How Europe employs disguised regulatory protectionism to weaken American free enterprise

International Journal of Economic Development, April-July, 2005 by Lawrence A. Kogan

Abstract

The European region regulates more than any single country in the world, and such over-regulation, along with higher taxes and labor and environmental standards, has increasingly caused European industry to lag behind its Asian and American competitors. As a result, a growing competitiveness and technology gap has arisen in a number of important advanced industrial and high technology industry sectors between European and American and Asian companies. Naturally, European industry is extremely concerned that it has become less globally competitive. In response, it has actively sought to 'level the global economic playing field' by working with regional and global environmental and social activists, grant-seeking academics, risk-averse European politicians and United Nations bureaucrats to export the systemically higher European costs of doing business throughout the world. It has proceeded to do so by promoting sustainable development as a broad new international legal paradigm premised largely on the Precautionary Principle.

The Precautionary Principle is a non-scientific 'better safe than sorry' European regulatory philosophy that favors banning or severely restricting particular substances, products and activities if it is merely possible that they or the processes used for their manufacture, formulation or assembly might, sometime in the uncertain distant future, cause potentially serious health or environmental harm. The Precautionary Principle is inconsistent with World Trade Organization law because it does not require governments to provide scientific and economic justification before they regulate to block or severely restrict the market access and/or use of new foreign products and processes. The European Commission has worked to bind foreign exporters by incorporating the Precautionary Principle into a number of international environmental treaties. And, where the Precautionary Principle does not expressly appear, the European Commission has sought to interpret the treaty and general customary international law as including it.

In order to establish it as absolute international law, the EU Commission must first secure United States adoption of and compliance with the Precautionary Principle as a matter of 'state' (U.S. national) law and business practice. For this reason, the EU Commission and several EU member state governments have waged an all-out campaign, with the help of misguided American politicians, activists and academics, to inject the Precautionary Principle within the U.S. at the federal, state and local levels, as well as, up and down U.S. global industry supply chains. Europe's ultimate goal is to reform the very same U.S. law and business practices that have served as the cornerstone of the U.S. national economy and the source of America's comparative advantage in international trade since the end of World War II. This article documents precisely how Europe seeks to accomplish its objective, how it significantly threatens the American legal and free enterprise systems, and why Americans should endeavor to prevent the Precautionary Principle from ever becoming U.S. law.

I. INTRODUCTION: EUROPE AS THE NEW GLOBAL REGULATOR

U.S.-based businesses of all sizes, but especially small and medium sized businesses will, over time, likely be subject to more stringent environment, health and safety ('EHS') regulations and related technical product standards. Whether they know it or not, many of these rules will have originated within the European Union ('EU') without their constructive input or consent--'regulation without representation'. According to a 2002 Wall Street Journal article,

   Americans may not realize it, but rules governing the food they
   eat, the software they use and the cars they drive increasingly are
   set in Brussels, the unofficial capital of the EU and the home of
   its executive body, the European Commission. Because of differing
   histories and attitudes toward government, the EU ... with the
   world's second-largest economy, regulates more frequently and more
   rigorously than the U.S., especially when it comes to consumer
   protection. So, even though the American market is bigger the EU,
   as the jurisdiction with tougher rules, tends to call the shots for
   the world's farmers and manufacturers ... EU rules often cause
   particular friction in high-tech fields, such as software,
   electronic commerce and biotechnology ... The EU requires any
   product that contains even 1% of a genetically altered ingredient
   to say so on its label ... pending European recycling rules, which
   are tougher than U.S. standards ... would require electrical
   equipment makers to eschew certain hard-to-recycle plastics and
   chemicals, such as brominated flame retardants ... the EU is
   considering requiring companies to test 30,000 chemicals already on
   the market to see whether they are hazardous, as well as thousands
   of products that use some of the chemicals in question ... another
   EU initiative targets auto makers ..." (1)