The United States and the 27-Member European Union (EU) share a huge, dynamic, and mutually beneficial economic partnership. Not only is the U.S.-EU commercial relationship, what many call the transatlantic economy, the largest in the world, it is also arguably the most important. While the transatlantic market is today highly integrated due in large part to a massive amount of foreign direct investment by both U.S. and European companies in each other's markets, differences in regulatory approaches, standards, and philosophies militate against the development of an even tighter and more integrated marketplace. Regulatory differences are also behind some of the most politically sensitive bilateral trade disputes. To deal with this situation, a variety of government-to-government efforts and transatlantic dialogues have been created to increase understanding between policymakers and regulators on both sides of the Atlantic, to minimize existing regulatory barriers, and to prevent the emergence of new regulatory barriers. These efforts, falling under the rubric of transatlantic regulatory cooperation (TRC), are seen as being important to today's U.S.-EU economic relationship. Proponents maintain that TRC undertakings can not only prevent disruptive and costly trade disputes from occurring, but also spur trade and investment flows by reducing costs for producers and consumers on both sides of the Atlantic. Since the establishment of the New Transatlantic Agenda (NTA) in 1995, there have been a number of new TRC initiatives, all aimed at removing or reducing regulatory barriers to trade. While each of these initiatives has made some progress toward reducing regulatory burdens, many U.S. and European companies heavily engaged in the transatlantic marketplace maintain that the results have not been materially significant. At the 2007 U.S.-EU Summit, leaders of the EU and United States committed their governments to increasing the efficiency and transparency of transatlantic economic cooperation and to accelerating the reduction and elimination of barriers to international trade and investment with the ultimate objective of achieving a barrier free transatlantic market. They also agreed on a Framework for Advancing Transatlantic Economic Integration (the Framework) and created a new institutional structure, the Transatlantic Economic Council (TEC), to advance the process of regulatory cooperation and barrier reduction. Headed on both sides by ministerial-level appointees, the TEC is designed to oversee the efforts outlined in the Framework, with the goal of accelerating progress and guiding work between the Summits. Whether the TEC will herald a new era of more effective cooperation remains to be seen. Much could depend upon whether the TEC can exert enough political leverage to convince regulators to make reforms that will result in reduction of regulatory barriers between the EU and the United States, as well as increase the role that legislators on both sides of the Atlantic play in the process. Six TEC meetings have been held since it was established in 2007, the most recent in November 2011 in Washington, DC. This report is intended to serve as an introduction and primer on a complicated, broad, and often highly technical set of issues. It is presented in seven parts: the first section describes the nature and scope of U.S.-EU regulatory barriers; the second section explains the rationale for regulatory cooperation; the third section highlights the differences in U.S.-EU regulatory approaches; the fourth section examines the various forms of regulatory cooperation; the fifth section evaluates the results of past initiatives at regulatory cooperation; the sixth section analyzes the creation and operation of the Transatlantic Economic Council; and the last section highlights the role of Congress in transatlantic regulatory cooperation. This report will be updated as events warrant. Since the mid-1990s, both U.S. and European multinational companies (MNCs) have viewed divergent ways of regulating markets for both goods and services as the most serious barriers to transatlantic commerce. Redundant standards, testing, and certification procedures are seen by these companies as far more costly and harmful than any trade barriers imposed at the border, such as tariffs or quotas. While the purpose of many regulations is to protect consumers and the environment, divergent domestic regulations and standards can affect the competitive position of firms, helping some and disadvantaging others by affecting the importation of products not produced or grown according to those requirements. To the extent that product standards differ, exporters may find their goods prohibited from certain markets or subject to expensive re-labeling, re-packaging, or re-testing. For example, European winemakers intending to sell in the U.S. market must label their bottles according to U.S. requirements, which are different than EU requirements. Similarly, U.S. exports to the EU of poultry washed with anti-microbial treatments have been blocked for years by different health and safety standards. Different regulations add to the cost of doing business on both sides of the Atlantic and serve as non-tariff barriers to trade in many different economic activities and sectors. These include but certainly are not limited to differences in accounting and financial reporting requirements, antitrust or competition procedures, consumer protection (safety and health) standards, environmental regulations, and personal data transmission. Each of these divergences can materialize into politically charged disputes and threaten the functioning of the transatlantic market. In no area has this been a greater problem than in chemicals. In this sector, the United States and EU have fundamentally different regulations on issues such as genetically modified organisms (GMOs), hormones, and the registration and restriction of chemical substances. In the case of GMOs, these differences have translated into longer authorization times and stricter standards for approval, release, and marketing of GMOs in the EU than in the United States Moreover, GMOs have been the subject of a long and bitter trade dispute brought before the World Trade Organization. Pharmaceuticals is another sector where regulatory differences have been described as not only significant, but also bewildering. Just in the area of drug approvals, primary regulatory elements governing testing protocols, submission of clinical data, and certification of good manufacturing practices vary considerably between the United States and EU. Moreover, within the EU, where public health policy is still a national prerogative, rules and protocols can vary greatly from member state to member state. Because each member state has its own rules and protocols, it can be quite expensive for pharmaceutical companies to achieve marketing authorization throughout the EU or even a subset of countries. Another example comes from the automotive sector, where American and European car makers sell similar products in the United States and Europe. But there are different standards and testing requirements for all kinds of parts, ranging from headlights, wiper blades, light beams, and seat belts to crash standards—which critics maintain are without measurable differences in safety benefits. There are even multiple crash test dummies of the same or similar size and purpose—a clear example of where regulatory requirements diverge. Despite the salience of regulatory barriers in transatlantic commerce, a comprehensive, sector-by-sector study or inventory of regulatory barriers has not been undertaken. Proponents argue that such a report could identify regulatory differences that impose substantial burdens on transatlantic commerce and possibilities for their reduction or convergence without compromising either U.S. or EU health and safety priorities. In 2003, the European Commission (EC) proposed that such a study be undertaken and jointly funded, but the U.S. government did not back the initiative. Both sides, however, note the major regulatory divergences that are considered trade barriers in their respective annual trade barrier reports. In the 2008 U.S. trade barriers report, for example, 12 pages are devoted specifically to EU regulatory barriers. Efforts to enhance TRC draw on both economic and political justifications and are strongly supported by business interests and governments on both sides of the Atlantic. At the same time, within the United States, some interests, mostly academics, see greater benefits derived from regulatory competition and independence, whereby each side is free to maintain its own approach to regulating consumer, health, and environmental issues. The case for non-cooperation or at least caution is also based on concerns that domestic health and safety standards may be compromised by a process that is driven substantially by business interests and stakeholders and could be affected by a "race to the bottom" regarding U.S. and EU standards. The primary reason why many export industries seek to achieve greater harmonization in international standards is to reduce costs associated with complying with two different sets of regulations and standards. To the extent that transatlantic regulatory standards and procedures differ, the costs of engaging in transatlantic commerce increase. A good example comes from the auto industry. According to a trade association, a U.S.-based producer of light trucks looked into exporting a model to Europe and found that its design was incompatible with a European regulation on exterior edge projection (the United States has no comparable standard). The truck was never exported because it would have required a major and costly re-design. The same truck manufacturer then undertook to ensure that another model on the drawing boards would have maximum export potential built into its design. In order to sell this product in Europe, the manufacturer reportedly utilized 100 unique parts, incurred an additional $42 million in design and developmental costs, and committed an additional 130 people to the program. Yet, the performance of the vehicle, in terms of safety, was unchanged. European-based manufacturers face the same issues in reverse when contemplating selling a European-designed model in the United States. These separate regulations, in turn, may cost manufactures millions of extra dollars to comply with, but may result in no changes in the vehicle in terms of safety or fuel economy. A 2005 OECD study is often cited to illustrate how costly regulatory barriers are to producers and consumers on both sides of the Atlantic. This study estimates that regulatory divergences between the United States and Europe costs the United States a sum that is equivalent to 1%-3% of GDP annually.