In a policy brief published today, the European Centre for International Political Economy (ECIPE) calls on the EU and the US to negotiate an agreement on conformity assessment, covering machinery and electrical equipment. The initiative aims to increase the number of European and US conformity assessment bodies (CABs) authorized to test and certify that products meet the requirements for export into each other’s markets, without altering the product requirements on either side. While focusing on machinery and electrical equipment, the scope of such an agreement could also be extended to other product categories.
- Regulatory compliance can be more costly than tariffs. Cutting red tape for industry could bring considerable benefits on both sides of the Atlantic, says Joel Jonsson, Director for International Trade at the Technology Industries of Sweden.
The study expects an agreement on conformity assessment to reduce trade costs by between 2 and 6 percent. In 2022, transatlantic trade in machinery and electrical equipment amounted to US$ 192 billion. An agreement covering these sectors has the potential to boost bilateral trade by up to US$ 75 billion. US exports to the EU are projected to increase by between US$ 11 billion and US$ 32.5 billion while EU exports to the US are estimated to grow by between US$ 13.8 billion and US$ 42.2 billion. In percentage terms, US firms are anticipated to experience a larger increase in exports than their EU counterparts.
- Increased economic integration will drive both growth and technological advancements needed for the energy transition and our security interests, says Joel Jonsson.
Machinery and electrical equipment are crucial inputs to technologies that both the EU and the US have identified as strategic. This includes green technologies needed for the energy transition and technologies where the EU and the US have trade dependencies on China. A reduction in trade costs between the EU and the US will accelerate the adoption of green technologies on both markets and is expected to lower Chinese exports to the EU and the US by between US$ 6.5 billion and US$ 19.4 billion.
- This policy contributes to joint strategic objectives by eliminating costs, rather than through subsidies that impose a financial burden on taxpayers. It should be a top priority for EU and US policymakers ahead of the next Trade and Technology Council, says Joel Jonsson.
The policy brief published by ECIPE can be found here. It was commissioned and financed by Danish Industry, FME, FMTI, Metaalunie, Swissmem, and the Technology Industries of Sweden (Teknikföretagen).
