Executive Summary & Recommendations

The proposed chapter on Regulatory Cooperation in the Trans-Atlantic Trade and Investment Partnership (TTIP) Agreement, the largest bilateral trade agreement in history, threatens the authority and independence of US state governors, legislators and executive agencies, and would fundamentally alter how environmental policy is developed, enacted and implemented in the United States.

TTIP’s regulatory cooperation provisions are intended to reduce the cost of doing business by minimizing regulation, promoting convergence of regulatory standards, and defaulting to international standards developed with significant involvement of the regulated industries. These goals can only be achieved by preventing US states from adopting health and environmental regulations that go beyond US federal standards.

This regulatory agenda is being pushed by the largest chemical and manufacturing corporations on both sides of the Atlantic. Largely frustrated in their past attempts to have the US Congress preempt US state standards that go beyond federal minimums, these corporations have now turned to international trade agreements, including TTIP, to undermine state regulations by other means. In the absence of comprehensive federal standards, state legislatures have become the primary vehicle for much of the United States’ chemical regulation. Interference with state regulatory authority will have major implications on public health, safety, and welfare in the US.

During the past three decades, while the federal Toxic Substance Control Act (TSCA) has proven egregiously ineffective, US states have adopted more than 250 laws and regulations protecting humans and the environment from exposure to toxic chemicals, and taken the lead in enforcing stricter pesticide standards. California is one of several states to design chemical policies to protect consumers from potentially hazardous products. Likewise, as the US federal government has failed to respond to fracking concerns, states have filled the regulatory void; in 2015 alone, 226 bills addressing hydraulic fracturing were proposed in 33 states.

US states have also extended regulatory authority over pesticides, implementing bans, overseeing registrations and labels, and imposing restrictive use standards. The US Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) is actually designed to promote co-regulation between the federal and state governments, yet states are the predominant regulator under this Act. This often leads to stricter standards and more stringent protocols at the state level. New York and California have banned several pesticide products deemed acceptable by the EPA, and Kansas and Iowa are among many states that require more rigorous registration, application, and use standards than those federally required.

TTIP’s Regulatory Cooperation chapter threatens to undermine these protections to public health, welfare, and safety, by explicitly targeting US state laws and regulations throughout. The US has not publicly responded to these detrimental impacts, nor addressed several of TTIP’s ambiguities that require clarification. For example, it remains unclear whether Investor-State Dispute Settlement (ISDS) arbitration will serve as an avenue for recourse for non-compliance claims.

Although there have been limited efforts to promote “good regulatory practices” and international cooperation in prior US trade and investment agreements, the US regulatory framework has never before faced the unexpected and novel challenges that TTIP presents. The proposals for regulatory cooperation and coherence in TTIP delve deeply into the internal legislative and regulatory decisions and choices of US states as well as the federal government. They do so in ways not anticipated by the US Constitution, and in the process pose significant risks not only to our capacity to regulate to protect public health and environment, but also to our democratic institutions.

The Regulatory Cooperation chapter not only disrupts the US legislative pathways by weakening state regulatory authority, but it will also threaten the independence of state agencies and regulatory bodies. The chapter would institutionalize new avenues for private interests to seek to influence decision-making before legislation is introduced and to suppress laws and regulations before they are enacted. Industries will no longer be limited by the democratic process of a legislature with public hearings and opportunities to provide testimony, but can instead influence an unelected, unaccountable, and currently ill-defined, international trade oversight body.

As proposed by the EU, an “early warning” system will inject additional, behind-the-scenes industry influence that will promote newly required alternatives and trade impact analyses and drive a race to the bottom based on preferred “least trade restrictive” policies. Besides “paralysis by analysis,” these harmonization requirements could also lead to a freeze on future protections as US states seek to avoid legal challenges by transnational corporations seeking millions of dollars in compensation in special arbitration proceedings.

The ultimate outcome of these provisions will dramatically impair health and environmental protections across the US, and erode the authority of the US states to regulate in the public interest. Not only is this result contrary to the historic role of states as the frontline protectors of public health and safety, it will halt the innovation and responsiveness of state policy-makers to emerging technologies and health threats, leaving millions of Americans at risk.

KEY MESSAGES AND RECOMMENDATIONS

  • The TTIP Regulatory Cooperation chapter proposed by the EU will comprehensively apply to both US state and EU Member State legislative and regulatory measures, and new procedural requirements will apply to legislative bodies as well as executive agencies.
  • The scope of any US regulatory proposal in TTIP is unknown, because the US refuses to publicly release any text. USTR has yet to publicly address the details of the EU text or similar industry-drafted regulatory cooperation proposals that seek to prevent US states and EU Member States from implementing regulatory standards that exceed federal or central government minimum standards.
  • US states have wide latitude to regulate to protect the public health, safety and welfare under the US Constitution and federal environmental laws, most of which institutionalize a strong state role as co-regulator. With federal regulation of chemical hazards lax, slow or simply broken, many states have assumed primary responsibility for developing regulations to protect the public and the environment, including restrictions on the use of certain toxic chemicals in consumer products, labeling for increased consumer awareness, tighter controls on fracking waste, and greater scrutiny in determining whether pesticides are safe.
  • Viewed as a whole, the EU’s Regulatory Cooperation chapter has the potential to negate important existing and future protections from toxic chemicals in the United States. The sweeping scope of covered laws and regulations, the failure to preserve any right to regulate outside of the federal government, and the avowed goal of achieving “regulatory compatibility” between the EU and US central governments all threaten the continuing viability of US state laws and regulations that are more protective than federal standards.
  • The impact of the Regulatory Cooperation provisions will extend well beyond encouraging good governance and voluntary transatlantic cooperation. The chapter will impose multiple procedural mandates – from an early warning system to regulatory exchanges to the trade and cost-benefit impact assessments – that will lead to regulatory chill caused by delay, increased costs for government, fear of legal challenges, and heightened industry influence and conflicts of interest.
  • To an unprecedented degree, US federal agency bureaucrats will become involved in state legislative and executive branch procedures and policies. In addition, the concerns of foreign governments will be inserted into US state domestic policy decisions.
  • It is imperative that state government officials and civil society act promptly to expose the details of TTIP proposals and to speak out in opposition in light of the fast pace of TTIP negotiations, the limits placed on Congressional oversight following approval of “fast track” review, the failure of the USTR to operate in a transparent manner, and the absence of any public push-back by the US government against EU and industry Regulatory Cooperation proposals.