U.S.-EU regulatory cooperation slow for trade security

By Eric Kulisch

   Business people involved in trade compliance and security usually think of countries integrating their supply chain security programs when they hear the term mutual recognition. But the practice of trade partners granting reciprocal recognition to each other’s rules and regulations really can apply to all types of cross-border activity.
   The agreement signed by the United States and European Union earlier this month regarding how “organic” products grown in one region and sold in the other are to be treated is an example of governments trying to simplify their regulatory regimes by coordinating how they achieve common goals. The Transatlantic Economic Council is a joint forum created several years ago to purse regulatory convergence on a wide variety of fronts.
   The two sides said that starting June 1 organic products certified in Europe or the United States may be sold as “organic” in either region. The arrangement benefits organic farmers and producers by reducing bureaucracy and compliance costs, especially for small and mid-sized companies, and making their products more competitive against ones grown with traditional methods. It also makes organic standards more uniform and open for producers and consumers to understand.
   The United States and Europe are the world’s largest producers of organic crops, with a collective value of $52 billion.
   Previously, growers and companies wanting to trade products in either the United States or Europe had to obtain certifications for two separate standards, resulting in the doubling of fees, inspections and paperwork. 
   As a prelude to the agreement, U.S. and EU officials conducted on-site audits to ensure their programs’ regulations, quality control measures, certification requirements and labeling practices were compatible. Although there are small differences between U.S. and EU organic standards, both governments individually determined that their programs were equivalent except for the prohibition on the use of antibiotics. 
   The U.S. Department of Agriculture’s organic regulations prohibit the use of antibiotics except to control invasive bacterial infections (fire blight) in organic apple and pear orchards. The European Union organic regulations allow antibiotics only to treat infected animals. For all products traded under this partnership, certifying agents must verify that antibiotics were not used for any reason.  
   All products traded under the partnership must be shipped with an organic export certificate showing the production location and certifying organization, attesting that prohibited substances and methods were not used and granting permission to track the products.
   The EU Directorate General for Agriculture and Rural Development and USDA will periodically review each other’s programs to verify that the terms of the partnership are being met.
   Shippers of all stripes that trade across the Atlantic can only hope this regulatory cooperation on the agricultural side serves as impetus for EU and U.S. customs administrations to reach consensus on supply chain security rules.
   In early December, U.S. Customs and Border Protection issued a statement saying that it had agreed with the EU Taxation and Customs Union Directorate on a preliminary reciprocity arrangement for freight security that would be finalized this spring. Both sides will recognize their respective trusted trader programs – the Customs-Trade Partnership Against Terrorism in the United States and the EU’s Authorized Economic Operator – as equivalent to their own programs, making corporate members validated by one set of regulators eligible for trade facilitation benefits in the other territory.
   Mutual recognition with the European Union is complicated by the fact that CBP has to subsequently strike separate deals with each of the 27 EU states to make sure their security practices under the EU umbrella principles meet U.S. standards.
   U.S. and EU officials have been plugging away at a mutual recognition agreement for more than four years, but apparently haven’t been able to overcome CBP concerns about the way corporate security audits are conducted in Europe and the lack of an export component within C-TPAT, among other issues.
   As part of the process, CBP compared the two programs on paper and has since conducted a series of joint validations to better understand the European Union’s methodology for verifying companies have strong shipment security in place. The export piece needs to be resolved because EU officials don’t send security specialists overseas to conduct validations as CBP does with C-TPAT. CBP officials have indicated they are interested in conducting a C-TPAT export pilot, but say they haven’t gotten beyond the conceptual stage.  
   Official predictions that an arrangement would be reached more than two years ago failed to materialize.
   CBP has mutual recognition agreements with New Zealand, Canada, Japan, South Korea and Jordan, although they are at various states of implementation.
   The prospect of harmonizing the U.S. and EU trusted shipper programs has dimmed in recent months without a confirmed commissioner for U.S. Customs, Ashley Craig, a trade attorney and partner at Venable LLP, said during a wide-ranging interview with American Shipper‘s editorial team.
   CBP Commissioner Alan Bersin was forced to relinquish his post in December when his temporary appointment from President Obama expired and the Senate did not act on his nomination. David Aguilar, then the deputy commissioner, is now CBP’s acting commissioner. He is expected to stay at the helm until someone presented by President Obama in a second term, or a new president, is confirmed sometime next year.
   “I don’t think we’re going to see movement here until we have someone in that office” to sign off of the policy, Craig said. 

Spartan digs for COAC meetings
   It used to be that the Commercial Operations Advisory Committee for the departments of Homeland Security and Treasury held its quarterly meetings in the modern surroundings of the Ronald Reagan Building and International Trade Center in downtown Washington. 
   The Reagan Building is home to trade-related government agencies, including U.S. Customs and Border Protection, private sector organizations, international affairs offices of multinational corporations, foreign entities, non-profit organizations and international trade consultants. The building, designed by internationally recognized architects, features a domed rotunda on one end and an eight-story foyer with a large atrium and giant skylight.
   The accommodations aren’t bad.
   But the last two COAC meetings have taken place a couple blocks away in the offices of the U.S. Access Board, which is located in a commercial office building.
    What is the Access Board, you say? It’s an independent federal agency devoted to making sure people with disabilities have access to federally funded facilities and developing accessible design-criteria for buildings, transit vehicles, telecommunications equipment, electronics and information technology.
   The room is not meeting friendly. For one thing, there’s a giant pillar in the middle of the room which makes it difficult for the audience to see all the panel members and speakers. The furniture, carpet, paint and other features resemble more of an aging VFW hall than a first-class meeting facility. 
   The reason for the new venue stems from Homeland Secretary Janet Napolitano’s efficiency edict and the tight budget situation. CBP, which is the primary interlocutor with COAC, must now search for available government facilities that can be used for free before it can rent commercial property. The Reagan Building is owned by the General Services Administration, which has leased it to retail property managers that are in charge of running the facility and charging for its use.