Managing U.S.-EU Trade Relations Through Mutual Recognition and Safe Harbor Agreements: 'New' and 'Global' Approaches to Transatlantic Economic Governance

A central goal in governing the interface of the economies of the United States and European Community (EC) is to reconcile the objectives of protective social regulation, on the one hand, and free competition facilitated through open trade policies, on the other. These policies can be both complementary and conflicted. This Article examines how these issues have been addressed bilaterally in a number of economic sectors through mutual recognition agreements and a hybrid form, the safe harbor principles on data privacy protection. The Article provides an overview and analysis of the 1997 Mutual Recognition Agreement and the 2000 agreement on Safe Harbor Principles (for data privacy protection). The Article assesses what spurred these agreements, which actors participated in their negotiation, what constrains their implementation (in terms of both political and market forces), and, ultimately, what are the prospects and limits for their adoption in other areas. Although neither of these agreements directly prescribe harmonization of U.S. and EC laws or regulatory approaches, they have led to some de facto harmonization by regulatory authorities and firms. The Article concludes that, overall, transatlantic institutional adaptation has been slow (and often creeping), but where it has occurred, it has been rather unidirectional, and will likely continue to be so. Simply stated, the United States has made most of the changes, whether through adoption of international standards that mirror those of the EC, through delegation of testing and certification responsibilities to private laboratories reflecting the EC’s “global approach,” or through coordination and oversight of these laboratories under a new U.S. national program analogous to those operating in the EC for over a decade. Overall, in light of the relative absence of government coordination, the private sector likely will continue to take the lead in coordinating arrangements to meet disparate transatlantic regulatory requirements through private subcontracting and other networking arrangements. 1 Professor, University of Wisconsin Law School; Director, UW European Union Center of Excellence; Co-Director and Senior Fellow, UW Centre on World Affairs and the Global Economy (WAGE). Correspondence e-mail: gshaffer@wisc.edu. Support for this project came from the Stephen P. Jarchow Faculty Research Award of the University of Wisconsin Law School and the University of Wisconsin European Union Center, which is in turn supported by a grant from the European Commission. This was complemented by support from the UW CIBER fund (U.S. Title VI grant) and the UW Center on World Affairs and the Global Economy. Earlier versions of this paper were presented at a conference at the European University Institute on Transatlantic Dispute Settlement and Avoidance (Florence, July 2001), the biannual conference of the Conference of Europeanists (Chicago 2002), the University of Michigan Law School (2002), and the Law and Society annual conference (Vancouver 2002). Thanks go to Ambassador David Aaron, Kalypso Nicolaidis, and David Vogel for their comments on earlier drafts, and to Benjamin Rickert and Rebecca Perlmutter for invaluable research assistance. All errors of course remain my own.