There are fundamental differences between the European and US conformity assessment and product approval systems. Consequently, the Transatlantic Trade and Investment Partnership (TTIP) could result in trade advantages biased towards American companies. Furthermore, it is highly likely that TTIP will lead to a lowering of Europe’s current environmental and safety standards.
According to a survey – called “Going International” – carried out by the DIHK (German Chambers ofCommerce & Industry), 75% of those export-orientate d companies surveyed believe the biggest benefit from TTIP relates to standards and certification. Proponents of TTIP see regulatory cooperationas the main point in the project’s favour. They cite the following examples: cars in the USA have red indicators; cars in the EU have yellow ones. And in electronics, the standard neutral cable in the EU is blue, whereas in the USA it is white. These sorts of differences in product requirements do indeed represent a serious problem for small-margin manufacturers who want to gain a foothold on the opposite side of the Atlantic.
But these examples are not a reason to proceed with TTIP – because standardisations of the type given in the above examples do not require complex, international treaties like TTIP. All that is needed here is sector-specific agreements. And we know that such agreements are possible: take the example of the common standards that exist in the USA and the EU for organic products.
Furthermore, the examples cited by those in favour of TTIP detract from the important problems that arise from the deal:
I. Differing Quality of Safety and Environmental Standards in Europe and the USA
For a substance to be brought to market in Europe, proof must be presented that the product is not dangerous. The American system comes at this from the completely opposite angle: in other words, in the USA a product can be brought to market until such time as its harmfulness is proven. Any compromise between these two systems would probably mean a lowering of European standards (which are usually higher than in the USA) and consequently a competitive disadvantage for those companies that produce products in line with these high standards.
II. Differences in Conformity Assessment and Certification
European standards and norms conform to the international ISO standards. The guiding principle is: one product or process, one standard. By contrast the American internal market is, thus far, not standardised and as such product requirements can vary within individual states or even from county to county. With TTIP we face not only the threat that Europe’s highly successful standards system could be undermined, but also that American companies would gain easy access to the European market. European companies, meanwhile, would have to continue to take into account the regional and non-unified product requirements that exist on the American market. Critically, such a competitive disadvantage would be felt most by small and medium-sized enterprises.
III. Liability Risk
If problems do arise, damages claims in the USA can be very high. It remains to be seen whether – should TTIP lead to the mutual recognition of conformity assessments – American courts and insurance companies, like their European counterparts, will recognise the European CE label and ISO certificates. This uncertainty represents a major risk for European companies.
IV. Systemic Disadvantages for SMEs
As with other trade agreements there is a risk that small and medium-sized enterprises will not be able to lobby for their interests to the same degree that large corporates can. This problem stems either from the structures in place, or as a result of central tools such as the Investor Protection system that is planned under TTIP.
One of the issues the VdTÜV e.V. (German Federation of Technical Inspection Associations) is concerned about is that TTIP could be a one-way street for European business. If regulatory cooperation were to be fixed in TTIP, that would set in train an irreversible process.
Background information the individual points outlined above can be found here: http://kmu-gegen-ttip.de/content/download/1619/40957/file/20-01-2016%20Folgen%20von%20TTIP%20fu%CC%88r%20Maschinenbau%20KMU%20gegen%20TTIP%20engl.pdf
Survey: German companies call for changes to free trade agreement Ohoven: “TTIP must not be allowed to benefit big business only”
UK: YouGov survey highlights SME concerns about free trade agreements