in essence aims to extend its own current standardized approach to the USA. The EU's standardization processes are laid down in Regulation 1025/2012 and are already based on collaboration with international organizations, various forms of international affiliations with third countries and public consultations open to NGOs and businesses which do not have to be EU-based.

As a consequence, the EU's model of standardization might very well serve as a positive and constructive means of extending the EU's approach across the Atlantic via TTIP. In the USA, there are more than 600 standardization bodies, and the federal and state legislators will then pick the one they find most suitable and integrate it into their binding law. This, in turn, leads to great diversity which in the EU is considered as detrimental, since it can allow barriers to trade to persist. In contrast to the USA, in the EU, a standard which was drawn up at EU level will be uniformly adopted across all 28 EU Member States, as well as EFTA countries and a few other associated states (in fact, for 33 countries in total). Furthermore, the EU views the International Standardisation Organisation (ISO) and the International Electrotechnical Commission (IEC) as the international bodies for standardization. In the case of the ISO, 31 per cent of European and international standards overlap, and in the case of the IEC this overlap exceeds 70 per cent. As a consequence, from an EU perspective, TTIP can be perceived as extending the (already) extensive international reach of the EU’s standards, through a greater penetration of the US market. Therefore, TTIP could in fact have a positive influence on the USA's approach to standardization… to the benefit of EU consumers and businesses. In this way, EU consumers may feel their interests and concerns will be protected while EU businesses will still have a greater opportunity to market their products abroad.

Conclusion

It must be stressed that the EU’s approach to standardization is embedded in a binding Regulation 1025/2012, which would not change through TTIP. What TTIP will bring is a greater openness of EU and USA standardization work, so that there are institutionalized exchanges of information on planned standardization work, dialogue on common concerns and a commitment to explore whether they can be addressed through common standards. This is essentially all about striking the right balance: It does not mean that either the USA or EU legislators would “lose sovereignty” or control over public policy. It does mean that both sides will become more attuned to one another through institutionalized communication so that consumers and businesses can benefit from mutually-advantageous rapprochement between both markets.