Subcommittee Examines Obstacles Surrounding Negotiation of the Transatlantic Trade and Investment Partnership

July 24, 2013

WASHINGTON, DC – The Subcommittee on Commerce, Manufacturing, and Trade, chaired by Rep. Lee Terry (R-NE), today held a hearing on “The U.S. - E.U. Free Trade Agreement: Tipping Over the Regulatory Barriers?” The hearing explored the issues surrounding the negotiation of the Transatlantic Trade and Investment Partnership, or T-TIP.

Chairman Terry highlighted the potential for job creation by T-TIP and said the agreement “represents a historic opportunity for both sides to create greater openness, transparency and convergence in regulatory approaches and standards while reducing unnecessary redundant requirements.”

The U.S. and EU are the largest trading markets in the world and the bilateral trade relationship between the U.S. and the 27-member European Union is the world’s largest with the two economies combined accounting for 40 percent of world output and nearly $1 trillion in trade. While historically tariffs have been the biggest barrier to trade, U.S. and E.U. tariffs are relatively low. Therefore, T-TIP negotiations remain largely focused on non-tariff barriers like duplicative and sometimes conflicting regulation. Stakeholders testified today about what they hope the U.S. Trade Representative can achieve during negotiations, particularly which non-tariff barriers they believe could be reduced or eliminated.

Former Missouri Governor Matt Blunt, President of the American Automotive Policy Council, discussed the potential benefits a U.S. - EU free trade agreement could bring to the auto industry. “The negotiation of T-TIP presents an opportunity to implement a regime that effectively breaks down regulatory barriers in the auto sector, recognizes regional integration that benefits both the U.S. and the E.U., reduces costs and increases commercial predictability, while respecting U.S. and E.U. sovereignty and without sacrificing vehicle safety or environmental performance,” said Blunt.

Building upon the subcommittee’s previous hearing and work on the protection of intellectual property, John Castellani, President and CEO of the Pharmaceutical Research and Manufacturers of America, testified that any agreement must strongly consider protection of intellectual property, stating, “Both the United States and the EU recognize that IP protections are the lifeblood of innovation. As a result, both, as a general matter, provide strong IP protections within the rubric of their respective systems and any agreement between the United States and the EU should not dilute these protections.”

Dean Garfield, President and CEO of the Information Technology Industry Council, explained the importance of regulatory convergence. He said, “Alignment of regulations and standards setting could significantly reduce costs, create conditions that make both markets attractive for new investment and startups, and compel other countries and regions of the world to engage in similar harmonization efforts to stay competitive.”

American Chemistry Council President and CEO Cal Dooley echoed this call to eliminate duplicative and conflicting regulations, stating, “Our goal of stronger U.S.-EU regulatory cooperation is not to weaken regulatory mandates, but rather to ensure that those mandates do not result in unnecessary barriers to trade.” Noting the job-creating potential of T-TIP, Dooley added, “For the chemical industry, and for the broader economy, it has the potential to provide a significant boost to growth and job creation, which in turn would promote innovation and strengthen the international competiveness of U.S. exporters.”

Full Committee Chairman Rep. Fred Upton (R-MI) added, “We are all hopeful of achieving the most ambitious trade agreement possible. The sheer size of our bilateral trade and investment with the EU means that any significant progress to cut regulatory costs and bureaucracy, reduce market access barriers, and eliminate tariffs will translate into positive economic growth for both sides of the agreement.”

The first round of T-TIP negotiations took place in Washington during the week of July 8, 2013. The next round of negotiations will be conducted in Brussels during the week of October 7, 2013.