The Impact of EHS Standards Worldwide on Trade Agreements

by Rana Kassas 28 Jun. 2019

Are Trade Negotiators EHS Standard Makers or Standard Takers?

Trade agreements typically revolve around the establishment of taxes, tariffs and investment guarantees that help parties reach agreement to trade with each other. However, such agreements are complex and can take years to negotiate. One of the key negotiating hurdles can revolve around discrepancies in the technical standards of the parties involved. This is particularly the case areas that are pivotal to protecting human health and the environment.

At the crux of the debate, environmental, health and safety (EHS) standards play a vital role in unlocking the challenges faced by governments, health institutions, NGOs and public health facilities in regulating EHS issues and providing solutions to problems that often require urgent action.

2019 news headlines such as ‘Trumped-up: EU-U.S. trade deal spells climate disaster,’[1]‘UK-U.S. trade deal: Envoy attacks 'myths' about U.S. farming’[2] and ‘UK should not follow EU's Museum of Agriculture’[3] reveal a general consensus on the current transatlantic state of affairs.

Negotiations between the U.S. and EU began to take shape in 2013 with a view of finalizing a transatlantic agreement on trade and investment (TTIP: Transatlantic Trade and Investment Partnership). Under the Trump administration, those negotiations (are suspected to) have recently come to a complete halt, with the last official round of negotiations held in October 2016.[4]

There were many controversial issues on the added value the trade and investment agreement could bring to the region. The preservation and protection of European environmental, health and safety standards was a major concern.

Various commentators predict that once American multinationals gain access to the EU market, these standards will degrade at the expense of the health and safety of its consumers and the environment. The culturally different approaches regarding consumer safety, environmental protection and individual privacy rights are deeply ingrained in the administrations and populations of both the US and the EU. These differences shed light on the resulting tangible variances in public policy and technical regulatory standards.

Japan Times

Source: The Japan Times[5]

The blueprint of the TTIP agreement (as it stood at the last official negotiating round) would introduce guidelines that are meant to solidify the keystone principles the negotiating parties are in the pursuit of – one of which is at the heart of the debate:[6]

  • Improved regulatory coherence: Improved regulatory coherence and cooperation by dismantling unnecessary regulatory barriers such as bureaucratic duplication of effort.
  • Improved cooperation when it comes to setting international standards.

Other sub-units that are under close analysis and scrutiny include:[7]

  • Horizontal chapters: Regulatory coherence and technical barriers to trade
  • Specific sectoral agreements: Textiles, chemicals, pharmaceuticals, electronics and information technology, machinery and engineering and pesticides

Previously, tariff-related topics consumed treaty negotiators and drafters as the single most effective tool in protecting local production while maintaining supranational relations in trade. Today, many tariff lines have been reduced to almost ‘zero’—or are consistently being reduced regionally, bilaterally and unilaterally. The general trend of declining tariffs is also another side effect of the growing number of preferential trade agreements (PTAs).[8]

With tariffs between the United States and the European Union already low, the London-based Centre for Economic Policy Research estimates that 80 percent of the potential economic gains from the TTIP agreement depend on reducing the conflicts of duplication between EU and US rules on those and other regulatory issues, ranging from food safety to automobile parts.[9]

While the legacy of the TTIP agreement is a thing of the past, the rules of the trade game have not changed. The same technical challenges and regulatory irregularities are likely to be brought up and faced in the negotiations for any trade agreement that will take place between the U.S. and the EU.

The US-EU High Level Working Group on Jobs and Growth (HLWG) affirmed the significance of building on the experience of the WTO Agreement on Technical Barriers to Trade[10] regarding the resolving of the challenges raised by technical barriers by drafting of a ‘TBT plus’ chapter, in addition to launching a permanent mechanism for smoother information interchange and collaboration on bilateral TBT issues.[11]

A comparison of the EU and US regulatory approaches:

The mechanisms for the public use of private standards in the US and EU are established by different legal tools: “[T]he US policy is set out in a statute and executive order, and the EU’s is outlined in an annual programme on European standardisation and delineated in a European regulation (No 1025/2012)”.[12] Both the U.S. and EU incorporate standards ‘by reference,’ so formal legislation is not the sole way standards are adopted and implemented. In the U.S., agencies are allowed to incorporate standards by reference without publishing the standard in the Code of Federal Regulations (CFR).[13]

The American Regulatory Approach: A De Facto Legitimization

The American National Standards Institute lists some key facts about the U.S. Standardization System:

  • The U.S. standardization system reflects a market-driven and highly diversified society.
  • It is a decentralized system that is naturally partitioned into industrial sectors and supported by independent, private sector standards developing organizations (SDOs).
  • It is a voluntary system in which both standards development and implementation are driven by stakeholder needs.[14]

As a result, more than 350 organizations submit voluntary standards for 26 federal agencies.[15]

In the American scheme, a public-private dilemma occurs: The development of “government unique standards” should be exceptional and justified by federal authorities when a private consensus-based standard is available. Federal agencies are encouraged to reinforce voluntary consensus standards when necessary; this would reduce (federal) government operational costs.[16] As such, private standards are incorporated into public law, rendering the question of the legality of the standards themselves trivial.[17]

The European Union Regulatory Approach: The European Standardization Strategy

The standards developed by the three European Standards Organizations—the European Committee for Standardisation (CEN), the European Committee for Electrotechnical Standardisation (CENELEC) and the European Telecommunications Standards Institute (ETSI)—are binding and applicable in all the EEA countries, in addition to Turkey and Switzerland. Once a member state or one of these countries adopts a standard and it is approved by one of the European bodies, other similar national competing, overlapping or conflicting standards already in existence are reviewed and eliminated from the regulations of involved countries.[18] Commission President Jean-Claude Juncker stated: “Trade is about exporting our standards, be they social or environmental standards,” as he introduced a “new industrial policy strategy” in 2017.[19]

The veiled struggle for regulatory supremacy between the United States and Europe is not simply a question of each wanting to be "standard makers, rather than standard takers"[20] in the eye of the international community, but it also imposes a practical challenge on many politically charged and lucrative industry-specific areas within each region/country. These challenges include the difficulties that are raised in introducing either more flexible or more restrictive measures to regulate different processes and productions internally.[21] If these challenges are not handled suitably, the credibility and legacy of each of these large trading blocs could be inversely at risk which could, in turn, shake up investment prospects.

The self-evident development in political and diplomatic bilateral relations between the US and the UK post-Brexit has widely shifted transatlantic investment and trade prospects for the two power houses. The ‘overachieving’ regulatory pedestal on which the UK has once been placed on for years by the EU is finally retreating to only encompass (or limit?) the EU.

The UK-US negotiations of February 28, 2019 on drafting the next transatlantic trade deal are summed up by the U.S. Trade Representative (USTR) stating that: “the President intends to negotiate a trade agreement with the United Kingdom (UK) once it leaves the European Union (EU)…As the first and fifth biggest global economies, the U.S. economic relationship with the UK is one of the largest and most complex in the world, with annual two-way trade totaling more than $230 billion. Despite this significant trade volume, multiple tariff and non-tariff barriers have challenged U.S. exporters in key sectors while the UK has been a Member State of the EU and therefore a part of the common trade policy of the EU. The UK’s decision to leave the EU creates a new opportunity to expand and deepen the U.S.-UK trade relationship.”[22]

In the latest headlines, chlorinated chicken has been stealing the limelight. “Brexit: Don't fear chlorinated chicken says US official - poultry is now being washed in acid instead”[23] and many other similar headlines have mirrored one of the many concerns of the British public. With adequate American persuasion and magnetic corporate allure, however, the UK might just be swayed enough to sign the forthcoming U.S.-UK trade agreement – conceivably at the price of heavy compromises.

Forbes chicken

Source: Forbes[24]

US producers follow the guidelines of the “Food Defects Levels Handbook.”[25] This handbook sets the ‘margins of error for defects’ allowed per unit of production. For example, a U.S. peanut butter producer is allowed to include on average 30 insect fragments per a 100 gram peanut butter jar, and spice producers may include, on average, 11 rodent hairs in a 25-gram container of paprika, or 9 or more rodent hairs per 10 grams of ground sage.[26]

In the environmental sphere, the Environmental Protection Agency (EPA) of the United States has been subject to a serious shift in direction under the Trump administration as it loosened various regulations on the protection of the environment such as reducing the number of waterways and other bodies of water protected from pollution under the Clean Water Act, and crossing out the Stream Protection Rule (in the best interest of the coal mining industry).[27] Industrial and corporate liability is minimized under theses ‘reforms,’ especially so in the context of the administration’s public withdrawal from the Paris Agreement in 2017.

Having previously complied with strict EU food safety and animal health regulations, and environmental standards, the UK is today at a crossroads in its trade negotiations with the U.S. Whether this will merely entail chlorinated chicken and a few insect fragments in peanut butter (we can’t entirely avoid peanut butter, now can we), or if these standards will reach out and contain the British nation in an avalanche of unprecedented environmental, health, and safety pitfalls is yet to be determined.

‘One standard to rule them all.’

While a government strives to enact and update regulatory legislation internally, attempting to contain and promote the growth of the technical developments in its sector-specific industries, the advancements that occur in parallel supra-nationally within other nations, regional blocks, and geopolitical unions are not diametrically a reflection of these advances. The discrepancies between the regulatory approaches adopted by governmental and governing bodies as displayed above manifest concretely as bilateral and multilateral tensions that can exponentially hinder the progress of negotiations. This highlights the necessity for a certain harmonization of standards that tackles the technical aspect at its roots and dodges ‘double standards’ without compelling states to have to choose between becoming ‘standard makers’ or ‘standard takers’ in the heated power play of international relations and diplomacy.


[1] https://euobserver.com/opinion/144080 [Accessed June 2019].

[2] https://www.bbc.com/news/uk-47426138 [Accessed June 2019].

[3] https://www.farminguk.com/News/UK-should-not-follow-EU-s-Museum-of-Agriculture-US-ambassador-says_51461.html [Accessed June 2019].

[4] The TTIP was recently pronounced dead by the Trump administration. However, speculators deem that a trade agreement between the US and the EU is bound to be negotiated in the future (whether this happens under the Trump administration, or under the same name (TTIP) is debatable) and the same concerns on environment, health and safety will be raised.

[5] https://www.japantimes.co.jp/news/2016/09/18/business/tens-thousands-protest-europe-trans-atlantic-trade-deals/#.XH1ezYhKiUk [Accessed March 2019].

[6] European Commission (2015). TTIP explained. Available at: http://trade.ec.europa.eu/doclib/docs/2014/may/tradoc_152462.pdf [Accessed March 2019].

[7] EU negotiating texts in TTIP- Updated on 14 July 2016 http://trade.ec.europa.eu/doclib/press/index.cfm?id=1230 [Accessed March 2019].

[8] UNCTAD, Key Statistics and Trends in Trade Policy (2013).

[9] Bollyky, Thomas J. and Anu Bradford (10 July 2013). "Getting to Yes on Transatlantic Trade". Foreign Affairs. Retrieved 22 July 2013.

[10] ‘The Technical Barriers to Trade (TBT) Agreement aims to ensure that technical regulations, standards, and conformity assessment procedures are non-discriminatory and do not create unnecessary obstacles to trade. At the same time, it recognises WTO members' right to implement measures to achieve legitimate policy objectives, such as the protection of human health and safety, or protection of the environment. The TBT Agreement strongly encourages members to base their measures on international standards as a means to facilitate trade.’ https://www.wto.org/english/tratop_e/tbt_e/tbt_e.htm [accessed in March 2019].

[11] Final Report of the EU-US High Level Working Group on Jobs and Growth, (2013).

[12] TTIP’s Hard Core Technical barriers to trade and standards. Michelle Egan and Jacques Pelkmans
Paper No. 13 in the CEPS-CTR project ‘TTIP in the Balance’and CEPS Special Report No. 117 / August 2015, pg. 9.

[13] ANSI Government Affairs: https://www.ansi.org/ibr/ [Accessed March 2019].

[14] ANSI https://www.standardsportal.org/usa_en/standards_system.aspx [Accessed March 2019].

[15] TTIP’s Hard Core Technical barriers to trade and standards. Michelle Egan and Jacques Pelkmans
Paper No. 13 in the CEPS-CTR project ‘TTIP in the Balance’and CEPS Special Report No. 117 / August 2015.

[16] OMB Circular A-119: Federal Participation in the Development and Use of Voluntary Consensus Standards and in Conformity Assessment Activities.

[17] TTIP’s Hard Core Technical barriers to trade and standards. Michelle Egan and Jacques Pelkmans
Paper No. 13 in the CEPS-CTR project ‘TTIP in the Balance’ and CEPS Special Report No. 117 / August 2015.

[18] De Vries, H. J. (2013). Standardization: A business approach to the role of national standardization organizations. Springer Science & Business Media.

[19] European Commission – Speech: President Jean-Claude Juncker's State of The Union Address 2017.

[20] Bollyky, T. J., & Bradford, A. (2013). Getting to yes on transatlantic trade: Consistent US–EU trade could remake global commerce. Foreign Affairs.

[21] For example, within the EU, during the early 1990s, the French government was heavily criticized for not taking immediate regulatory action to limit the public health and occupational hazards related to the use of asbestos. Another example would be the scandal of the mad-cow disease in Britain. Political and economic pressure was placed on these governments by the EU as the superior and unified regulatory body to comply with the Union’s (stricter) standards following the enactment of the Single European Act in 1987.

[22] Lexology Blog: https://www.lexology.com/library/detail.aspx?g=66f04018-2dfb-482b-bb9a-5b951d32d3e1 [Accessed June 2019].

[23] https://www.independent.co.uk/news/uk/politics/chlorinated-chicken-brexit-us-trade-deal-acetic-acid-liam-fox-a8921936.html [Accessed June 2019].

[24] ‘Packs of "Brexit Selection Freshly Chlorinated Chicken" sit on display at the 'Costupper' Brexit Minimart pop-up store, set up by the People's Vote campaign group, in London, U.K.’ https://www.forbes.com/sites/jamesellsmoor/2019/03/06/trump-asks-uk-to-drop-food-and-environment-standards-to-secure-post-brexit-trade-deal/#3979ea541926 [Accessed June 2019].

[25] From the Food and Drug Administration: https://www.fda.gov/food/ingredients-additives-gras-packaging-guidance-documents-regulatory-information/food-defect-levels-handbook [Accessed June 2019].

[26] From the Food and Drug Administration: https://www.fda.gov/food/ingredients-additives-gras-packaging-guidance-documents-regulatory-information/food-defect-levels-handbook [Accessed June 2019].

[27] For more information on why the Trump administration took these steps: https://www.vox.com/2017/2/2/14488448/stream-protection-rule [Accessed June 2019].

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