Response to Keynote Addresses by

U.S. Ambassador to the European Union C. Boyden Gray

and European Commissioner Meglena Kuneva

8^th Annual Meeting of the TransAtlantic Consumer Dialogue (TACD)

Brussels, 12 March 2007

By Edmund Mierzwinski, U.S. PIRG and TACD Steering Committee

We want to thank Ambassador C. Boyden Gray and Commissioner Meglena Kuneva for their remarks today. The TACD has long-recognized and appreciated the efforts by the two governments to send senior-level officials to engage with us on the important matters that affect consumer health and safety and the economies of not just the U.S. and Europe, but also the world-- since the two largest trading partners and their economic, trade and social policy decisions have a massive impact on global decision-making.

On behalf of the TACD, then, I want to respond to the remarks by the Commissioner and the Ambassador. First, we want to welcome the new European Commissioner for Consumer Protection, Meglena Kuneva of Bulgaria. The TACD looks forward to working with her and her staff. We support her goals of empowering and protecting consumers and enhancing consumer welfare. We strongly endorse her recent call for a strong consumer movement at all levels, including at the national level in the member states.

We would caution her, however, on two things. First, on the proposal for full harmonization, we would point out that the TACD has long found that business, in its continual efforts toward obtaining the least regulation possible – has long over-stated the costs of diverse and local regulation. We have found, instead, as a famous U.S. Supreme Court Justice Louis Brandeis once said—that the states are laboratories of democracy and innovation. Consumers have the highest welfare when the highest level of government –either the US or the EU -- set harmonization as a floor of protection, not as a ceiling, and the states – either US states or EU member states -- are then allowed to experiment with better ideas when new problems arise. For example, in the U.S., our solutions to problems as diverse as global warming and identity theft are not coming from the Congress, they are coming from state governments.

Second, we would caution the commissioner that adopting better regulation, an important EU goal which we in the TACD share, does not mean adopting U.S. regulatory ideas.

Over the last decade or more, we have seen U.S. business, aligned with the current U.S. administration, use regulatory bureaucracy and roadblocks, coupled with an anti-health and safety ideology, to weaken and roll back consumer and worker protections. For example, here is a brief summary:

According to the U.S. NGO known as OMBWatch, and we agree, the Bush administration record on health and safety regulations is dismal. Consider the following: The politically-charged agency that oversees rules, the White House OIRA, has pushed a host of policy changes that make it more difficult for agencies to promulgate new health, safety and environmental standards. This includes new emphasis on measuring the dollar benefits of proposed regulation, frequently an impossible task; the implementation of guidelines that allow industry to challenge the information that supports regulation; and proposals that allow industry to use legal tactics to grind regulatory agencies to a halt.

Some examples of the impact:

(1) Auto fuel efficiency: May 2001, when announcing his national energy strategy, President Bush had the opportunity to take a bold step forward and increase the fuel economy of cars and SUVs to 40 mpg by 2012. If he had, consumers and the U.S. economy already would be reaping the benefits as more efficient cars entered the market. Among the lost benefits-- The U.S. would consume 500,000 barrels of oil less per day, helping end global warming pollution, dependence on foreign oil, etc. Fortunately, we are seeing leadership on energy reform from a number of US states and their governors, including the Republican Arnold Schwarzenegger of California, and the states may again show Washington the way. Recently, New Jersey became one of nearly two dozen states that have passed laws or regulations backed by my organization requiring similar renewable energy portfolios by 2020. PIRG is supporting Congressional legislation that would also require 20% of our electricity come from renewable sources like wind and solar by 2020. Yet, for some inexplicable reason, our president and his administration have not supported the idea of renewable energy goals yet.

(2) Mad Cow Disease and Listeria: Despite the discovery of three cows infected with bovine spongiform encephalopathy (BSE), or mad cow disease, measures to ensure the safety of the food supply and to keep foreign markets open to American beef have been stalled, according to a 2006 report from OMB Watch and the TACD members Center for Science in the Public Interest (CSPI) and Consumer Federation of America. Incredibly, after listing a new rule against the food-borne pathogen Listeria has one of its major accomplishments, the Bush administration agreed tow eaken the rule after complaints from big food companies. Listeria is carried in hot dogs and ready-to-eat meats—it has the highest hospitalization rate and the second-highest fatality rate of all foodborne pathogens. Pregnant women who contract Listeria poisoning will almost always miscarry or bear a child with severe developmental disabilities.

(3) Mine Safety: In September 2002, the Bush administration stopped work on a proposed air quality standard to protect underground coal miners. But, it gets worse. Only after 12 miners were killed in early 2006 in one accident did the Bush Administration reinstate review of numerous cancelled safety regulations on how to better supply miners and rescuers with equipment such as breathing apparatus and communications devices. According to USA Today, three weeks later, when two more miners were killed, a member of Congress, Nick Joe Rahall of the coal state of West Virginia said: "It's unfortunate that every coal mine health and safety law on the books today is written with the blood of coal miners.”

(4) Auto Safety: Its previous regulatory czar forced the National Highway Traffic Safety Administration to adopt a less protective standard – favored by automobile manufacturers – for warning drivers of under-inflated tires, which are linked to thousands of injuries and more than 100 deaths a year.

(5) Some environmental examples: From the US Natural Resources Defense Council:

In 2005 alone, EPA proposed to make toxics reporting standards more lenient for industry, failed to protect children from rat poison, proposed a weak asbestos removal method, and proposed and defended pesticide testing on children. Eventually, due to political pressure, EPA called a halt to its controversial Children's Environmental Exposure Research Study, a program that would test the effects of pesticides on infants and babies in low-income households. The study was partly funded by the American Chemistry Council trade group, formerly known as the Chemical Manufacturers of America. It offered $970, a camcorder, a bib and a T-shirt to parents with infants or babies routinely exposed to pesticides in return for completing the two-year testing program.

Second, I want to focus specifically on an area of concern for TACD members on both sides of the Atlantic—the Bush Administration's gross interference in European decision-making on chemical safety hazards. U.S. environmental experts from my organization and others consider our chemical safety laws to be a dismal failure and look to the European proposal known as REACH as a more effective health and safety based solution. We have been disappointed that Ambassador Gray has carried on and expanded these efforts as a priority, despite strong opposition from U.S. civil society. Unlike some other U.S. officials however, at least his lobbying has been transparent and in speeches.

According to a Congressional report, Congressman Waxman’s committee investigators uncovered a history of emails, cables, and memoranda from the State Department, the U.S. Trade Representative, the Commerce Department, and the U.S. Environmental Protection Agency about the REACH initiative. These documents showed in great detail that Administration officials had actively met with the U.S. chemicals industry to solicit their views and concerns regarding the European Union’s proposal to regulate chemicals. As far back as March 2002, Secretary of State Colin Powell sent a cable directing U.S. diplomatic posts to “raise the EU chemicals policy with relevant government officials” and to object to REACH.

Basically, to summarize, the Ambassador and the President, along with the industry lobby American Chemistry Council, want to undermine REACH by eliminating its underlying precautionary principle and replacing it with analysis-paralysis –or so-called risk-based cost benefit tests.

In addition to our concerns about the ongoing US meddling, U.S. health groups prefer REACH to our own 1976 Toxics Substances Control Act. That weak law has been a complete failure. For example: Under TSCA, EPA has failed to collect health and safety data for the majority of chemicals on the market. Under TSCA, all new chemicals are presumed safe. Under TSCA chemical health risks are managed, not avoided. Under TSCA, the burden to prove health and safety risk is on taxpayers, not companies. TSCA does not require chemical companies to test chemicals for health and safety before they are submitted to EPA for approval. And, EPA holds little authority to ban chemicals that are hazardous to human health.

Case Study of TSCA’s Inability to Protect Human Health

Starting in 1979, EPA initiated a rulemaking to ban the use of asbestos because scientific evidence proved that asbestos was a carcinogen. Notwithstanding a ten year process, 100 studies and a scientifically supportable record, EPA was unable to meet the high standard necessary to ban a substance that is a known carcinogen. Congress eventually stepped in and passed a legislative ban. In addition, the U.S. is the only major developed country that does not require actual hazard test data to be submitted up front as part of each new chemical notification.

Some comparisons between REACH and TSCA

Under U.S. law, all existing chemicals, 99% of all chemicals, were grandfathered and allowed to remain in the stream of commerce without any health or safety testing. REACH does not differentiate between new and existing chemicals. All chemicals produced above established threshold volumes will be tested. When testing reveals that a chemical is of concern or high concern, REACH requires a formal authorization process to ensure that the chemical is properly regulated.

For the vast majority of chemicals on the U.S. market, there is almost no information available about the hazards to public health or the environment. REACH requires basic human and environmental toxicity data for all chemicals.

Regulating Dangerous Chemicals

U.S. law ties EPA’s hands when it comes to regulating dangerous chemicals. It is not surprising that EPA has restricted the use of only 9 chemicals in the last 27 years. REACH requires that any chemical that is inherently harmful, such as carcinogens, reproductive toxins, mutagens and persistent, accumulative chemicals, proceed through an authorization process, where a dangerous chemical can be subject to restrictions, regulation, or even a ban.

Precautionary Principle

Most importantly, the US TSCA is the opposite of the precautionary principle because it places the burden of proving that a chemical is safe on an overburdened and underfunded EPA. The result is a regulatory system that presumes all chemicals to be safe until they are proven dangerous. REACH is based on the TACD-backed Precautionary Principle and industry is responsible for the testing and the safety of any chemical that is used.
Safer Alternatives and Green Chemical Innovation

TSCA does nothing to promote the development of safer alternatives to dangerous chemicals. REACH is likely to prompt new innovation leading to safer, alternative substances resulting in less toxicity and health or environmental effects.

Regarding the Ambassador’s comments on the U.S. removing lead from gasoline, and how the U.S. system worked in that case, I would point out that I have a detailed study form the Georgetown Law School that points out hat, in fact, it was not the layers of benefit-cost analysis that helped in this case. Rather, it was the original 1970s precautionary principle language of the underlying Clean Air Act.

Finally, I want to discuss briefly issues related to “Better Regulation” Mutual Recognition Agreements, and the potential for, and risks of, regulatory cooperation.

According to our TACD briefing paper, supporters of Mutual Recognition Agreements or MRAs expect them to result in reduced costs and increased market access for industry, as well as freeing up scarce regulatory resources. Yet, our paper outlines numerous potential drawbacks of MRAs including a loss of domestic regulatory control in crucial public health and safety matters. In addition, while the ambassador and other U.S. officials have often commented favorably on an MRA between the U.S. Consumer Product Safety Commission (CPSC) and DG Sanco, U.S. consumer groups have long had grave concerns about the effectiveness of this CPSC in protecting health and safety.

We strongly agree with the Commissioner that the U.S. CPSC secrecy rules are unacceptable. It cannot share most recall information with other regulators, such as the commission, let alone with the general public. Its so-called Rule 6(b) unwisely preserves corporate information at the expense of health and safety. Just this month, we at U.S. PIRG received notice from the CPSC that it had taken action against 6 unsafe toys identified in our November 2006 Trouble In Toyland report. But, under the commission’s rules, it could not tell us which toys it took action on, even though they’d been listed publicly in our report that was well-covered by the media. So we will work with the Commissioner to convince the U.S. Congress that the rules must be changed to aid safety efforts on both sides of the Atlantic.

I want to call both the Ambassador’s and the Commissioner’s attention to the recent TACD paper on regulatory cooperation:

TACD has long advocated using something like the US Administrative Procedure Act to govern the process of producing regulations. But the US has been adding to the APA with distortions of that simple process, and now there is a 30+ year record of the harms to the public from those distortions. Europe has recently begun moving in the direction of repeating the mistakes the US has made, and TACD wants to emphasize that these distortions should not become the business model of regulating to protect the public.

In the aftermath of the enactment in the 1960s and 1970s of historic US protective legislation for consumers, workers, and the environment, business interests mounted a long-term campaign to persuade policymakers that regulatory policy decisions are so irrational that the regulatory process should be changed in order to supply the supposedly missing rationality. That campaign has succeeded in loading up the simple process of the APA with numerous burdensome additions such as the following:

Centralized political review of major regulations and other policies by the Office of Information and Regulatory Affairs (OIRA) in the White House Office of Management and Budget (OMB),

Making important policy decisions subject to cost-benefit analysis, limitations on information gathering through the Paperwork Reduction Act (a 20-yr-old equivalent of the current “Administrative Cost Reduction” efforts in Europe), and special access for special interests, with lots of avenues for business to be able to have inputs into regulatory policy as it is being made, with no similar access for civil society—either consumer, environmental, or labor groups.

The process has also resulted in tools for undermining science in regulatory policy:

The result of these add-ons to the APA have been terrible for US consumers:

- We’re not regulating, as in the asbestos case.

- It takes too long – we have paralysis by analysis

- Industry gets special access to high-level power players in the administration (foxes in henhouse, OMB)

- They’re undermining the science

- So we end up not getting things done to protect the public

- Instead – it’s now easier in the US to eliminate existing regulations than it is to create new ones

Under the banners of “Smart Regulation,” “Better Regulation,” “Better Governance,” and “Administrative Cost Reduction,” Europe is now going down the same path as the U.S.

It’s only been going on in Europe since the mid 90s, so there isn’t the same track record as in the U.S.

Centralized political review: France has moved to create its own version of OMB, creating a Better Regulation Office in the Ministry of Finance, Economy and Industry, while the UK has likewise created a Better Regulation Executive in the Cabinet Office and Ireland has created a regulatory reform office in the Department of the Taoiseach.

Paralysis by analysis: The UK and Ireland are among the European nations that have recently required regulatory impact assessments emphasizing market failure and cost-benefit analysis.

Reducing information collection: The Netherlands has led the way in a European parallel to the U.S. Paperwork Reduction Act, with its Administrative Cost reduction program that inspired an international working group on the Standard Cost Model.

These regulatory process and information policy changes are relatively new, most dating back no earlier than the mid to late 1990s; analysis of their effects on consumer protections and other public interest policies is still developing.

European consumer groups have the same concerns as US groups. Even though these developments are relatively new in Europe, consumer groups have begun to see harmful effects on public policy, such as the following:

· An implicit assumption that “better” means “less,” rather than more effective, regulation and an unjustified assumption, based on little or no hard evidence, that self-regulation is “better” than legislative measures.

· A tendency to overstress economic and other easily measurable factors in impact assessments, to the detriment of the wider public good.

There is a growing concern that these new analytical requirements and process burdens undermine the Precautionary Principle and put consumers at risk. For example, a National Consumer Council report observes that impact assessment methodologies in the UK are distorted and “may lead to inaccurate assessment of the consumer detriment and faulty regulatory decisions.”

Meanwhile, this trend is being incorporated into European Commission policy. The EC recently adopted guidelines to systematize impact assessments (combining both cost-benefit analysis and risk assessment) and recently announced a 25% “administrative costs” reduction goal (paralleling the U.S. Paperwork Reduction Act).

Members of the TACD support a process of regulatory cooperation based on open, transparent multi-stakeholder discussions with an objective of improving regulation by achieving best practices. However, this is not the current reality. There is a clear danger that the flaws in the regulatory regimes on each side of the Atlantic will be exported and amplified through the process of regulatory cooperation.

The European embrace of the Precautionary Principle in its rulemaking processes has made it the envy of consumer advocates in the U.S. Consumers on both sides of the Atlantic have reason to fear that the Precautionary Principle is at grave risk of being gutted as U.S.-style regulatory process changes become the norm in Europe.

As Brussels has become the world’s leading proponent of new consumer and environmental regulations, it has also become the target of the same forces that have worked in the United States to slow down and derail regulatory processes.

AMONG THE MOST IMPORTANT TACD RECOMMENDATIONS

1. The EC and EU member states should not adopt centralized political review and control of regulations, regulatory impact assessments, or information collections, in the US mode.

2. TACD calls on participants in the EU-U.S. horizontal regulatory dialogue not to pursue the goal outlined in the initial April 2002 TEP Guidelines on Regulatory Cooperation and Transparency Implementation Roadmap of harmonizing impact assessment methodologies and assumptions used in impact assessments. It would be contrary to the Precautionary Principle for the EC to adopt proposals such as the pending OMB bulletin on risk assessment methodologies, for example.

3. The Precautionary Principle should apply in cases when the scientific evidence is not conclusive enough to determine a level of protection but there is a necessity to take measures for the purposes of protecting public health, safety, or the environment. The TACD once again calls on the U.S. to incorporate the Precautionary Principle in regulatory decisions involved in consumer health and safety and the environment. The U.S. and the EU should include the Precautionary Principle as an agenda item in the EU-U.S. horizontal regulatory dialogue.

Conclusion

I want to again thank you for your remarks today. The TACD members are looking forward to working with both of you. I am sure that they have some questions.