Answering TTIP's Critics: Regulatory Cooperation in Risk Assessment and Risk Management

Submitted by Reeve T. Bull on Mon, 12/08/2014 - 06:23

It was a pleasure to participate in the George Washington University Regulatory Studies Center's recent workshop, Enhancing the Transatlantic Trade and Investment Partnership: Reducing Regulatory Barriers. The seven panels over the course of the two-day event essentially covered the waterfront on important regulatory issues connected with the TTIP, including, among other things, the role of legislatures and courts, ex ante and ex post regulatory impact analysis, stakeholder consultation, and risk assessment and risk management. The panels both explored the commonalities and distinctions between the U.S. and EU regulatory systems and highlighted possible areas for reform.

Though the panelists identified a number of promising avenues for enhanced regulatory cooperation, an agreement ultimately will not succeed absent approval by the relevant political actors in both blocs (i.e., the U.S. Senate and House of Representatives and the EU Parliament and Council). Unfortunately, the popular rhetoric on both sides of the Atlantic has been dominated by the naysayers. In the EU, Eurosceptics have assailed the agreement as an erosion of national sovereignty, whereas politicians from the far-left have characterized it as an assault by American imperialists on the "precautionary principle" and other cherished aspects of the modern European regulatory state. In the U.S., progressive groups have maligned TTIP as the brainchild of a cabal of multi-national corporations designed to overturn public-spirited regulations on both sides of the Atlantic. So long as the prevailing public narrative is dominated by skeptical voices, the prospects for a successful agreement are, lamentably, quite dire.

Regulatory proponents should be commended for vehemently defending laws designed to protect the environment, consumers, and the general public. Nevertheless, the U.S. and EU governments and prominent TTIP advocates have repeatedly asserted that a successful agreement will maintain or even enhance prevailing levels of regulatory protection while simultaneously promoting trade. Thus, a conscientious U.S. Member of Congress or EU MEP considering whether to support TTIP faces something of a conundrum—will the agreement usher in a new era of increased regulatory convergence between the world's largest trading partners or precipitate an international regulatory "race to the bottom"?

In answering this question, it is informative to scrutinize the objections at a more granular level. When so doing, one is struck by the prominence of scientific regulatory issues in the "parade of horribles" trotted out by the adversaries of TTIP. Outcries over genetically-modified foods, hormone-treated beef, chlorine-washed chickens, and other "unnatural" agricultural products have featured prominently in the TTIP debate, especially in Europe. In this connection, Professor George Gray's comments concerning the importance of separating issues of risk assessment (i.e., the objective, technical analysis of the risk associated with certain activities) and risk management (i.e., the subjective process of deciding what resources should be allocated to minimizing or eliminating that risk) prove especially salient. In essence, the two sides seem to be talking past one another: opponents insist that the average consumer would strongly support regulations designed to prohibit (or at least label) stomach-churning "Frankenfoods" (i.e., risk management) while proponents counter that the existing scientific studies have identified little to no risk associated with such products (i.e., risk assessment). Though this is merely one example (albeit an especially prominent one), much of the public debate seems to similarly conflate technical questions with the conceptually distinct issue of the appropriate level of regulation.

If such confusion prevails in the popular rhetoric, the public is not chiefly to blame, for U.S. and EU officials have also traditionally failed to disaggregate the risk assessment and risk management aspects of regulatory problems. Though Professor Gray also highlighted the difficulty of separating these two inquiries, as many questions lie on the ambit between science and policy (e.g., determining the level of certainty required to demonstrate "causation"), many issues fall cleanly on one side of the divide or the other. In the context of TTIP, making a more diligent effort to segregate these inquiries could have enormous payoff in enhancing the political viability of the agreement.

First, regulatory cooperation on issues of risk assessment is almost completely unobjectionable: virtually no one would demur to information sharing between U.S. and EU regulators, which would promote more accurate scientific fact-finding, preserve limited regulatory resources, and reduce unnecessary animal testing. Cooperation on questions of risk management is considerably more challenging, but a number of promising opportunities exist. As Professor Jonathan Wiener has shown, notwithstanding common perceptions concerning greater solicitude for the precautionary principle in Europe (and the fact that the EU formally embraces the precautionary principle whereas the U.S. does not), the reality is that U.S. regulations are more precautionary than their European counterparts in some areas and less so in others. Where one side is significantly more precautionary than the other (e.g., limitations on carbon emissions to combat climate change), the likelihood of regulatory convergence is diminished. Nevertheless, in many contexts, U.S. and EU regulations exhibit roughly commensurate levels of precaution (e.g., auto safety standards), and the likelihood of achieving harmonization or mutual recognition of regulatory approaches is considerably greater in these areas. Concerns about a "race to the bottom" are largely unfounded when levels of regulatory stringency are comparable. By taking a sector-by-sector by approach, the TTIP negotiators have allowed regulators to tailor the type of regulatory cooperation sought in light of the preexisting regulatory landscape.

Closer attention to the distinction between risk assessment and risk management could also greatly improve U.S. and EU practices for gathering stakeholder input. In the U.S., the widely participatory notice-and-comment process often gives the mistaken impression that regulatory policymaking is a plebiscite (witness the popular reactions to the FCC's proposed "net neutrality" rule). U.S. policymakers might borrow a page from the European Commission's playbook, posing a series of technical questions on which the agency desires input and clearly stating that mere expression of assent or disagreement with the proposed policy is irrelevant. EU regulators, in turn, might learn from their U.S. colleagues in offering an explanation of how the decisionmaker accounted for relevant technical input in a prefatory statement to any policymaking instrument adopted. Public commenters are likely to grow dispirited if they feel that regulators consistently ignore the information they furnish. Finally, both the U.S. and EU might consider whether regulators can and should solicit public input on risk management determinations, such as by convening advisory committees to opine on specific risk tradeoff issues. I have proposed one possible mechanism for achieving this in the U.S. context in an article in the Administrative Law Review and explore its use in international regulatory cooperation in a forthcoming article in Law & Contemporary Problems.

Though TTIP's advocates have articulated a strong case for the agreement's economic benefits, they are unlikely to win the overall debate unless if they can assuage popular concerns that it represents a stealth effort by an international elite to dismantle the regulatory state. More carefully disambiguating risk assessment and risk management issues is one possible means of doing so, helping to elucidate the countless areas in which closer cooperation can both eliminate unnecessary trade barriers and actually help government officials achieve their regulatory missions.

Reeve T. Bull is an Attorney Advisor with the Administrative Conference of the United States. The views expressed in this post are those of the author and do not necessarily represent those of the Administrative Conference.

This essay is based on remarks made at The George Washington University Regulatory Studies Center's conference, Enhancing the Transatlantic Trade and Investment Partnership: Reducing Regulatory Barriers. It reflects the views of the author and does not represent an official position of the GW Regulatory Studies Center or the George Washington University.