Warning to U.S., EU: Secret “Early Warning” System Undermines Consumer Protections

Dec. 5, 2001

Warning to U.S., EU: Secret “Early Warning” System Undermines Consumer Protections

Statement by Joan Claybrook, President, Public Citizen*

Tomorrow, the U.S. House votes on Fast Track, the process that allows the president to ram trade agreements through the Congress with no public participation and merely an up-or-down vote by lawmakers. The public?s major complaint about Fast Track is the lack of democracy and the substantive consequences that flow from this autocratic system. This lack of public participation and democratic procedures is the issue that we?re raising here today.

Transatlantic corporations have set a deregulatory, trade-driven agenda that is dangerously anti-consumer and now is at the forefront of discussions between the United States and European Union (EU). The clever mechanism being used to advance this agenda is called the “early warning” system. While intended to alert governments about potential trade disputes and advance the perspective of businesses, this system is cutting consumers out of vital discussions that are designed to lead to the weakening of public health, safety and environmental standards.

Today, the Transatlantic Consumer Dialogue (TACD) is sending a letter to the U.S. and EU governments urging them to immediately open this process to the public to ensure that critical safeguards aren?t eliminated or watered down.

The “early warning” system was created largely at the behest of the Transatlantic Business Dialogue (TABD), a coalition of U.S. and European CEOs from transnational corporations and created at the urging of former U.S. Commerce Secretary Ron Brown in 1995. The organization?s 2000 mid-year report details its overarching goals of globalization, deregulation and privatization, succinctly summarized in the report?s introduction, which states: “The new obstacles to trade are now domestic regulations.”

The Transatlantic Business Dialogue wants to replace public services with private services, government inspection with company self-inspection, and the wide variety of democratically achieved domestic regulations and safety standards with uniform global regulations set in industry-dominated, standard-setting institutions that meet in far-flung corners of the world. The TABD?s reports propose a regulatory race to the bottom in dozens of areas, including drugs, medical devices, auto safety, aviation safety, biotechnology and genetically modified foods, cosmetics, cellular phones, dietary supplements, chemicals and climate change.

The TABD is a powerful backer of the World Trade Organization?s dispute resolution system, in which a tribunal comprised of three trade bureaucrats can decide that a country?s worker, consumer and environmental protections — and other national or local public interest laws and rules — are “barriers to trade,” even if they are non-discriminatory and treat domestic and foreign goods the same. Once the WTO tribunal makes a decision, it can coerce a country into changing its “WTO-illegal” laws or paying millions of dollars in trade sanctions. For example, a 1998 WTO tribunal ruled that a non-discriminatory European (EU) law banning the use of artificial growth hormones in beef was a barrier to trade. The EU refused to change its public health law and currently is paying over $116 million a year in trade sanctions, which also has hurt U.S. consumers by raising the price of these imported goods.

In addition to pressing various governments to initiate WTO disputes to remove regulatory controls, the Transatlantic Business Dialogue is now trying to dismantle safety standards before they are issued. The TABD has convinced the U.S. and EU governments to implement the “early warning system,” through which corporate executives identify environmental and public health and safety regulations that they claim constitute “barriers to trade.”The governments are then expected to engage in high-level discussions geared toward eliminating these barriers. The implication is that if these regulations are not changed or watered down, they may be challenged in the WTO?s dispute system.

Regulations on TABD?s early warning hit-list include: (1) a proposed cutting-edge environmental law that would require electrical and electronic equipment manufacturers and distributors to recycle and reduce waste; (2) a European proposal to accelerate the phase-out of ozone-depleting hydrofluorocarbons (HFCs) used in refrigerators; and (3) a proposed ban on animal testing for cosmetic products. More recently, U.S. auto safety regulations and EU legislation on transmissible spongiform encephalopathy (TSEs) also have been discussed.

These suggestions are whispered by the TABD into government ears and move into the U.S./EU “early warning” system. No consumers, environmentalists or members of the public at large are consulted along the way, and information about these discussions is very hard to obtain. When the “early warning” system was first discussed, the governments said they would welcome input from consumer groups. Not only have we not been consulted, but governments have repeatedly refused to give us — or have long delayed giving us — lists of “early warning” items discussed between the governments. But just late yesterday, the U.S. Trade Representative gave us the most recent TABD hit list of “offending” proposed regulations, which we are releasing today.

Today, the Transatlantic Consumer Dialogue calls upon the governments to do the following:

1) Make these conversations public by posting the “early warning” items in the Federal Register or on a special for Web page to solicit comment from interested parties and the public.

2) Limit the discussions to true trade barriers. Governments should not allow nondiscriminatory public health and safety measures to be the topic of “early warning” discussions or WTO disputes.

3) Consult the TACD about all “early warning” discussions involving consumer, health or environmental matters.

4) Institute a “Consumer Participation System” to foster genuine regulatory cooperation, which eliminates the secrecy of the trade realm from this discussion and allows regulators on both sides of the Atlantic to learn from each other directly, cooperate on emerging issues and public health threats, and ensure the highest standards of consumer and environmental protection. The TACD is prepared to assist the governments in designing such a system. They can start by cooperating on the issue of antibiotics, which Jim Murray will address next.

Before the now famous WTO meeting in Seattle two years ago, the public was generally unaware of the effects the global trade system had on consumer protection and public health. But with each international dispute and each protest, they have become more aware of anti-democratic trade measures such as Fast Track votes in Congress or secret dealings with businesses to bury consumer protections.

The modest requests we make today will facilitate an effective acknowledgment of the rights of the American public to be informed and able to participate in setting the agenda for their own protection. We urge the government officials to act affirmatively, in the public?s best interests, and let consumers in on the dialogue, rather than listening solely to corporations.

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*This statement was delivered at a press briefing held by the Transatlantic Consumer Dialogue. Public Citizen sits on the steering committee of the TACD.