Amb. Schnabel on The Role of Better Regulation (link)

September 16, 2003

Brussels, 15 Sep 2003

Many of the conflicts that exist in the economic relationship between the United States and the European Union are rooted in divergent regulatory approaches, says U.S. Ambassador to the EU Rockwell A. Schnabel. "These divergences often arise from different attitudes about risk and safety, and the respective roles of governments and private actors in minimizing the former and maximizing the latter," Schnabel told a Sept. 15 conference on "Understanding Chemical Control Policies: International Perspectives" in Stockholm, Sweden.

He said the role of science in the development of regulatory policy – especially the EU's expansive use of "precaution" -- was also a major issue. "The big danger in all of this, of course, is that an economic relationship on the scale of the U.S.-EU relationship simply can't afford to get bogged down in these regulatory divergences. Even if our regulatory policies are not explicitly designed to disrupt trade, differences in regulatory approach can all too easily result in trade problems."

Taking chemicals as a specific example, the ambassador said that the U.S. continues to have some concerns about the development of the EU's proposed REACH chemicals regime. However, it supports the EU objective to develop a regulatory framework for chemicals that will protect human health and the environment, and welcomes the European Commission's efforts to apply principles of Better Regulation to the development of the new REACH chemicals regime. "The unprecedented internet-based stakeholder consultation on an initial REACH proposal marked an important milestone for EU regulatory policy," Schnabel noted.

Below are remarks by U.S. Ambassador to the EU Rockwell A. Schnabel on "The Role of Better Regulation," delivered at the conference on "Understanding Chemical Control Policies: International Perspectives" in Stockholm, Sweden, on September 15, 2003:

(As Prepared for Delivery)

Ambassador Heimbold, and distinguished sponsors, let me open with my appreciation for your support of this important discussion with the EU.

Issues surrounding environmental protection are particularly challenging, as they tend to be technically complex, wide-ranging in scope, and are often emotionally charged. Dealing with those challenges isn't easy, but it has been made more manageable by Commissioner Wallstrom's directness and her openness to dialogue.

I am also pleased that Susan Hazen, our Environmental Protection Agency's leading authority in this area, will be lending her considerable experience and expertise to this discussion. EPA's commitment to a constructive U.S.-EU dialogue on the emerging REACH framework has been enormously helpful – and I think our colleagues in the European Commission would agree. I'd love to see this approach from EPA extended across the breadth of the U.S.-EU relationship on regulatory matters.

Finally, I extend a warm welcome to other speakers and participants in the discussion, by which I mean all of you gathered here today. As you know, our intention for all of these dialogues is that there be no "speakers" or "audience" but that everyone present participates freely and fully in the discussion.

While this meeting is focused on one particularly high-profile area of regulatory policy, the discussion on chemicals offers a chance to think more broadly about one of the key challenges confronting the economic relationship across the Atlantic. How do we, as the two largest economic entities in the world, deal with the reality that our respective approaches to the regulation of economic activity are often quite different, sometimes in conflict, and frequently motivated by different political, social, economic, and cultural factors?

I've just posed an awfully big question, I know. And I certainly don't pretend to have all the answers. But I've made it a core priority of my time in Brussels to try to promote this notion of transatlantic regulatory cooperation. I truly believe that this is essential to preserving and expanding a transatlantic economic relationship that produces prosperity for citizens on both sides of the Atlantic. We're increasingly confronted with the fact that the conflicts that exist in our economic relationship are, fundamentally, rooted in divergent regulatory approaches. These divergences often arise from different attitudes about risk and safety, and the respective roles of governments and private actors in minimizing the former and maximizing the latter. The role of science in the development of regulatory policy is also a major issue. We are particularly concerned over the threat that the EU' s expansive use of "precaution" poses for the principle that risks need to be carefully assessed on the basis of sound science.

The big danger in all of this, of course, is that an economic relationship on the scale of the U.S.-EU relationship simply can't afford to get bogged down in these regulatory divergences. Even if our regulatory policies are not explicitly designed to disrupt trade, differences in regulatory approach can all too easily result in trade problems. And that's not good for our relationship, nor for the 8 to 10 million people on both sides of the Atlantic whose jobs depend on transatlantic trade and investment.

And let me emphasize here parenthetically how important it is – as we develop standards which protect consumers at the lowest cost to our producers - that we work in international organizations such as the WTO to ensure that developing countries, especially China, also adhere to these standards, bear the same costs and level the playing field.

At the same time, it's not reasonable or realistic to be aiming at complete regulatory convergence between the U.S. and the EU. We do operate within different political, social, and economic contexts when it comes to regulation, and we have to recognize that and work with it.

For example, we do - clearly - have concerns about the current REACH proposal, and we have outlined these in our own response to the Commission's consultation exercise. To be specific, we're particularly concerned that, as currently outlined, REACH could:

- be unworkable;

- depart from ongoing international regulatory cooperation on chemicals, such as that in the OECD;

- lead to costs and administrative complexity that could hinder, rather than advance, the underlying objectives of human and environmental safety;

- have disruptive effects on global trade; o adversely impact innovation; and

- adversely impact small and medium enterprises – which, by the way, have been especially significant as the greatest generators of jobs in our recent history

So, what now - where does this leave us? It leaves us, obviously with a lot of work on our hands. But here is why I remain optimistic.

Because, a good deal of that work is now in train under the framework of the voluntary Regulatory Cooperation Guidelines that we negotiated a couple of years ago. We now have a number of pilot projects underway, in which our respective regulators are engaging in direct discussion on some very specific issues such as automotive safety, cosmetics, and nutritional labeling. We need to keep building on this kind of work, but it's a good start.

We also take a good deal of encouragement in the EU's current initiative on Better Regulation, outlined as a critical element of the Lisbon Process. It is clear that improved stakeholder consultation, more open and transparent methods of considering policy options, early and independent impact assessments of proposed regulation, and effective oversight to ensure consistency and uniformity in consultative and assessment procedures are critical components of an effective regulatory regime.

The Commission's Better Regulation Action Plan seeks to address these issues. The Action Plan provides a solid basis for the U.S. and EU to engage on regulatory matters, and an important framework within which to consider and discuss emerging regulatory policies of interest to U.S. stakeholders.

Other participants will address chemical regulation and the REACH proposal in depth. But let me just mention a few points on approach.

First, we mean what we say: the U.S. supports the EU objective to develop a regulatory framework for chemicals that will protect human health and the environment. We recognize that the existing patchwork regulatory regime needs to be consolidated and updated. And we are committed to engaging - as Ms. Hazen and others have been doing - to share our own experiences with chemical regulation in ways that we hope will be constructive.

Second, we very much welcome the Commission's efforts, so far, to apply principles of Better Regulation to the development of REACH. The unprecedented internet-based stakeholder consultation on an initial REACH proposal marked an important milestone for EU regulatory policy. The vast response, reflecting all shades of positive and negative commentary and representing most regions of the globe, is a clear indication of the enormous interest in this regulatory initiative. We are confident that the Commission is now taking full account of these comments. Not an easy job, for sure, but a critical element in creating a legitimate and workable regulation.

Finally, permit me to quote Commissioner Wallstrom's May 16 Dusseldorf speech when she stated: "The idea is to invite comments from stakeholders so we can fine-tune the proposal and make sure that it is workable… We have invested heavily in striking the right balance between the interests of the citizens and the environment on the one hand, and the competitiveness of a very important sector of European industry on the other."

It is this positive spirit that I invoke for our gathering here in Stockholm, wishing you a full and lively exchange.

Thank you.

U.S. Mission to the EU
Item source: http://www.useu.be/About%20the%20Embassy /Ambassador/Sept1503SchnabelBetterRegula tion.html

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