Cosmetics, Medical Devices, Cars Among EU Trade Offers

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By Rossella Brevetti

July 14 — New European Union proposals in trade talks with the U.S. are aimed at simplifying technical regulations in the cosmetics, medical devices, cars, chemicals and textiles sectors, the European Commission said.

The proposals set out the EU's position on regulatory cooperation in these sectors in the Transatlantic Trade and Investment Partnership (TTIP) talks aimed at cutting red tape for companies operating in both markets and helping regulators by eliminating duplicative inspections.

The Commission also published proposals on climate protection, energy and raw materials, financial services market access and institutional cooperation.

Release of the proposals during negotiations marks a departure from the EC's policy of publishing texts sometimes weeks after presentation. The U.S. doesn't release its proposals but has published detailed objectives of TTIP goals.

TTIP talks are taking place in Brussels until July 15.

Release of the documents follows a leak of a purported proposal on energy and raw materials, which the commission said wasn't what would be presented to U.S. negotiators (133 ITD, 7/12/16).

Energy, Raw Materials

The energy proposal contains the same language as in the leaked text. It states that “the Parties must agree on a legally binding commitment to eliminate all existing restrictions on the export of natural gas” in trade between them.

The language would lead to greater dependency on a climate-disrupting fossil fuel and more hydraulic fracturing, according to environmental groups, which had criticized the leak.

Other provisions in the energy chapter would establish a consultation mechanism to prevent or react to disruptions of energy supplies to any TTIP party. The chapter also says that cooperation on energy and raw materials is needed to reduce or eliminate trade- and investment-distorting measures in non-TTIP countries.

Financial Services

The document said financial services “should be addressed in TTIP and that discussions on market access and on regulatory cooperation are closely linked.” A fundamental U.S.-EU difference is whether the TTIP should include a separate financial services chapter and whether the chapter will promote EU-U.S. financial regulation cooperation. EU negotiators have told their U.S. counterparts if the treaty doesn't address financial regulatory cooperation the EU won't address enhanced market access in Europe for U.S. financial services companies (129 ITD, 7/6/16).

The document lists protections sought by specific EU member states regarding their domestic financial services industries. Italy wants to require companies managing a domestic securities settlement system to be incorporated in Italy. Several EU countries including Bulgaria want executives working at certain financial institutions operating in the EU to reside permanently in their home country.

Institutional Mechanisms

The EU proposed a TTIP Joint Committee composed of representatives of both parties in the institutional provisions chapter. The committee would have a dedicated session on regulatory cooperation at least annually with participation of relevant regulators.

Another provision would set up a regulators' forum. General regulatory cooperation trends would be one of the issues discussed by the forum. A civil society forum would be convened at least annually under the proposal. If any World Trade Organization (WTO) agreement provision incorporated in the TTIP is amended, the parties would consult on a mutually satisfactory solution where necessary.

Trade, Sustainable Development

The climate proposal seeks to safeguard environmental standards by promoting green goods trade and “progressively” phasing out fossil fuel subsidies.

The EU urged U.S. officials to cooperate and exchange information regarding: energy efficiency, sustainable development, deforestation and emissions monitoring. The proposal acknowledges the 2015 Paris climate change accord's importance and urges the parties to cooperate with the United Nations Framework Convention on Climate Change and the Montreal Protocol on Substances that Deplete the Ozone Layer. The Paris agreement was reached last December and calls for global action to mitigate carbon emissions.

The EU also called upon parties to cut tariffs on environmental products—such as solar panels, water filters, electric motors and hydraulic turbines—by implementing the Environmental Goods Agreement.

Cosmetics

The proposed cosmetics annex would commit member states to support international efforts to maintain a globally harmonized regulatory and labelling schemes for cosmetics. To that end, the parties are encouraged to actively participate in the International Nomenclature of Cosmetic Ingredients Committee and to implement International Cooperation on Cosmetics Regulation guidelines. Regulatory bodies in each party, such as the Food and Drug Administration, would exchange regulatory information, even confidential commercial and technical information such as trade secrets.

The annex directs parties to develop alternative methods to animal testing. Parties can only require that cosmetic products be tested on animals in “exceptional circumstances,” namely where serious concerns arise regarding the safety of an existing cosmetic ingredient which is in wide use and cannot be replaced by another.

Motor Vehicles, Parts

The motor vehicles proposal sets out terms for EU and U.S. officials to issue new regulations for the automotive sector in a cooperative and transparent manner. The proposal seeks to ensure high regulatory levels for vehicle safety and environmental protection while aligning cross-Atlantic technical requirements, regulations and administrative measures with the 1998 agreement of the World Forum for Harmonization of Vehicle Regulations.

The U.S. accounts for 18 percent of all EU vehicle exports and more than 12 percent of all cars imported to the EU come from the U.S., according to EU trade statistics. The EU Trade Commission estimated that reduced trade barriers could increase bilateral EU-U.S. trade in the automotive sector by 70 percent to 350 percent over the next decade.

Textile Cooperation

The textile annex proposal would establish a joint regulatory cooperation work plan to guide cooperation between parties and to establish priorities. The work plan would be reviewed regularly. The International Organization for Standardization (ISO) would play a central role in cooperation, as parties are instructed to encourage their internal standardization bodies to actively participate in ISO work.

Chemicals

Regulatory cooperation in chemicals aims at improving protection for workers, health and the environment. Neither side would be required to change any laws and both could take immediate action if unsafe chemicals are discovered.

The EU and the U.S. would inform each other when they update their lists of priority substances and exchange information about the lists. When one party is about to classify a substance, the other would be able to comment. They would inform each other of “new and emerging” chemical hazards under the proposal.

Medical Devices

Regulatory cooperation in medical devices aims at improving the level of protection for workers, health and the environment. The parties can take immediate action if unsafe devices are discovered.

The parties would encourage cooperation between their standardization bodies and exchange information about risks posed by medical devices. Confidential information would be kept secret. A joint regularly cooperation work plan will guide cooperation.

The Office of the U.S. Trade Representative did not immediately respond to a request for comment.

With assistance from Brian Flood and Maeve Allsup in Washington; Bengt Ljung in Brussels; Stephen Joyce in New York City; Bryce Baschuk in Geneva

To contact the reporter on this story: Rossella Brevetti in Washington at rbrevetti@bna.com

To contact the editor responsible for this story: Jerome Ashton at jashton@bna.com

For More Information

Additional information is available at http://trade.ec.europa.eu/doclib/press/index.cfm?id=1527.

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