On January 18, 2018, the European Commission launched a call for proposals on regulatory cooperation activities envisaged by the EU-Canada Comprehensive Economic and Trade Agreement (“CETA”). (See our previous post for further details on the provisional application of CETA). The Commission is seeking views from all interested parties on the scope of issues for potential regulatory cooperation in order to prepare for the first meeting of the RCF, tentatively scheduled to take place in mid-2018.This call for proposals is based on Chapter 21 of CETA, which sets out the EU’s and Canada’s overall objectives for cooperation with a view to enhancing convergence and compatibility between each Party’s regulatory measures.
Regulatory cooperation between the EU and Canada has the potential to enhance trading opportunities between the two jurisdictions by mitigating non-tariff barrier issues. In the past, the EU and Canada have tussled before the WTO dispute settlement body over regulatory issues related to technical barriers to trade and sanitary/phytosanitary measures (for example, in EC – Hormones, EC – Asbestos, and EC – Seal Products). Joint efforts on a wide range of regulations (such as product standards, testing requirements, and the regulation of services) should be beneficial to European companies with business interests in Canada, and vice versa.
CETA’s stated goals with respect to regulatory cooperation are to: (a) promote health and safety; (b) facilitate trade and investment by avoiding unnecessary regulatory differences; and (c) improve industry competitiveness by reducing duplicative regulations and compliance costs.
Although participation is voluntary and the procedural framework is still nebulous, these consultations are a promising start to an initiative with potentially wide-ranging implications. This is the first time that regulatory cooperation has been formalized to such a degree within the context of an EU FTA. Indeed, CETA is the most comprehensive trade-related agreement ever entered into by the EU. The CETA developments with respect to regulatory cooperation will likely set the tone for such future initiatives in future EU trade deals with other countries.
Scope of Regulatory Cooperation. Chapter 21 of CETA sets out commitments and aspirations of both parties which cover a very broad range of regulatory measures, including those related to technical barriers to trade, sanitary and phytosanitary aspects, trade in services, trade and sustainable development, trade and labor, and trade and environment.
The agreement provides for various activities to foster regulatory cooperation, including consultations, exchanges of information throughout the regulatory development process, and the sharing of proposed technical or sanitary and phytosanitary regulations that may have an impact on trade. Notably, it emphasizes cooperation in the development of “technical regulations”.
In terms of data sharing, Article 21.7 defines specific areas where the Parties endeavor to cooperate and share information on “non-food product safety”, including: scientific, technical, and regulatory matters, standardization activities, market surveillance and enforcement, risk assessment and product testing, and coordinated product recalls. To that end, the Parties have specifically agreed to the possibility of establishing a system of reciprocal information exchange on product safety, warnings, and recalls.
Regulatory Cooperation Forum. CETA expressly provides for a centralized body focused on regulatory cooperation, the Regulatory Cooperation Forum (“RCF”), which constitutes one of the treaty’s pre-defined “specialized committees”. Although details in the treaty text are sparse (its terms of reference, procedures, and work plan will be adopted at its first meeting), several elements are clear. First, the RCF will carry out its mandate under the auspices of the “CETA Joint Committee”. (The CETA Joint Committee, as elucidated in Chapter 26, is CETA’s principal implementation body. It is responsible for facilitating and supervising implementation of the treaty, and overseeing the activities of all the specialized committees, including the RCF).
Second, the RCF’s activities will center around the discussion of regulatory policy issues of mutual interest and consideration of regulatory initiatives pertinent to EU-Canada cooperation. It will assist national regulators with identifying potential partners for cooperation activities, and in obtaining information on regulatory developments to recommend potential areas of cooperation.
Third, the RCF will be co-chaired by a senior Canadian government official and a senior European Commission official.
Fourth, the Parties may, by mutual consent, invite other interested parties (likely to include private stakeholders, including businesses, consumer organizations, academics, and NGOs) to participate in the meetings of the RCF.
Finally, ultimate decision-making power on regulatory cooperation rests with the CETA Joint Committee. However, the RCF may make proposals to the CETA Joint Committee on regulatory cooperation matters. Decisions of the CETA Joint Committee are binding, and will be made by mutual consent of the Parties.
In sum, this initiative provides interesting first steps towards responding to calls for greater harmonization of standards and regulations worldwide in order to improve cross-border trade. The EU’s foray into regulatory cooperation with Canada, a country that has markedly different standards and priorities in many areas, will be a challenging, yet potentially impactful endeavor – not least because cooperation with Canada may in turn have useful outcomes for European companies with business in the United States.
The European Commission welcomes proposals that fall within the areas outlined above and that do not duplicate cooperation activities covered by other parts of CETA (there are already provisions for bilateral dialogues on topics such as biotech and raw materials). The deadline for submission is February 16, 2018.