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Regulatory trade costs matter. They consist of the costs incurred by A exporters of effective market access to B due to different regulation and enforcement, in particular of ‘risk regulation’ (health, safety, environment). Stronger, negotiations for ‘deeper’ bilateral and regional trade agreements as well as estimates of tariff equivalents of ‘regulatory trade costs’ have increased the awareness that lowering of regulatory trade costs is quintessential for world trade. For middle-income and developing countries, these costs are rising secularly. This paper critically reviews the three principal ways of reducing such costs to the world economy – trade agreements, international regulatory cooperation, and global technical standardisation – and discusses how to render these more effective. Key challenges are to reduce national standards setting and to promote more effectively world standards. The European Union plays a frontrunner role in this regard, including for information and communications technology standards.

EU/China bilateral trade policy is largely conducted via a myriad of ‘trade-related’ Dialogues, nearly 50. Both the sheer quantity and the scope are conspicuous. We undertake a first attempt to map and assess these EU/China Dialogues, as far as is possible given the lack of transparency and paucity of hard data. We identify seven functions of the Dialogues. Four key questions are posed: (1) can the web of bilateral Dialogues be seen as an ‘unbundled’ FTA? (not really) ; (2) can Dialogues improve or delay market access? (if not about applied tariffs, both can be found, but easier access may well dominate because of the ‘lesser restrictions’ approach via Chinese reforms stimulated via Dialogues) ; (3) can Dialogues stimulate ‘sustainable development’, both socially and in environment & climate ? (yes, in both) ; (4) can Dialogues address ‘systemic differences’ ? (surely not directly, but in roundabout ways via reforms, selectively).

Regulatory cooperation is both one of the most ambitious and contentious parts of the EU-US Transatlantic Trade and Investment Partnership (TTIP) negotiations. In this paper, having identified the many levels of international regulatory cooperation, we show that TTIP regulatory cooperation will be significant, but not ambitious, while political and legal limits on cooperation in both the EU and the US minimise the concerns. For transatlantic regulatory cooperation to work, it must accept these political and legal constraints, build trust and confidence among counterpart regulators so they see that their transatlantic partner can help them do their work better, and provide tools to help regulators on both sides make informed decisions while retaining their regulatory autonomy and accountability to their politicians and citizens. A TTIP that provides these tools – and some more detailed instruments to that effect – will be more ambitious than previous trade agreements, and should, over the longer term, provide both the economic and regulatory benefits that the two sides envisage. The paper incorporates comparisons with the relevant chapters of recent FTAs the US and the EU have concluded, so as to clarify the approaches and degrees of ambition in this area. This comparison suggests that the TTIP regulatory cooperation will probably be more ambitious in terms of commitments and have a wider scope than any of these FTAs. This paper is the seventh in a series produced in the context of the “TTIP in the Balance” project, jointly organised by CEPS and the Center for Transatlantic Relations (CTR) in Washington, D.C. It is published simultaneously on the CEPS (www.ceps.eu) and CTR websites (http://transatlantic.sais-jhu.edu).

It is striking that there is little or no mention in the TTIP debate so far of the US-EU Mutual Recognition Agreement (MRA) concluded in 1998. At the time, expectations of the gains from the MRA were high. One should expect the MRA to be instructive for TTIP and entail some lessons to be learned for today’s attempt to lower technical barriers to trade (TBTs) across the North Atlantic. We offer an analysis of the 1998 MRA, the difficulties in the prior negotiations and those during the implementation phase, the subsequent and present status of sectoral approaches. The MRA experience revealed clearly how difficult it is to accomplish the acceptance of all relevant aspects of conformity assessment of the trading partner for the mere purpose of testing and certifying export goods on the requirements of the importing economy. The MRA has succeeded only in a few sectors. However, the ambition in TTIP with respect to TBTs is said to go so much further. It is therefore important for all those involved or interested in TTIP to learn the lessons of this early exercise in lowering TBT costs. This paper reaches two main conclusions: i) the US-EU MRA was only partially successful and only for some one-fifth of the export flows at the time: a disappointing outcome and a far cry from the expectations of business and political leaders; and ii) the EU’s attempt to ‘balance’ the negotiations in 1995 by bringing in three relatively competitive sectors did not work out – it was precisely there that problems accumulated. It is critical that domestic regulators must be satisfied during and after the negotiations that their pursuit of health, safety, environment and consumer protection objectives will not be watered down in any way. Lessons drawn include, among others: MRAs are not about regulatory change (by definition), but if initial regulatory cleavages between trading partners are too wide, conditions become so restrictive that parties may regard them as a denial of the very purpose of the MRA. There are incentives to opt for alternatives in the market for the formalised designation of conformity assessment bodies in the MRA and these are often cheaper and faster, while equally qualified. Even in heavily regulated sectors such as medicines and medical devices, the narrow MRA has been superseded by near-global forms of effective cost-reducing cooperative (i.e. not treaty-based) regulatory alignment, a confirmation of the OECD approach that governments should think in terms of an entire spectrum of forms of regulatory cooperation.

What are the economic and other impacts of the Transatlantic Trade and Investment Partnership? At the request of the European Parliament, CEPS has provided an appraisal of the TTIP Impact Assessment carried out by the European Commission, with special elaboration of the underlying economic model. The methodology applied by the Centre for Economic Policy Research (CEPR) for this economic modelling is analysed in depth, together with the assumptions used to make TTIP amenable to an economic appraisal. The research paper also compares the IA on TTIP with selected previous empirical economic assessments of EU trade agreements and with a set of alternative studies on TTIP itself. In reading our findings, two central caveats should be kept in mind that affect any analysis of the CGE model included in the European Commission’s Impact Assessment. First, TTIP is a rather unusual bilateral trade agreement; and second, TTIP is so wide-ranging that an alternative approach, such as the so-called ‘partial’ (equilibrium) approach – already a second-best solution – would be totally inappropriate to the case under examination.

The creation and prominence given to the new post of First Vice-President in charge of Better Regulation, Inter-Institutional Relations, the Rule of Law and the Charter of Fundamental Rights are among the most interesting of several novelties contained in the proposed Juncker Commission. It is also welcome and overdue. After all, better regulation has been underpinning the Commission's core business, namely, EU regulation, for over a decade. Better regulation, together with free movement, generate the economic value-added that we all expect from the Union. The centrality of this function is fully justified if the EU is serious about contributing to economic and societal welfare via its critical means: the internal market and the related common policies (which again consist mainly of…EU regulation).

'Does EU regulation hinder or stimulate innovation' is a frequently heard query in the EU, but there is little systematic analytical literature on the issue. Fragmented evidence or anecdotes dominate debates among EU regulatory decision-makers and in European business, insofar as there is a genuine debate at all. This CEPS Special Report focuses on the multi-faceted, ambiguous and complex relationship between (EU) regulation and innovation in the economy, and discusses the innovation-enhancing potential of certain regulatory approaches as well as factors that tend to reduce incentives to innovate. We adopt an 'ecosystem' approach to both regulation and innovation and study the interactions between the two ecosystems. This general analysis and survey are complemented by seven case studies of EU regulation enabling and disabling innovation, two horizontal and five sectoral ones. The case studies are preceded by a broader contextual analysis of trends in EU regulation over the last three decades. These trends show the significant transformation of the nature as well as improvement of the quality of EU regulation, largely in the deepened internal market, which tend to have a favourable and lasting effect on the rate of innovation in the EU (other things being equal). Our findings include the following: Regulation can at times be a powerful stimulus to innovation. EU regulation matters at all stages of the innovation process. Different types of regulation can be identified in terms of innovation impact: general or horizontal, innovationspecific and sector-specific regulation. More prescriptive regulation tends to hamper innovative activity, whereas the more flexible EU regulation is, the better innovation can be stimulated. Lower compliance and red-tape burdens have a positive effect on innovation. We recommend incorporating a specific test on innovation impacts in the ex-ante impact assessment of EU legislation as well as in ex-post evaluation. There is ample potential for fostering innovation by reviewing the EU regulatory acquis.

The EU is currently facing its most severe economic crises ever, with unemployment rising and Gross Domestic Product (GDP) not returning to its earlier growth path. In the face of this situation, in April 2011, the European Commission launched 12 new initiatives under the Single Market Act with the aim of boosting the Single Market and exploiting its potential as a driver of economic growth in the EU.

Notwithstanding the undeniable success of telecoms liberalisation in terms of price reduction, new services and technologies as well as consumer satisfaction, EU telecoms policy is at least a half failure. This might seem hard to believe, but we show in this paper that there is no such thing as an EU telecoms (or eComms) single market. We provide ample empirical economic and regulatory evidence of profound and lingering fragmentation as well as a brief assessment of the flaws of the eComms package as amended in 2009, and recently entered into force. Overcoming the fragmentation cannot but yield a considerable welfare improvement for the Union, which is exactly what a single market should be expected to deliver. Doing away with the flaws in the EU system requires a better institutional design. We wonder whether the regulatory (and competition policy) approach is really suitable for the Union and whether the fundamental conflict between the EU constitutional doctrine and the building of the single market (just as much a constitutional duty!) should not be resolved in novel ways.

Notwithstanding the undeniable success of telecoms liberalisation in terms of price reduction, new services and technologies as well as consumer satisfaction, EU telecoms policy is at least a half failure. This might seem hard to believe, but we show in this Policy Brief that there is no such thing as an EU telecoms (or eComms) single market. We provide ample empirical economic and regulatory evidence of profound and lingering fragmentation as well as a brief assessment of the flaws of the third eComms package of 2009, now in force. Overcoming the fragmentation cannot but yield a considerable welfare improvement for the Union, which is exactly what a single market should be expected to deliver. Doing away with the flaws in the EU system requires a better institutional design. We wonder whether the regulatory (and competition policy) approach is really suitable for the Union and whether the fundamental conflict between the EU constitutional doctrine and the building of the single market (just as much a constitutional duty!) should not be resolved in novel ways.

Digitised version produced by the EUI Library and made available online in 2020.