EU-US Regulatory Cooperation Approaches and Experiences

1. EU-US Regulatory CooperationApproaches and Experiences Jan E. Frydman Head of Unit for International Regulatory Agreements and Toy Safety Directorate General for Enterprise and Industry European Commission Jeff Weiss Senior Director, Technical Barriers to Trade Office of the United States Trade Representative WTO TBT Committee Workshop on Regulatory Cooperation Between Members November 8-9, 2011

2. What do we do? US and European regulators actively pursue cooperation through a broad range of horizontal policy tools and sectoral activities in the area of TBTs • Regulator to regulator dialogue – increasingly on prospective regulation • Policy spectrum from ad hoc, informal information exchanges – to structured dialogues – to binding government agreements (e.g., MRAs) • Appropriate approach selected depends on policy context and objective

3. Why do we do it? • In US-EU trade relationship, with relatively low tariffs, non-tariff barriers are an increasingly important factor to address • Reduce unnecessary cost to business/improve competitiveness, while improving quality of regulations • Deeper US-EU regulatory cooperation is viewed as essential activity to promote more compatible transatlantic regulatory approaches and enhanced economic ties

4. Objectives • Minimize unnecessary regulatory divergences • Facilitate trade; minimize trade frictions • Promote better quality regulation • Reduce unnecessary regulatory burdens • Increase consumer confidence

5. Instruments US and EU have pursued a variety of policy initiatives over past decade which feature regulatory cooperation in the area of TBTs as a key element: • Transatlantic Economic Partnership (1998) • US-EU MRA (1998) • Guidelines for US-EU Regulatory Cooperation and Transparency (2002); ECJudgement 2004 • US-EU Positive Economic Agenda (2002) • US-EU Economic Initiative (2005) • Framework for Enhancing Transatlantic Economic Integration (2007)

6. Main Tools • Regulatory Cooperation Roadmap • Sectoral dialogues • OMB-EC methodological dialogue on good regulatory practices • High Level Regulatory Cooperation Forum (senior-level platform for follow-up and cross-cutting issues) Political oversight provided through • Transatlantic Economic Council, TEC (2007) • US-EU Summit

7. Sectoral Cooperation To advance sectoral cooperation, the US and EC have developed: • Guidelines for Regulatory Cooperation promote procedural steps for more effective dialogues (e.g., consultations, data sharing) • A document on “Best Cooperative Practices” • Confidentiality arrangements to permit sharing of non-public information between regulators has facilitated cooperation in key areas such as pharmaceuticals, medical devices, food safety • Specific dialogues/activities in a number of different TBT sectors (e.g., pharmaceuticals, medical devices, cosmetics, toys, food safety, auto safety, consumer product safety, import safety…). -- Increased focus on prospective regulations (or even earlier). -- Cooperation often leverages work in pluri/multilateral fora (e.g., ICH). -- Aim to reduce TBTs and promote compatible regulatory approaches

8. Sectoral Cooperation: Examples Some illustrations of US-EU sectoral cooperation in past years: • Pharmaceuticals – pilot projects on parallel product/substance approvals; common format for applications; intensified cooperation on vaccines, pharmacovigilance and counterfeit medications; agreed common format for orphan drug designations • Auto safety - dialogue initiated to streamline adoption of global regulations, including cooperation on specific GTRs • Marine equipment - established a two-way alert system for unsafe equipment and agreed to expand the product scope of MRA • Consumer products - established a program for sharing information on recalls of unsafe products • Toys – successful bilateral cooperation, and third country outreach

9. OMB-EC Methodological Dialogue • Dialogue established in 2005 between the US Office of Management and Budget (OMB) - Office of Information and Regulatory Affairs (OIRA) and relevant experts in the European Commission (led by Secretariat General) • Focus is to addresses methodological issues (i.e. related to good regulatory practice), such as impact assessment, stakeholder consultation, etc. in order to improve our understanding of each others' regulatory systems and practices • Results/Ongoing work includes: -- Analysis of respective practices on impact assessments; development of a common understanding on regulatory principles and best practices -- Exchanges of respective regulatory workplans to help upstream coordination/early warning

10. TEC • The Transatlantic Economic Council (TEC) provides minister-level political guidance for implementation of the 2007 Framework for Advancing Transatlantic Economic Integration. • First meeting in November 2007; next meeting end November 2011 • Three main themes/areas discussed now: • Innovation, new industries and technologies • Facilitating trade and foster regulatory cooperation • Investment cooperation

11. HL Regulatory Cooperation Forum • The High-Level Regulatory Cooperation Forum was established in 2005 as a platform for senior-level regulators to agree on areas for cooperation and promote cooperation on cross-cutting regulatory topics – such as new technologies or policy developments that may impact multiple authorities on each side. Current Forum issues include: • Standards • New areas, such as nanotechnology, electric cars • Possible future areas of cooperation (US stakeholder consultation) • SME policies

12. Practical Lessons Learned Based on experience advancing US-EU regulatory dialogues, the Forum identified the following “Best Cooperative Practices” in 2006: • Define scope of cooperation clearly • Identify appropriate mechanisms for cooperation • Cultivate senior-level support for cooperative activity • Provide sufficient resources to support cooperation • Provide transparency and opportunity for stakeholder input • Promote dialogue between own regulators on best cooperative practices

13. Horizontal Forum Issues: Regulation • “Common Understanding” of Regulatory Principles • Transparency and openness, allowing participation by stakeholders and the public; • Consideration of benefits and costs; • Careful analysis of alternatives, including less stringent and more stringent; • Selection of least burdensome approach; • Use of performance-based and behaviorally informed approaches; • Avoid unnecessarily divergent or duplicative requirements; and • Evaluate existing regulatory measures on a periodic basis through a transparent procedure

14. Horizontal Forum Issues: Regulation (2) • Improving Existing Mechanisms for Cooperation • Use of online planning tools; • Soliciting input from international stakeholders; • Ensuring comments on proposals to supplement/ modify existing regulatory measures; and • Exchanging information on ex-post evaluations and reviews of regulatory measures

15. Horizontal Forum Issues: Regulation (3) • Explore New Cooperation Mechanisms • Explore new ways to use planning tools to facilitate cooperation; • Expand the use of online planning tools to exchange information; • Consider publishing an annual notice seeking public comment; and • Explore additional consultation mechanisms • Status Update

16. Horizontal Forum Issues: Standards • Joint Statement on Standards in Regulation • Each side has a different approach to standards • Need to enhance cooperation so as to minimize unnecessary divergences and creation of NTBs • Important to enhance transparency and stakeholder participation, participation in int’l standard setting • Agree to develop proposal to implement these principles • Will encourage trading partners to adopt similar principles • Status update

17. Sectoral Issues • Current Issues • Energy Efficiency • Manufactured Nanomaterials • E-mobility (electric vehicles) • Future Areas of Focus? • FR notice • Other stakeholder outreach

18. Toys as a success story • First meeting of TEC 2007 identified safety of imported products as a priority for future work; Forum report of 2008 on how to improve cooperation, including information exchange on unsafe products • USCPSC and EC DG ENTR and DG SANCO established Working Group on Toy Safety; covers information exchange, regulatory and standards developments, potential areas for harmonization, new initiatives to enhance toy safety • Quarterly video-conferences, with contacts between meetings; resulted in greatly enhanced understanding of our systems • Common challenge of implementing new toy safety regulations (US: 2008 Consumer Product Safety Improvement Act; EU: 2009 Toy Safety Directive (both upgrade old regs, and require development of new or upgraded standards)

19. Toys as a success story (cont’d) • Current priorities include • Promote greater convergence of EU and US toy safety standards • Promote global solutions (ISO standards) in line with the high level of safety required under both systems • Develop common approaches to common issues, like definitions, risk assessment, traceability, format of declarations of conformity • Develop closer cooperation on enforcement matters, e.g. information exchange on US recalls and EU market surveillance • Joint outreach and training in China for regulators, manufacturers and traders

20. Experience Through variety of approaches over the past decade, US-EU regulatory cooperation efforts have grown/expanded: • Cooperation now deeper and broader – more decentralized and routine • Confidence-building between regulatory counterparts is essential • No “magic wand” – regulatory cooperation is technical, hard work • No “one size fits all” approach – specific context matters • Focus on prospective regulations is far easier than changing existing regulations • Replicate models that work well – apply to other sectors/dialogues • Near-term, practical results are key to maintain momentum/support • Expectations management: benefits accumulate – robust over time • Political oversight of technical negotiations (involves legislation)

21. Experience (2) • Need highest level political will/clear commitment (e.g. TEC) and senior level implementation (e.g., Forum) • Note: this is a necessary but not sufficient condition for a successful outcome • Avoid long-standing trade irritants • Understand your limitations (flexibility is key) • Focus on areas with best prospects of success and where net benefits are highest • Resource constraints can create both challenges and opportunities • Don’t waste a good crisis • Ensure all relevant players are aware/involved (e.g., legislatures, States, regulators, stakeholders) • Stakeholder-driven agenda – ongoing stakeholder involvement • But provide us with robust data/evidence, not assertions

22. Experience (3) • Start as early as possible • Internal coordination matters • “Cheat” • Use of performance standards, acceptance of more than one standard that meets regulatory objectives • Encourage regulator/stakeholder participation in international standards development, following the coherence principle • More likely that standards will be performance based, integrate regional differences, not conflict with each other  minimizes potential for divergence • Use of international systems of conformity assessment

23. Concluding Panel: Needed for successful international regulatory cooperation: • Comparable jurisdictions over the subject matter (to be) regulated • Common powers, including comparable institutional structures and regulatory competences (involve/talk to the right players) • Shared values on role of government, acceptable risk and issues such as impact assessment, risk assessment, transparency • Confidence and trust between regulators (normally a national mandate with focus on domestic policies, not a trade mandate, not used to cooperate with foreign regulators/authorities (“bottom-up”) • Need for highest level political will/supervision of bureaucratic process (“top-down”) • Common interest/utility; focused, selective agenda • Resources • Stakeholder driven • Issue of creating new (easier) versus changing old/existing regulations (harder)

24. Further Information • http://www.whitehouse.gov/omb/international_regulatory_cooperation#irc • http://ec.europa.eu/enterprise/enterprise_policy/inter_rel/eu_us/index_en.htm