Opinion of the Economic and Social Committee on the 'Relations between the European Union and the United States`

(96/C 212/13)

On 25 October 1995, the Economic and Social Committee, acting under the third paragraph of Rule 23 of its Rules of Procedure, decided to draw up an Opinion on the 'Relations between the European Union and the United States`.

The Section for External Relations, Trade and Development Policy, which was responsible for preparing the Committee's work on the subject, adopted, its Opinion on 15 April 1996. The Rapporteur was Mrs Davison.

At its 336th Plenary Session (meeting of 30 May), the Economic and Social Committee adopted the following Opinion by 94 votes for, 3 against and 6 abstentions.

SUMMARY

The Committee generally supports the New Transatlantic Agenda and the Action Plan. There are exciting possibilities for cooperation in the areas of environment, overseas aid and social and employment policies and significant gains to be made by focusing on additional opportunities for economic cooperation and detailed trade issues involving regulatory policy. The Committee shares the view therefore that this is not the time to risk negotiating a comprehensive new free trade agreement.

Alarmed by the Congress proposal to cut overseas aid, the Committee calls for trilateral EU, Japanese and US discussions on a major new aid programme to focus on Africa, and for EU-US cooperation on development education of the public. Another political priority as far as the Committee is concerned is the environment, where the EU and US need to lead a greater commitment to international environmental agreements in order both to protect the global environment better and to avert trade disputes over environmental regulation. In addition, the Committee calls for increased dialogue and cooperation in the sphere of social issues and would welcome a comparative analysis with US partner organizations.

EU-US trade is more or less in balance and 95 % is trouble free. Where trade differences exist, these are largely due to different traditions in regulatory policy and to the different perspectives of the various interest groups on either side of the Atlantic. The Committee proposes particular bilateral work therefore to include the various interests on the major issues of regulatory policy such as competition policy, mutual recognition of standards, financial services, the information society, air transport and state aids. The EU and US should also discuss monetary policy, which has such an impact on trade.

The Committee warmly endorses the emphasis in the Agenda and Action Plan on multilateralism in trade issues. It also agrees that issues such as investment or the social clause, should be conducted multilaterally under the WTO.

The Action Plan will only work if the EU provides a strong European pillar and if it is broadly based. In the absence of a high profile free trade agreement, the Committee emphasizes the need to secure the sustainability of the initiative and the involvement of the public. The New Transatlantic Agenda aspires to broadening the transatlantic dialogue and the establishment of the transatlantic Business Dialogue is a significant first step. Extension of the dialogue is necessary now to a wider base in order to encompass the breadth of issues and to ensure full participation of interest groups. The Economic and Social Committee recommends, in the light of support received for the idea in the US, a two-yearly face-to-face exchange of views on these issues between the economic and social interest groups on both sides of the Atlantic. The aim should be to achieve a programme of genuinely coordinated policy and common action.

1. INTRODUCTION

The challenges

1.1. Transatlantic relations face the challenge of consolidating and developing the close and mutually beneficial relations that have existed since the origins of European integration.

1.2. Europe and the United States share common values of democracy and freedom. They share a common heritage and the most important bilateral commercial relationship in the international economy. But the lesson of the five years since the signing of the Transatlantic Declaration in 1990, is that common values and history are not sufficient to ensure common action and that there must be effective follow through on objectives.

1.3. In security and commercial policy, the lesson of the recent past is that a genuine commitment to joint action is needed if progress is to be made, whether in the Former Yugoslavia or in the conclusion of the Uruguay Round of the GATT.

1.4. But in both security and commercial policy some of the old certainties which helped simplify matters have been swept away or are being progressively undermined. International security and conflict prevention must be maintained although there is no clear cut threat as there was during the Cold War. In commercial relations growing interdependence means commercial diplomacy must reach more and more 'beyond the border` to touch domestic political preferences and policies. At the same time there is a need to integrate the emerging markets in Asia, South America and Central and Eastern Europe as well as to aid the struggling economies of Africa. The EU and US thus share the challenge of listening to sometimes different traditions and values to those which they share.

1.5. The nature of such diplomatic challenges requires constant effort to maintain domestic political support. In 1994 the US mid-term elections brought into Congress representatives with either as yet undeveloped opinions in the US role in the world or views antithetical to an active US role. Action to cut US contributions to the UN and the US aid budget added to a sense of unease about a potential drift towards isolationist and protectionist sentiment in the US on the part of many Europeans. For its part the lack, on occasion, of a coherent EU voice in its relations with the US and on the international scene in general, reawakened scepticism in the United States of the EU's capacity to be an effective actor in the world. The United States has consistently supported European integration and looks to the European Union to be a strong and effective partner in the 21st century.

1.6. Because of the importance placed on these challenges the Economic and Social Committee established a Working Group to produce an Information Report on relations between the EU and the US, which worked through the Spring of 1995. An Information Report was adopted by the Section for External Relations, Trade and Development Policy on 6 July 1995 and the Plenary voted on its transmission to other institutions in September (CES 978/95).

Policy initiatives

1.7. During the first half of 1995 there were calls from a number of European sources for a new initiative in transatlantic relations in order to strengthen trade links and discourage isolationist sentiment in the US. These were supported by those in the US who were concerned not to let the US and EU drift apart. A number of proposals were made including high profile negotiations on a Transatlantic Free Trade Area and more detailed, pragmatic cooperation. This was followed by an agreement, at the US-EU summit in June 1995, of the Presidents Clinton, Chirac and Santer, to establish a Senior Level Representatives Group consisting of officials from the European Commission, Council and US Administration to propose action to strengthen transatlantic links.

1.8. At the end of July 1995 the European Commission produced a paper entitled Europe and the US: the Way Forward (COM(95) 411 final).

Like the US this took a pragmatic approach (and one that was in line with the sense of the ESC Information Report) but in broad terms could be seen as being more enthusiastic about deepening cooperation. At the same time the EU position was that strengthening multilateral policies should certainly not be undermined by the EU-US links, indeed, one could argue that it put multilateral approaches before strengthening bilateral links.

1.9. In October and November officials drew up an agenda for EU-US cooperation, which was adopted by the Presidents at the Madrid EU-US summit in December 95. This agenda took good account of the Committee's Information Report on EU-US relations. (CES 978/95)

1.10. Two documents came out of Madrid: The New Transatlantic Agenda and a joint EU-US Action Plan. They both deal with four broad subjects: political issues, global challenges, economic relations and building transatlantic bridges.

2. POLITICAL RELATIONS

2.1. This section of the Action Plan deals with stability in Europe, peace in the Middle East, conflict prevention elsewhere in the world, development aid, human rights, international organizations and arms. The Committee has special expertise in the areas of stability in Europe and overseas aid - on which it has already pressed the EU and the US to cooperate.

Stability in Europe

2.2. Europe's security and long-term prosperity will not be firmly based unless democracy and transition toward market economies is promoted to its immediate neighbours in the Mediterranean area and the East as well as in Russia and the other member states of the NIS. In this regard, cooperation between the EU and the US is essential.

2.3. The Committee supports coordination of activities by the EU and the US to integrate Russia and the other NIS states into the global economy and economic institutions, as well as coordination in the fields of nuclear safety and environmental protection. Together, the EU and US can contribute to peace, security, political stability, respect for and promotion of human and social rights, and economic prosperity across Europe, East and West, and in the wider region incorporating Russia and the NIS.

Overseas aid

2.4. Enhanced political cooperation is envisaged on humanitarian aims at a global and regional level. No doubt the move to close cooperation in this area reflects concern on both sides of the Atlantic about the likely wide-scale reductions in US aid planned by the new Congress ().

2.5. The establishment of an institutional infrastructure has, however, longer-term significance. The plans, for example, for staff exchanges between Washington and Brussels also suggest that cooperation in this area will become a permanent feature. Once established such structure will not easily be removed, thus if and when US development aid is again increased aid cooperation should continue.

2.6. Of a special importance is the agreement to establish a High Level Consultative Group on Development Cooperation and Humanitarian Assistance to coordinate and act jointly in development and humanitarian assistance activities. This is something, for which the Committee has pressed. The EU should use this cooperation as an opportunity to keep up aid budgets on both sides of the Atlantic and to ensure that they are effective. The Committee has frequently expressed its concern about the increasing poverty in, and isolation of, Africa. It is alarmed by the Congress proposal to cut aid to this continent and indeed believes that the extent of poverty in developing countries and its destabilizing effect is sufficiently pressing that the EU, Japan and the US should discuss cooperation on a major new aid programme on trilateral basis.

2.7. Part of EU-US development cooperation and action on human rights should be discussion on encouraging private investment: also on how best to encourage good governance, participatory development and social cohesion.

2.8. The participatory approach is not always easy to implement, but it is better able to reach the disadvantaged. Donors can certainly benefit from shared experience and assessment of development needs by coordination of their actions, preventing duplication and seeking to develop clearer and more consistent policy. Recipients would also benefit from the streamlining and coordination of aid application procedures.

2.9. One important area for joint consideration should be the role of development education in sustaining public support for overseas aid. Although the US has public education programmes on health and on drugs, the EU is more successful in development education. However, both the US public, and much of the EU, think that their governments give more overseas aid than they do. Greater transparency in the granting of development aid, and a greater flow of information from NGOs and other bodies such as universities, which should cooperate transatlantically, would help to promote improvements in this area.

3. RESPONDING TO NEW GLOBAL CHALLENGES

3.1. The New Transatlantic Agenda urges greater cooperation on some of the new global challenges such as international crime, terrorism, immigration and asylum drug trafficking, legal cooperation, the environment, population, nuclear safety and health.

International crime, drugs, health and population

3.2. The objectives on international crime and drug trafficking seem to be fairly modest and take the form of organizing joint seminars and exchanging information. It should be recalled that cooperation on these issues was also the objective of one of the three working groups set up in Berlin in December 1993. Little progress was made by the working groups and they were disbanded in June 1995. The prevailing view in Washington was that progress could not be made because of the absence of any common European position on the issue.

3.3. The Committee regrets that a lack of coordination between the EU Member States on these third pillar issues appears to be, at least, an important contributing factor to the failure of transatlantic efforts. In these areas of new global challenges it is the Committee's conviction that solutions will only be found through effective EU-US cooperation. There is therefore a need to build on such initiatives as the Pan-European Conference on Drugs and strengthen the EU's capability to present a unified view on these issues. This is an issue which must be addressed in the Intergovernmental Conference's consideration of third pillar issues.

3.4. More concerted action between the EU crime authorities to tackle the international crime which spills over into our streets would then be able to be followed up by practical cooperation with the US at all levels.

3.5. On drugs, this should include action on money laundering and demand reduction. There are some interesting schemes such as the joint school and cities initiatives which should be expanded. For example, transatlantic cooperation on training schemes where specially trained police officers educate children on how to resist being pressured into drug abuse or joining criminal gangs has been successful.

3.6. The Committee also supports exchange of information on health. EU-US cooperation on population programmes should acknowledge that the education of women and girls, and their literacy in particular is of paramount importance in reducing population growth.

3.7. Sudden, serious global challenges to health, such as AIDS, do emerge on occasion and the Action Plan is right also to mention cancer, which effects one in three citizens.

The environment

3.8. On the Environment the NTA and Action Plan proposals are more concrete and as with overseas aid reflect the Committee's call for serious attention. The proposals include calls for cooperation on Prior Consent for the export of hazardous chemicals, environmental labelling, work on the decreased emissions for vehicles (an issue actively taken up in the Transatlantic Business Dialogue) and dissemination of environmentally friendly technologies to the developing world and environmental rehabilitation in Central and Eastern Europe and the CIS.

3.9. The Committee fully endorses closer cooperation between the EU and US in the field of environmental policy, an area where it has significant experience. There are a number of advantages with such cooperation. First and foremost as two of the leading developed economies the EU and US are major contributors to global environmental pollution, such as global warming. The Committee has already called on the industrialized countries to be the first to take action (). If progress is to be made at the global level leadership is needed from the EU and US. Without agreement the costs of introducing pollution abatement measures, such as on CO2 emissions will be seen to fall disproportionately. The EU and US can encourage agreement among all the major industrialized countries within the relevant UN fora. More effort also needs to be made to disseminate results of the work done on both sides of the Atlantic on the economic as well as the environmental benefits of action on energy saving, for example.

3.10. The Committee agrees with the aim of labelling harmonization, and indeed suggested cooperation on this and all other areas of environmental regulatory policy in its information report. The starting point should be the mutual transparency of schemes. Interest groups in general and the Committee in particular have a lot to offer as negotiations progress, since industry, environmentalists and consumers have to make the necessary compromises. Here the Committee's experience of ecolabelling is useful. Work on decreased emissions from vehicles is helpful, even more so if accompanied by a comparison of methods for reducing car dependency, through public transport, and traffic calming. There should also be transatlantic cooperation on the development of biological forms of pest and weed control and the problems of agrochemicals in the water supply.

3.11. The sharing of environment-friendly technologies with developing countries is vital, and can only be successful if properly financed. Such technologies developed in the South merit special attention. Furthermore, developing countries will only be able to protect their biodiversity if they are helped to catalogue what they have. Where their genetic resources generate profits, local people should share the benefit.

4. ECONOMIC RELATIONS

4.1. Monetary and exchange-rate policies

4.1.1. One notable omission from both the Agenda and the Action Plan is any substantial reference to cooperation on monetary and exchange-rate policies. The section on jobs and growth merely says: 'We will continue to exchange views on macroeconomic issues in the light of the importance of a sound macroeconomic framework for a harmonious relationship (presumably US-EU) and for the fostering of non-inflationary growth, the reduction of imbalances and international financial stability.`

4.1.2. Recent instability in exchange rates, brought about by the decline in the value of the dollar, has reawoken European concern about apparent US disinterest in the impact of exchange-rate changes on the rest of the world. A major section of world trade in transacted in dollars. There is a deep-seated preference for stable exchange rates in Europe born out of many years exposure to currency fluctuations. Given the size of the US economy in relation to the world economy and the extent of its trade within NAFTA, the US has been less affected and has taken a more laissez-faire attitude to international exchange-rate stability. Only in the case of Mexico did the US intervene to shore up the peso - where it saw its vital interests affected.

4.1.3. There is less concern in the US about instability or volatility in exchange rates. Given the lower trade dependence of the United States compared to individual European economies, US policy has been prone to pursue policies of benign neglect of the dollar.

4.1.4. This problem underlines not only the motivation for a single European currency, but also the clear need for international cooperation on macroeconomic and monetary issues. Industry on both sides of the Atlantic agrees that instability and swings in currency values on the world market are unhelpful. Further, the fall in US earnings may have been a domestic repercussion of its depreciating currency. Monetary and exchange rate policies should feature on both its transatlantic agenda and that of officials.

4.2. Jobs and growth

4.2.1. There is a short section of the Action Plan calling for continuation of the dialogue on employment and market issues. An EU-US working group has the remit of labour and employment.

4.2.2. The Committee here proposes a transatlantic dialogue between the social partners to contribute to finding the solution to stable job creation whilst maintaining social protection. Broadly speaking, the EU emphasis is on maintaining standards and wage levels for those in work and on shoring up declining industries, perhaps at the expense of creating new jobs for the unemployed. The US approach is the opposite. More new jobs (not always secure ones) have been created in the US but the size of the labour force has also been growing but at the same time real rates of pay for most workers have been significantly eroded ().

4.2.3. Unemployment benefits depend upon the laws of the different federal states. On average about 30 % of the unemployed receive them. The remainder rely on welfare and food stamps. There is no state health insurance system. Only the very poor and retired people receive free medical care. Perhaps 15-20 % of people draw the minimum wage with 10-15 % of the population below the poverty level.

4.2.4. The EU has avoided this level of social disadvantage, although it certainly has its own poverty and exclusion problem and a major problem with unemployment. Perhaps the next most serious social problem is how to provide its ageing population with a continuing high level of health, care and pensions.

4.2.5. The Committee has a wealth of experience, including on the benefits of social partnership, and would welcome comparative analysis prepared with US partner organizations. The transatlantic dialogue so far has been sparse and ineffective. Much of the purpose of the EU-US trade initiative is to encourage jobs and growth. It is therefore sensible to underpin this with an appropriate debate. The Committee would like to be kept informed about the progress of the working group on labour and employment and be associated with its activity. Given its competence in this area, the Committee should also be represented at the Vocational Training Conference set for 1996, which is a useful, if limited, initiative.

4.3. Strengthening the multilateral trading system

4.3.1. The agenda and action plan acknowledge that the EU and US have a special responsibility to strengthen the multilateral trading system. The Committee warmly endorses the emphasis on multilateral approaches.

4.3.2. The EU and US do have a special responsibility for maintaining an open multilateral trading system. In order to live up to these responsibilities the EU and US should not rely on unilateral measures and the transatlantic agenda should ensure that support for multilateral negotiations reduces the significance of the 'unilateral` instruments such as Section 301 and Special 301. Secondly, both the EU and the US are concluding an extensive web of regional agreements. The potential exists, therefore for the evolution of competing regional approaches to dealing with increased economic interdependence. The EU and US need therefore to make efforts to multilateralize their regional efforts or come to some accommodation with each other. In this respect the establishment of a WTO Committee on regional trade agreements to study the impact of all such agreements on the multilateral system is welcome.

Completing the Uruguay Round

4.3.3. In the short term the concrete ways of promoting multilateralism are set out in the two documents and include mostly issues of the unfinished business of the Uruguay Round such as:

- exploring an acceleration of tariff reductions agreed in the Uruguay Round (as well as areas for new tariff reductions);

- concluding negotiations on services in the WTO (to bring the US into the agreement on financial services, to act in maritime services and to conclude the GATS negotiations on telecommunications). On these issues action is needed soon;

- launching a new initiative on public procurement (to multilateralize agreement reached in Uruguay Round).

4.3.4. The Committee believes that the Singapore ministerial meeting of the WTO is a suitable venue for the EU and US to promote these objectives.

The new commercial issues

4.3.5. Environment and trade

4.3.5.1. The agreement establishing the WTO includes a welcome commitment to sustainable development. The Committee agrees with the Commission that protecting the environment and maintaining an open, non-discriminating and equitable multilateral trading system are equally important objectives, also that carefully designed and implemented environmental policies can both support trade and improve resource efficiency, competitiveness and employment.

4.3.5.2. Besides coordination with the new WTO Committee on Trade and Environment, the EU and US will need to lead progress within UNCTAD and the OECD and the international organizations with a specifically environmental brief, UNEP and the CSD. The WTO will include within its remit clarification of the precedence of international environmental agreements.

4.3.5.3. The WTO Trade and Environment Committee will also consider environmental product standards (an area where WTO rules permit EU-US bilateral cooperation to go further) eco-labelling and production and processing methods. This question of using trade measures to counter environmental damage which crosses borders or is global is the most sensitive one and will require careful exploration by the EU and US. The aim should be to enforce only such measures as can be agreed multilaterally and preferably within the context of an international environmental agreement.

4.3.5.4. As with food safety, the WTO permits national standards higher than international ones but deemed necessary to protect the national environment. They must be designed to have the minimum adverse impact on trade and the US questions this in the case of eco-labelling and packaging measures in the EU.

4.3.5.5. One of the most controversial proposals for WTO consideration is to permit countries to penalize imports on the basis of how they were produced or processed. Examples are leg-iron trapped furs, products from non-sustainable forests where trees are not being replanted and tuna caught with a dolphin by-catch. These are emotive issues and the GATT case against US legislation on tuna-dolphin (which required tuna exporters to catch no more dolphin than US fleets, without knowing what that figure was) turned the vociferous US environmental lobby against trade liberalization. The Committee is wary of taxes and trade embargoes which are blunt instruments. Communication between EU and US environmental organizations might help to allay their fears and promote a better understanding of the (environmentally preferable) alternatives to unilateral action such as rewards for countries which e.g. preserve forests eco-labelling and inclusion by the WTO of environmental issues within its Trade Policy Review Mechanism.

4.3.5.6. Although it has been argued that stricter environmental standards in industrialized countries encourage transnational companies to relocate to 'pollution havens` in developing countries, the evidence does not bear this out. However, it is appropriate to call for even stricter compliance by companies with the OECD Code of Conduct for transnational companies operating in developing countries which includes environmental provisions. Developing countries can also be encouraged to improve environmental standards through GSP incentives.

4.3.6. Social clause

4.3.6.1. The two powers agree to explain their position better to the developing countries and to reassure them that there is no desire to deny them comparative advantage by protectionist use of the social clause. The declared US aim is to set a floor to competition between developing countries so that those with low standards cannot undercut the others. The EU puts more emphasis on meeting basic human rights standards.

There are risks that trade sanctions can damage the people they are designed to help, and incentives, such as the new EU GSP schemes along with technical assistance and training, should be used in the first instance.

In the WTO sufficient resources to oversee increased access to information, a broadening of consultation procedures and wider analysis of the impact of trade measures to incorporate developmental, environmental and social issues, would also be beneficial. The EU and US could also further the approach taken in the Memorandum of understanding on the elimination of child labour from the garments industry in Bangladesh, which involved the ILO, UNICEF and the Bangladesh and US governments. The ILO is looking first for voluntary raising of standards such as initiatives like this, second for importers to reward higher standards with increased access and, failing this, WTO intervention.

4.3.6.2. The Committee has previously expressed its opinion that the working programme of the World Trade Organization should include a 'social clause`. This should be based on Conventions adopted by the ILO - to which virtually all the world's countries belong - and particularly to those concerning:

- abolition of forced labour (Conventions 29 and 105);

- the right to organize and collective bargaining (Conventions 87 and 98);

- minimum age for work and the abolition of child labour (Convention 138);

- ban on discrimination in the workplace and equal pay as between men and women for equal work (Conventions 100 and 111).

4.3.7. Investment

4.3.7.1. The Committee has already said that it 'would prefer that any multilateral agreement on investment (MAI) be negotiated on the World Trade Organization (WTO)`; however, given that the Organization for Economic Cooperation and Development (OECD) has already started up negotiations the Committee feels that the Community and its Member States should participate actively therein without losing sight of the need for a future WTO agreement (). Developing countries might be reassured by the inclusion of the principles of the OECD guidelines for multinational firms in any agreement on investment.

4.3.7.2. Given the degree and balance of inter-penetration of investment between the EU and the US, transatlantic investment must be regarded as a success. The Committee would, however, like to see coverage of sub-federal and local bodies to ensure removal of discrimination at state level.

5. THE NEW TRANSATLANTIC MARKETPLACE (TMP)

5.1. To go for a TAFTA would have been ambitious and risky. The Committee therefore endorses the pragmatic and step-by-step approach of the transatlantic market place. The major complications if free trade were agreed with the US, or indeed with NAFTA, would be the possible detrimental impact on the WTO and the difficulty for the agricultural sectors.

5.2. The EU and US agreed to carry out a 'joint study on ways of facilitating trade in goods and services and further reducing or eliminating tariff and non-tariff barriers`. This joint study is an open process and the final report should be available 1997/98. The Committee asks the Commission to keep it briefed on this study and reserves its right to draft an opinion on the question of a TAFTA.

5.3. The question arises as to whether the EU and US should negotiate bilaterally on trade issues in advance of WTO discussions. The Committee supports a pragmatic case-by-case approach. In some instances EU-US leadership is needed to spur WTO agreement or to break a deadlock (as with agriculture at the Uruguay Round). In others, such as investment, too much of a joint position could increase tensions with excluded economies. This is an issue which will require careful scrutiny as EU-US cooperation proceeds.

5.4. Agriculture

5.4.1. From a US point of view, Community production and exports which receive some form of government assistance are the major source of concern and are at the core of many of the bilateral trade disputes. The situation will certainly change after the second stage of the WTO negotiations, which will take place in 1999. The new round of multilateral negotiations is likely to bring a further reform of the CAP, and this will facilitate the accession to the EU of the central and eastern European countries and the establishment of new, normal trade relations with the United States.

5.4.2. There have been significant improvements in transatlantic relations over agriculture since the GATT round was concluded. The possibility now exists, within the framework of WTO rules to prevent unfair competition, that both US and EU farming could become genuinely competitive.

5.4.3. If the EU and US did manage to agree to more open markets in the agricultural and other sectors, this would pave the way for freer trade across the board. Whilst the potential gains to the EU economy would be great, there would be concomitant disadvantages for certain sectors in the EU and the US. The answer may be therefore to start with all other sectors and show some patience over agriculture. By the time the, also difficult, negotiations on standards, cultural trade and services are completed for example, and account has been taken of the implications for Canada and Mexico, the CAP may well have been reformed further.

5.5. Regulatory cooperation

5.5.1. In the meantime, significant progress should be made on the political agenda outlined above and on the major issues of regulatory cooperation including competition policy, mutual recognition of standards, financial services and telecommunication certification and testing, the information society and air transport.

5.6. Competition policy

5.6.1. The Committee believes that competition policy is an instance where EU-US bilateral regulatory cooperation can contribute to progress of the multilateral level. The Action Plan suggests that the EU and US might go on to encourage developing countries to set regulations in process. EU-US or EU-NAFTA cooperation holds great advantages for businesses. Currently, in the field of mergers, they may have to seek clearance from several authorities worldwide all with different reporting requirements. US system information requirements at the first stage are less stringent. This means that the 98 % of mergers which are cleared worldwide incur much less paperwork for all concerned. The benefits of convergent procedures would perhaps counterbalance business fears about confidentiality risks from the exchange of information between several authorities. Agreement would also help smaller businesses, which particularly need better access in technologically advanced sectors.

5.6.2. In the case of restrictive practices, there also could be some convergence with the US system whereby company agreements are legal unless the practice has been ruled illegal. In the EU even harmless agreements would have to be referred to the competition authorities to make them enforceable. Tougher action could then be concentrated on those practices which are against the public interest.

5.6.3. Although of significant interest to business, and indeed the consumer, competition policy does not excite the public. The addition of transfer pricing and corruption issues, as well as cooperation on model business principles would arouse more interest. The US legal action against its citizens who bribe foreign nationals should be followed up in Europe for example, as called for by the International Chamber of Commerce and the OECD. Implementation of OECD guidelines would also prevent tax concessions for overseas bribery. Similarly, the major EU and US accounting bodies are now agreeing global standards of accounting and reporting. These should be used to counter transfer pricing.

5.7. Mutual recognition of standards

5.7.1. The Committee supports the aim to conclude an agreement on mutual recognition of conformity assessment (which includes certification and testing procedures) for certain sectors as soon as possible. The Transatlantic business dialogue sets priorities such as telecommunication terminal equipment, information technology product and electrical equipment. In addition, the Committee supports the call for increased cooperation in the international standard setting process and for the greatest possible use of international standards with maximum practical transparency, participation and non-discrimination. In these standard-setting processes, it is important that all relevant interests - business, labour, consumer, environment and citizen - are included.

5.8. Food standards

5.8.1. An example of the need to include consumer perspectives is the food standards debate between the EU and US. The Uruguay Round agreement says that food standards cannot be challenged as trade barriers, as long as they are 'science-based`. However, the agreement makes no provision for dealing with uncertainties. If scientific opinion is divided, however, the agreement provides for preventive measures. The US position at home is that it will maintain the highest possible food standards and allow the benefit of the doubt where scientific evidence is uncertain. At the same time it is pushing the EU to accept imports of beef produced with hormones and has rejected the call of the EU and certain US beef producers for certification of beef produced without hormones.

5.8.2. Clarification could be found in the working of the NAFTA agreement. NAFTA defines a scientific base as meaning 'a reason based on data or information derived using scientific methods`. The US Executive branch denies that the Uruguay Round agreement encourages harmonization down to international (mainly Codex) standards and the NAFTA text states the right of each party to 'adopt, maintain or apply... a measure more stringent than an international standard`. This reinforces the Commission's view that it has the right to apply higher standards. The Committee favours the inclusion of food standards in the Action Plan.

5.9. Financial services and telecommunications

There is considerable scope for gain from increased competition in financial services and telecommunications. There are risks that systems of prudential control and investor and policy holder protection will not be up to the task of protecting consumers and that increased competition could jeopardize services to some groups of consumers such as those living in sparsely populated areas. On the other hand, an agreement could address the confusions of regulation based on the domestic base of the company rather than the operating market in the EU, and the plethora of different rules in the US at State level. The EU banking sector is relatively open. Regulatory requirements are the same for US banks sited in the EU as for EU banks. However, the lack of integration of the US banking market makes it difficult for EU banks to penetrate the various state markets. This is an area where progress is important since the EU has a strong financial services sector.

5.10. The information society

5.10.1. The Committee welcomes the industry proposal for an EU-US information technology agreement by December 1996. This should eliminate tariffs by 2000, and use common standards to encourage competition and user access. Common standards would reduce the risk of market dominances and permit small and medium-sized businesses to enter the market more effectively.

5.10.2. The two documents avoid discussion of the audio-visual debate. However, it has to be addressed since it is relevant too to the new technologies. The EU requirement for the majority of entertainment broadcast in the EU to be of EU origin 'where practicable` could, once the software has been developed, potentially be applied to the Internet, for example. US industry is certainly concerned at the threat that the cultural argument, which it does not fully recognize, will be applied by the EU to new technologies. A transatlantic dialogue on this, with clearer EU definition of the boundaries of its cultural argument could help.

5.11. Air transport

5.11.1. The US is seeking increased access, while the EU wants the right to increase stakeholdings in US airlines beyond 25 %. There is also the issue of subsidies, not helped by the delays by the Commission acting on EU state subsidies. Before any real progress can be made, the issue of EU competence needs to be resolved. The Committee is inclined to the view that here, as in other areas, it is in Europe's interests to speak with one voice.

5.12. State aids

5.12.1. Although the Action Plan mentions public procurement, the problem of state aids is not highlighted. The US has however questioned EU state aids generally, including regional subsidies.

EU industry also has problems with US aids because the authorities in the different states give incentives to industry which are difficult to track down especially at commune level. The Committee proposes that the Action Plan include the aim to improve transparency.

5.13. Committee's conclusion on TMP

5.13.1. Although useful progress can be made in an ad hoc manner for example in these above areas, the risk is that the TMP proposals have played it too safe. Detailed work on mutual recognition or even the pilot cooperative projects in regulatory cooperation, useful though they are, are unlikely to set politicians or public opinion alight. The more controversial issues such as monetary policy, audio-visual and food standards are largely avoided. There is also an open question as to whether it will be possible to maintain the momentum behind the proposals. Neither side is committed to targets which the public understands. Failure to achieve the objectives set out in the action plan will therefore not be registered by public opinion. In such circumstances it is difficult to see how there will be sufficient political will to overcome the problems that will inevitably arise.

5.13.2. This Opinion suggests ways in which action in the areas targeted by the EU and US could be strengthened: also where EU and US interest groups could be more fully involved. Where trade differences between the EU and US keep resurfacing, it is largely due to different traditions in regulatory policy, as the action plan recognizes, but also to the different perspectives of the various interest groups on either side of the Atlantic. Transatlantic cooperation between economic and social interest groups, extending from the business dialogue which is currently being promoted, would have the benefit of deepening a dialogue which to date has been largely carried out by a relatively small group of experts in the political and security community. It would also help to resolve some of the disputes and to keep the transatlantic agenda more firmly in the public eye.

5.13.3. Central to the success of the agreement will be the monitoring of progress. This cannot be the task of body officials such as the senior level group, of which the membership and terms of reference are not visible to the public, but should be carried out in a more transparent fashion. The Committee should try to monitor progress in implementing the agreement and to increase the accountability of the negotiations to the public at large and to the various interests affected by the agreement within the European Union.

6. BUILDING BRIDGES

6.1. The final section of the agenda and action plan recognizes the need to extend the scope of the transatlantic dialogue as was called for in the Information Report, it focuses on business (the transatlantic business dialogue), science and education. It welcomes the intention to conclude an agreement on Science and Technology and wishes to see maximum use of the agreement on cooperation in Higher Education and Vocational Training. Educational exchanges are frequent but not as systematic as they might be; there is no central clearing house to put visitors in touch with appropriate sponsors and vice versa. Particular gaps are exchange programmes for faculty members to lecture at each others' universities and participate in conferences, and think tanks, as well as exchanges for voluntary organizations. It is to be hoped that the action plan extends to these.

6.2. The Opinion indicates where interest groups can have a particular impact on transatlantic cooperation since they are very active. The environment and agriculture are obvious examples. In the changed environment post Cold War, the EU and US need to develop mechanisms for an extended dialogue on commercial, environmental and social issues. This should include more than business, science and education contacts.

6.3. The developing Transatlantic Business Dialogue has already produced clear cut proposals for improving trade. The Committee would like to be briefed regularly about developments, about the subjects dealt with in this context and about any problems which arise. This information will make it possible to coordinate attempts to secure deeper economic and social consistency between the EU and US and may serve as a model for other interest groups. The addition of, for example, labour, consumer, farmer and environmental interest groups to the debate would ensure full participation. The agenda of common interests between EU and US interest groups is a long one. The Committee would emphasize the following:

- international issues such as relations with Japan and other countries with a significant role in world trade;

- the regeneration of the transitional states of the CEE and CIS;

- promoting sustainable development and aid/food aid to the developing countries, the position of Africa;

- commitment to multilateralism, progress on regulatory policy, competition policy and model business principles;

- problems of economic and monetary policy;

- comparative experience of job creation, social issues, incomes and trade, vocational training, health and unemployment;

- international environmental agreements, environmental policy in the various sectors, lifestyle changes, information to consumers;

- differences in agricultural policies, mutual reductions in export subsidies, agriculture's contribution to the protection of the environment;

- cooperation in consumer issues such as cross-border redress, high health and hygiene standards, prudential control and maintenance of services in rural areas;

- innovative initiatives among NGOs, including civic, charity and voluntary organizations;

6.4. In the light of support received for the idea in the US, the Committee recommends a two-yearly face-to-face exchange of views on these issues between the economic and social interest groups on both sides of the Atlantic. The Committee would like to begin this process with a conference towards the end of 1996 on transatlantic issues with US economic and social partners.

7. CONCLUSION

The Committee supports the pragmatic approach adopted by the transatlantic market place. This is preferable to the riskier approach of a TAFTA. But with a pragmatic approach the success of the agreement will depend on whether there is sufficient momentum to ensure that the targets are reached. The Committee therefore proposes clearer and more ambitious goals in the areas of overseas aid, the environment and social policy. The Committee proposes also an opening of the process of cooperation to the wider public beyond businesses and the senior level group.

Done at Brussels, 30 May 1996.

The President

of the Economic and Social Committee

Carlos FERRER

() US aid about 0,2 % of GDP, EU aid about 0,4 % of GDP. US aid is also biased to a small number of middle income countries.

() See Committee's Opinion on the proposal for a resolution of the Council of the European Communities on a Community programme of policy and action in relation to the environment and sustainable development (Rapporteur: Mr Boisserée). OJ No C 287, 4. 4. 1992.

() Beware the US Model: Lawrence Mishel et al. Economic Policy Institute, Washington, 1995.

() OJ No C 153, 28. 5. 1996.