TABD Takes Up Arms Post-September 11, major EU and US arms producers take a leading role in the ailing group Following a leadership crisis that lasted several months, the Transatlantic Business Dialogue (TABD) was restarted by a new team in April 2002. Over 100 of the largest EU and US-based corporations work through the TABD to get rid of government regulations and policies which they consider "barriers to transatlantic trade." The two new co-chairs are Mike Turner of BAE Systems and Philip Condit of Boeing Corporation, representing two of the world's largest arms producers. A range of other arms producers have joined the TABD ranks in a new working group on "security", which will focus on "ways to capitalise on… the new awareness of the importance of the security sector," following September 11. [1] Despite flagging interest of US business, the TABD seems to have retained its influence on high-level policymakers, particularly in the European Commission. [2] Working groups on EU-US 'regulatory co-operation' and on the new WTO round have continued to push their agenda and have booked major successes. September 11 and the militarisation of the TABD Although BAE Systems and Boeing have been involved in the TABD's working group on aerospace for some years, it is the first time the arms industry has taken such a prominent role in the business dialogue. [3] BAE Systems is the world's largest weapons producer, with over 80% of its sales comprised of military aircrafts like Harrier, Tornado and Eurofighter as well as other weaponry. [4] Boeing is the largest US arms exporter, producing the F-15 aircraft, AH-64 Apache attack helicopters, anti-tank and anti-ship missiles. The militarisation of the TABD goes beyond the leadership role of BAE Systems and Boeing. At its Outreach Meeting in Brussels in early April the TABD announced a new working group on "security". As Michel Trobetsk of the European Aeronautic Defence and Space Company (EADS) explained, "The events of 9-11 have created a new awareness of the importance of the security sector. Our group will focus on ways to capitalise on this, as well as to ensure that new government regulations in the name of security do not burden our industries." [5] The new working group will be coordinated by EADS on the EU side and Northrop Grumman on the US side, corporations that are both in the top 10 of the global arms industry. [6] Giving the military industry a stronger role is part of the TABD's efforts to regain momentum. The arms industry has always been powerful and enjoys a particularly stable commitment from governments on both sides of the Atlantic, a relationship that has only been strengthened since the September 11 terrorist attacks on New York and Washington D.C.. With the bombing of Afghanistan and military action under preparation elsewhere in the Muslim world, post-September 11 developments have boosted profits and share prices of the global arms industry. [7] In effect, this presents the weakened TABD with an opportunity to ride on the back of the burgeoning arms industry. The TABD in crisis? The new co-chairs take over the leadership of a TABD that seems past its peak. In recent years the TABD has achieved fewer concrete results than in the early phase of its existence. It has been unable to resolve trade wars over genetically modified food and numerous other issues, [8] and this decreasing rate of return has resulted in less enthusiasm among EU and US corporate leaders to commit time to active involvement in the process. [9] The cancellation of the CEO Conference in Stockholm in October 2001, which would have been the TABD's main annual event, was a serious blow. The conference was cancelled in the aftermath of September 11 and replaced with a far smaller transatlantic videoconference. According to Will Berry, Director of the European-American Business Council (EABC), "September 11 harmed the TABD, it didn't get to meet, it lost energy and had no visibility." [10] A new co-chair team for the following year is traditionally announced at the end of the CEO Conference, but the TABD remained without leadership for the first few months of 2002. In January John Weston of BAE Systems agreed to be European co-chair, but there was still no US co-chair. Only in late March could the TABD announce that Phil Condit of Boeing would take up the position. A few days later, a new leadership crisis arose when John Weston was fired as CEO of BAE Systems after a boardroom coup. [11] Mike Turner became the new CEO and soon after announced that he would also take over Weston's TABD commitments. This temporary lack of leadership seems to have paralysed parts of the TABD's work. As the European Voice points out, the TABD "was unable to offer as much as a quote," when US President Bush decided to introduce steep tariffs on steel imports from countries including the EU and Japan, [12] further deepening the EU-US trade war. Corporate enthusiasm for the TABD process has waned in recent years, particularly among US business. After attending a TABD meeting in March 2001, an EC official reported that the TABD's future "was being openly questioned by strong voices, including the CEOs from the US Chamber of Commerce and the European American Business Council." [13] Another sign that the body is falling from grace is the fact that the EABC is now stepping up its own efforts to remove barriers to Transatlantic trade and to prevent trade wars. In mid-March, the EABC (a corporate lobby group based in Washington D.C. working on the very same issues as the TABD) announced a new heavyweight leadership duo: Stuart Eizenstat and Hugo Paemen. [14] The former US ambassador to the EU and former head of the EU Delegation are to "bring a stronger voice to what some believe is the most serious crisis between the two continents in more than 50 years." [15] 'Regulatory Co-operation': Towards a Transatlantic Single Market Despite these problems, the TABD remains influential. At its Brussels outreach meeting in early April, high-level European Commission officials praised the TABD's work and restated the EC's commitment to the process. Alistair Stewart of DG Trade for instance said the EC has "been very encouraged by last year, despite the tragic events of September 11 and the cancellation of the Stockholm Summit." [16] The TABD's latest achievement is the successful campaign to get the EU and US governments to finalise 'Guidelines on Regulatory Co-operation and Transparency'. [17] In November 2001, the TABD released proposals, which officials on both sides of the Atlantic say helped to get the negotiations out of their deadlock. [18] The TABD presented the paper to US Commerce Secretary Evans and EU Enterprise Commissioner Liikanen at a meeting in Washington D.C. [19] According to a U.S. trade official, the compromise language agreed in early 2002 is not "100 percent identical" to the TABD proposal but tracks it closely. [20] The 'Guidelines on Regulatory Co-operation and Transparency' call for a "more systematic dialogue between regulators," to "help minimise and resolve trade frictions." [21] Like Mutual Recognition Agreements (MRAs), intensified 'regulatory co-operation' is a less controversial path towards a transatlantic single market. The Bush government has repeatedly expressed strong interest in negotiating a Free Trade Agreement with the EU, however that would be politically unfeasible due to opposition by the French and other European governments. The US government is eager to support other steps towards the same goal, a strategy supported by the European Commission. [22] The new guidelines instruct EU and US regulators to "pursue, as appropriate, harmonised, equivalent or compatible solutions, and take appropriate steps to minimise or, where appropriate, eliminate unnecessary divergence in regulations." [23] The guidelines build on existing EU-US mechanisms with the same purpose, such as the so-called Early Warning system that aims to spot contradictory regulatory proposals before they get a chance to turn into trade conflicts. Through intensified co-operation, the process of harmonising regulations is upstreamed further, to the earliest phase of decision-making. New tools for corporate control In practice the intensified co-operation starts with exchanging information in the development phase of new regulations and "examining the possibilities for greater convergence." The guidelines apply to any regulation which either EU or US regulators "believe may have significant trade effects," but regulatory processes relating to agricultural products are exempted. A look at the latest US government report on EU trade barriers shows that even without covering genetically modified food, a wide range of environment and consumer protection regulations are at stake. [24] The very long list of "divergences in standards and non-transparent regulations," includes the EU's proposal for stricter regulation of chemicals, proposed taxation of electronic commerce, waste disposal standards for electrical and electronic equipment and a proposed ban on animal testing for cosmetics. The TABD will be happy to see that the guidelines include cost-benefit analysis and other forms of economic impact assessment of new proposals. This is a direct manifestation of a past TABD demand for "trade impact assessments" for all new regulations. [25] The repeated calls to explore "alternative regulatory approaches," and to address "the interface between regulations and voluntary standards," provide the TABD with new tools to block, weaken or postpone unwanted regulations. The guidelines clearly reflect the EC's strong support for industry self-regulation and business-friendly cost-benefit analysis. Giving US government officials a stronger role in shaping EU regulations will certainly not help to address the urgent need for democratisation of decision-making. In the race to remove obstacles to trade, a further technocratic layer is added to an already over-centralised political process. While the guidelines do include principles for improving transparency and consulting with the public, these are much less concrete. [26] The TABD's lobbying efforts on the issue of transparency aimed to make the European Commission adapt its procedures to the US government's more transparent, yet very corporate-biased regulatory model. [27] The TABD's underlying agenda might be to enable industry to have more access to lobby the parts of the European Commission where it currently has a weaker grip on the policy process, such as DG Environment. Harvesting from the Doha Round At its Brussels Outreach Meeting, the TABD announced that its focus for the rest of the year will be on "a few issues, no more than 5 or 6, with a cross-sectoral appeal." [28] One of the key priorities is the new round of trade talks in the World Trade Organisation (WTO), launched at the WTO's Ministerial Conference in Doha last November. The TABD hopes to accelerate the "liberalisation results" of the WTO round by making detailed recommendations to the EU and US governments. At the Outreach Meeting, the EC's Alistair Stewart of DG Trade stressed the role of the TABD in the launch of the Doha Round, stating that the group's "recommendations were instrumental." [29] Stewart also said to be looking forward to bringing new issues like investment and government procurement into the Round by the next WTO Ministerial Conference in Mexico in October 2003. At that point, governments will have to decide whether to start negotiations on these controversial issues, something the EC has campaigned for since 1995, with opposition from Southern governments. Stewart's optimism builds on the close partnership between the EU and the US government during the summit in Doha. "Remember, that we achieved [the new round] because of EU-US co-operation," said Stewart, "this was not the case in Seattle, and so there is an important lesson for us to draw there." [30] Others are less optimistic about EU-US co-operation in the new round. EABC Director Will Berry is concerned about the wider implications of EU-US trade conflicts over steel imports and corporate taxes. "The worst case scenario," says Berry, "is that the new WTO round could get stalled." [31] According to Berry, the problems mainly arise from US politics. "Last year we had a positive government agenda in the WTO," he says, "now it is not clear how much priority the US government really gives to the new round, judging from Bush's decision on steel. The same goes for Congress which has not approved the Trade Promotion Authority" [which would give President Bush fast track powers in trade negotiations, CEO]. TABD in 2002: sinking ship or smooth sailing? After hitting a low during its leadership crisis, the TABD might get a considerable boost from its successful lobbying for the 'Guidelines for Regulatory Co-operation'. The new WTO round gives the TABD enormous opportunities to cash in on its privileged political access. This year, however, may prove to be a rough one for the TABD. Presenting two of the world's biggest arms producers as its public face might strengthen the TABD's political clout, but it will certainly further damage its public image. BAE Systems, for instance, is already the target of boycott campaigns due to its practice of selling arms to repressive regimes and regions in conflict. [32] Clearly, the continued political commitment from the European Commission and the US government helps the TABD to keep afloat through stormy waters. The Commission still seems unimpressed with the growing critique of the TABD, whose annual CEO Conferences were the scene of demonstrations both in 2000 and 2001. Alistair Stewart managed to raise a laugh with his comments at the TABD's Outreach Meeting. "Nowadays, people tend to see these sorts of events where CEOs from major corporations gather, and judge their importance by the size of the demonstrations they attract. Stockholm had a significant demonstration even when the TABD wasn't there in the end!" [33] The TABD's next annual CEO Conference is scheduled for November 7 and 8 in Chicago. Notes 1. See for instance 'TABD in Troubled Water', CEO Issue Briefing, October 2001 http://www.corporateeurope.org/tabd/troubled.html and 'TABD Back on Track?', Corporate Europe Observer 10, December 2001. http://www.corporateeurope.org/observer10/tabd.html 2. Notes from TABD Outreach Meeting, Brussels, April 8 2002. 3. During 2001, BAE Systems and Boeing worked together as co-ordinators of the TABD's aerospace working group. The so-called Expert Group on Aerospace was run by Anthony Parry of BAE System's Brussels office and David Raynham of Boeing. TABD 'Experts Group Issues', http://www.tabd.com 4. The company is also involved in the development of the controversial Joint Strike Fighter. 'BAE Systems', company briefing written by the Campaign Against Arms Trade, February 2002. http://www.caat.org.uk/ 5. Notes from TABD Outreach Meeting, Brussels April 8 2002. 6. EADS -- a merger of French, German, Spanish and Italian arms companies - produces civil aircrafts like Airbus, but also the Ariane space shuttle. It is the seventh biggest arms producer in the world (second biggest in Europe) with brands like Eurofighter, Euromissile and Eurocopter. Northrop Grumman is the fifth biggest arms contractor in the world. 7. Jane's Defence Weekly speaks of "a boon for the defence industry." The global defence industry saw a 32,6% rise in profits from 2000 to 2001. BAE Systems saw its share price increase 30% within weeks after September 11. 'BAE Systems', a company briefing written by the Campaign Against Arms Trade, February 2002. http://www.caat.org.uk/ 8. See 'TABD in Troubled Water', CEO Issue Briefing, October 2001, http://www.corporateeurope.org/tabd/troubled.html 9. According to Will Berry, "there are less CEOs involved now than originally. The TABD every time has to convince CEOs that it is worthwhile to get involved. But the new co-chair Condit might be able to attract a lot of CEOs." Phone interview with EABC Director Will Berry, April 9 2002. An EABC survey held in January 2002 among 80 member companies revealed a dramatic drop in interest in the TABD. 55% of the EABC member companies found the TABD "important" or "very important", against 96% in 2000. http://www.eabc.org/Survey2002Report.htm See also 'TABD in Troubled Water' (CEO briefing, October 2002) and 'TABD Back on Track?', Corporate Europe Observer 10, December 2001. The European-American Business Council (EABC) describes itself as "the leading business association active on transatlantic trade, tax and investment and policy issues." Among the 70+ member corporations are Philips Electronics, BASF, IBM, ABB, Andersen, Pirelli, Ericsson, PricewaterhouseCoopers and Akzo Nobel. See http://www.eabc.org/ 10. Phone interview with EABC Director Will Berry, April 9 2002. 11. 'Firms' chance to kiss and make up over transatlantic dialogue', European Voice, 28 March 2002. 12. "Not much good from an institution designed to help nip trade warts in the bud. But Entre Nous knows why, it had its own little drama, picking the new US and European chairs for 2002". 'Firms' chance to kiss and make up over transatlantic dialogue', European Voice, 28 March 2002. 13. Mission Report from the TABD's Joint Executive Meeting. 'Mission Report', Brussels, March 29 2001, European Commission Enterprise Directorate General. On file at CEO office. 14. Berry stresses that the new EABC co-chairs "were active in the early stages of the TABD and involved in solving Helms-Burton and other disputes. They can provide leadership so we have more political impact." "Contrary to the TABD, EABC is institutionalised, we don't have to restart each year." Phone interview with EABC Director Will Berry, April 9 2002. 15. It is the first time the EABC will have a European and a US co-chair duo, mirroring the structure of the TABD. 'Former ambassadors Paemen, Eizenstat named co-chairmen of European-American Business Council', EABC Abstracts, March 15, 2002. The two take over after the departure of Donald B. Reed, the chairman and chief executive officer of Cable & Wireless. Another former Clinton official gone through the revolving door to business, J. Michael Farren, former Under Secretary of Commerce for International Trade and Vice President of the Xerox Corporation, commented that it "demonstrates their belief in the urgency for the business communities to step up and take a lead role." 16. Notes from TABD Outreach Meeting, Brussels April 8 2002. 17. Negotiations on the "U.S./EU Guidelines/Principles on cooperation and Transparency in Establishing Technical Regulations" started after the EU-US summit in June 1998. The guidelines do not need approval from the EU Member States. 'New Pact on Closer U.S., EU Regulatory Ties To Be Sent to EU Member States Next Month', International Trade Daily, March 29 2002. 18. Officials said negotiators had been "using recommendations presented to them several weeks ago by the Transatlantic Business Dialogue (TABD)." 'U.S., EU Said Close to Agreement on Guidelines for Regulatory Co-operation', International Trade Daily, February 13 2002. 19. The meeting took place on November 21. 'Transatlantic Business Dialogue Presents Language On Transparency To US And EU Leaders", EIA's Inside Skinny Report, November 21 2001. 20. 'U.S., EU Said Close to Agreement on Guidelines for Regulatory Co-operation', International Trade Daily, February 13 2002. 21. 'Guidelines on Regulatory Cooperation and Transparency', April 2002. 22. "Our European counterparts have signalled to us that they're not interested. If that changes, I think they'd find a very receptive audience here", a U.S. trade official told International Trade Daily about the response to the proposal for an EU-US free trade agreement. 'U.S., Europe Near Agreement on MRA to Boost Marine Safety Equipment Trade', International Trade Daily, February 15 2002. The US has several strong supporters within the EU for its call for a transatlantic free trade zone. The Spanish government, which currently holds the presidency of the EU, recently proposed an official EU study into "the benefits of lowering bilateral barriers." The report is intended to play a role similar to the 1987 Cecchini report which argued the economic benefits of removing trade barriers within the EU and played an important role in the creation of the EU's Single Market. "Spain wants study of transatlantic trade," Financial Times, February 11 2002. 23. "Guidelines on Regulatory Cooperation and Transparency", April 2002 24. "2002 National Trade Estimate Report on Foreign Trade Barriers", published by the Office of the US Trade Representative (USTR) http://www.ustr.gov/reports/nte/2002/europeanunion.PDF 25. 'Guidelines on Regulatory Co-operation and Transparency', April 2002. 26. 'Guidelines on Regulatory Cooperation and Transparency', April 2002. 27. The TABD called for "a commitment from governments to make regulatory development documents public, to actively involve the public in the regulatory process, and to allow active participation by the public in the development of regulations." Paper on the EU-U.S. Guidelines on Regulatory Co-operation, http://www.tabd.org The Transatlantic Consumers Dialogue (TACD), while supporting a more transparent "notice and comment system parallel to the US system," stressed that such a system "should not be used for harmonisation," in other words lowering EU and US regulatory standards to the lowest common denominator. The TACD has demanded that similar transparency should apply to the 'early warning' system. A list of the early warning items being discussed by the governments should be posted on an ongoing basis on the governments' websites, and the public should be consulted as to whether or not these are appropriate items for early warning of potential trade disputes. http://www.tacd.org/cgibin/db.cgi?page=view&config=admin/docs.cfg&id=105 28. Notes from TABD Outreach Meeting, Brussels April 8 2002. 29. "As we all know Doha was a success… The recommendations of the TABD were instrumental in that." Notes from TABD Outreach Meeting, Brussels April 8 2002. Stewart is Head of the Market Access Unit in DG Enterprise. See also 'Undercover in Qatar' http://www.xs4all.nl/~ceo/observer10/qatar.html 30. Notes from TABD Outreach Meeting, Brussels April 8 2002. 31. Phone interview with EABC Director Will Berry, April 9 2002. 32. BAE Systems is currently pushing the Indian government to buy 60 Hawk jets worth 1billion UK pounds, despite the looming armed conflict with Pakistan. 'BAE Systems', company briefing written by the Campaign Against Arms Trade, February 2002. 33. Notes from TABD Outreach Meeting, Brussels April 8 2002.

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