notes, “the United States and the European Union havedirectly invested more than $3.7 trillion/€ 2.8 trillion on bothsides of the Atlantic.” All of this investment is beneficialin economic terms. However, it also provides numerousopportunities for investor–state litigation, which may causeconcern among groups who worry that these rules interferewith domestic policy autonomy. Under the similar provisionsof the North American Free Trade Agreement (NAFTA),Canadian companies have brought 15 cases against theUnited States in the almost 20 years since the NAFTA wassigned.
With EU investment in the United States over seventimes the amount of Canadian investment,
there is the poten-tial for a large number of complaints.
One of the most difficult issues in these negotiations ishow to address various concerns about domestic regulation.There are a number of issues within this general category:
Regulation as a trade barrier, international regulatorycooperation
.At the outset, it is worth noting that issues of regula-tory
are already dealt with under the rulesof the WTO. There is a long history of WTO cases—and prior to the WTO, at the General Agreement on Tariffsand Trade (GATT)—dealing with protectionism appliedthrough regulatory measures. Although the report is notcompletely clear on this point, presumably the UnitedStates and the European Union will continue to rely onthe WTO to deal with such issues and are not seeking torewrite the WTO’s jurisprudence.However, regulations can act as trade barriers even if they are not protectionist. The WTO’s rules deal with thisissue as well, but it appears that the United States and theEuropean Union are seeking to push the rules further. Inthis regard, two of the specific proposals are
An ambitious “SPS-plus” chapter, including es-tablishing an ongoing mechanism for improveddialogue and cooperation on addressing bilateralsanitary and phytosanitary (SPS) issues. The chapter will seek to build upon the key principles of theWorld Trade Organization (WTO) SPS Agreement,including the requirements that each side’s SPSmeasures be based on science and on internationalstandards or scientific risk assessments, applied onlyto the extent necessary to protect human, animal, or plant life or health, and developed in a transparentmanner, without undue delay.
An ambitious “TBT-plus” chapter, building on hori-zontal disciplines in the WTO Agreement on Tech-nical Barriers to Trade (TBT), including establish-ing an ongoing mechanism for improved dialogueand cooperation for addressing bilateral TBT issues.The objectives of the chapter would be to yieldgreater openness, transparency, and convergence inregulatory approaches and requirements and relatedstandards-development processes, as well as, inter alia, to reduce redundant and burdensome testingand certification requirements, promote confidencein our respective conformity assessment bodies, andenhance cooperation on conformity assessment andstandardization issues globally.In seeking to expand on both the SPS and TBT agreements,the United States and the European Union seem to be suggest-ing that the existing rules are inadequate. It is not clear whythey think so. There have been a number of WTO disputesunder these agreements already. These cases have delved intosome very sensitive domestic regulatory issues, and have doneso in a way that tries to balance trade issues and domestic policy concerns. WTO disputes between the United States andthe European Union have addressed issues such as EU mea-sures related to hormone treated beef and genetically modifiedorganisms. But these disputes have shown how difficult theseissues are to resolve. While the United States succeeded on itslegal claims, domestic political constraints have prevented theEuropean Union from complying. Perhaps there is room for improvement in the rules here, but without further details, itis difficult to say whether this particular proposal is a sensibleone and what its impact might be.With regard to
, the report refersto “more compatible regulations for goods and services,”and further talks aboutProvisions or annexes containing additional com-mitments or steps aimed at promoting regulatorycompatibility in specific, mutually agreed goodsand services sectors, with the objective of reducingcosts stemming from regulatory differences in spe-cific sectors, including consideration of approachesrelating to regulatory harmonization, equivalence,or mutual recognition, where appropriate.If the goal here is to reduce the costs of arbitrary diver-gences in regulation across countries, such an effort has the potential to be of great benefit. At the same time, includingsuch rules in trade agreements has not been done before,and carries the risk of taking on new issues that tradeagreements cannot handle.Currently, issues related to incompatible regulationsare being pursued in a number of different fora. Outside of trade agreements, the United States and Canada are pursu-ing these issues through a regulatory cooperation council.And in the trade arena, there are broader talks about regu-latory coherence in the Trans Pacific Partnership (TPP). Itis not yet clear which forum is the most effective place toaddress these issues.Finally, the U.S.–EU trade and investment talks willtake on issues of
, which the TPP isdealing with as well. The report says that the parties shouldseek to negotiateCross-cutting disciplines on regulatory coherenceand transparency for the development and imple-mentation of efficient, cost-effective, and morecompatible regulations for goods and services,including early consultations on significant regula-tions, use of impact assessments, periodic review