Speech by Jean Ann Fox

Director of Consumer Protection Consumer Federation of America

February 10, 2000
Washington, DC

Good morning. My assignment is to provide a brief summary of TACD's annual report on behalf of the Steering Committee. We will be finalizing the annual report in the near future and look forward to feedback on the items raised here today.

The Transatlantic Consumer Dialogue was formed over a year ago to bring consumer interests to the trade table. Many of you were present in this same room at the meeting in September 98 when the Transatlantic Consumer Dialogue was formed. It was not an easy birth, but I am pleased to note that we are back well over a year later still going strong and getting stronger.

The groups that make up TACD are 65 or so consumer organizations from 16 countries. The oldest dates back one hundred years, the youngest are well over ten years old. We are supported directly by roughly 10 million individual consumers and speak for the interests of 600 million. On both sides of the Atlantic we have long track records of achievement in the consumer protection and safety fields. Many have successful publishing, research and product testing businesses that support our advocacy and policy activities; others, according to their cultural traditions, are financed from public or foundation funds; but all are independent. We have decades-long traditions of organising ourselves into regional or global networks and federations to speak out for the interests of citizens at all levels of decision-making TACD is a different type of network in that its creation was top-down and government-driven, not a grassroots effort, although TACD was formed as a result of public pressure and political necessity to have a place along with business and legislators at the trade negotiating table. There was a stated commitment from the EU and US governments to formalise and make work the consumer interest (and other civil society) input into the bilateral trade-driven negotiations of the Transatlantic Economic Partnership. So the consumer groups got together, agreed to give it a try and set about building the process.

After more than one year, at the third meeting of TACD, we can report that we have an established membership, we have an infrastructure, we have three active working groups. At the 2nd TACD meeting in Brussels these working groups discussed and agreed by consensus to adopt 33 policy resolutions - on issues that have been of direct concern to consumers and on which the member groups have been working actively for some years on their national and regional levels. The dialogue has also produced a detailed position for the Seattle WTO ministerial round. Exchanges of views and briefings took place with officials on both sides of the Atlantic. And, most recently, leaders of TACD were invited to an audience with the US and EU presidents during the December 99 Summit in Washington.

This is positive progress, though there is room for improvement. As far as the consumer side of the dialogue

• The dialogue is not sufficiently resourced for the tasks it sets itself, and there is a big question mark over sustained funding.
  
  
• The working group chairs and the people in consumer organizations producing substantive work are doing so on a voluntary basis, on top of their regular daily work.
  
  
• This in itself sets future growth limits, particularly in areas of trade negotiation that are significant to the TEP process. It also limits the capacity for wider participation, particularly from the smaller national organizations with limited volunteer time to give.
  

However, a dialogue has two sides, and we must also consider the government role. Ultimately the member organizations of the TACD have to judge the success of their efforts in this dialogue by the results and translation of their recommendations into government policies. These are some of the key questions presented by Rhoda Karpatkin in Brussels in April 99:

• Now that our efforts to organise have been productive…what are the policy outcomes of this participation? Will [government representatives] integrate consumer viewpoints into their representation?…This is a critical test, it goes to the heart of what we're doing here.
  
  
• What concrete steps will the governments take to 'breathe life' into the verbal commitments made by their leaders throughout '98 and '99 regarding citizen participation and a trading system fair to all that rejects a 'race to the bottom in environmental protections, consumer protections and labor standards'?
  
  Will the governments continue to show support for the continuation of the Dialogue by providing the financial support that is necessary to sustain it?
  

To begin to answer those questions, TACD is preparing a 'Annual Report' that examines the TACD recommendations against existing EU and US policy on these issues. Our report does not set out at this stage to compare the two. Furthermore a number of the government policies that align themselves closely to the TACD viewpoints were in place before this dialogue was created. While we can't take credit for the status when we started, the long-standing work and input of consumer groups into their national and regional consultation processes should not be under-estimated or ignored.

The Annual Report will provide a useful benchmark to judge the results of TACD's efforts. This morning I will give you a brief 'preview' summary. The full report will be released as soon after this meeting as feasible.

TACD's three working groups address electronic commerce, food, and trade issues.

Electronic Commerce

Electronic commerce is an area that poses new challenges for consumer advocates in the fields of consumer protection, rights to choice, privacy and the protection of minors. Rights that have been hard-won in the off-line world over many years are being dismantled and undermined by the nature and borderless character of on-line transactions. To reflect the global nature of the information society the Electronic Commerce Working Group co-operates with an increasing number of organizations outside the EU and US, which are welcomed as observers and contributors.

With regard to consumer protection in electronic transactions TACD's fundamental underlying principle is that on-line minimal standards should provide a functional equivalence to current safeguards, offering at least the same levels of protection that would be provided in the off-line world. The group has made specific recommendations on minimum disclosure standards for suppliers in e-commerce transactions and on unfair contract terms. Recognising the global nature of electronic commerce, the TACD urged the two governments to acknowledge the need to begin a dialogue on issues related to the development, reform or creation of international organizations that should play a role in elevating consumer protection.

Regarding citizen privacy rights, the TACD urges the EU to reject the US Safe Harbor proposal, which would undermine the purpose of the EU Data Directive and compromise the privacy interests of EU citizens. It recommends the development and adoption of an International Convention on Privacy Protection.

The TACD considers that consumer rights to choice are undermined by monopolistic or anticompetitive practices, such as bundling or technological tie-ins of products, as well as control of choice through default menus for shopping on-line and selection of editorial content. It urges policy makers to use appropriate competition policy and regulatory remedies to ensure consumers have open platforms for network access.

In the area of protection of children the TACD recommends specific principles to be followed to safeguard minor's personal information, ensure parental controls, avoid undue influence of advertising and assure access to high quality educational services.

Finally, with regard to consumer participation in policy making, the TACD recommends that EU and US negotiations on standards for the electronic marketplace should develop means for consulting consumers as an integral part of the negotiating process.

In actions taken since we met in Brussels:

• The US and EU member governments, together with the governments of the other OECD member states, finally reached consensus and agreed to adopt Guidelines for Consumer Protection in Electronic Commerce. This is a welcome step, in line with TACD recommendations, though the guidelines are too weak to solve the issues of jurisdiction and applicable law or limits on consumer liability. The guidelines are voluntary, and their principles remain to be implemented by the governments. So far, for example, the US government has opposed specific standards for disclosures to consumers. The European Commission comments that existing EU legislation already provides for mandatory disclosure of all elements of information that are of 'absolute value', in line with the TACD recommendation. With regards to unfair contracts the Commission comments that all TACD concerns are adequately dealt with in existing legislation. In the US, the House of Representatives has passed digital signatures legislation that undermines consumer rights. The TACD also considers that the US 'self-governance' proposals for consumer protection are unenforceable.
  
  
• The Safe Harbor proposal reflects in too many ways the concerns of business and not the interests of consumers. Following the TACD specific recommendations, a meeting was held with US Government and follow-up comments were submitted by TACD. The US Government has not accepted any of our proposals. The Commission does not plan to follow TACD's recommendation to reject the proposed US-EU Safe Harbor guidelines as inadequate.
  
  
• The U.S. government has made significant progress in the area of online privacy protections for children through the Federal Trade Commission's rules issued in October 1999, implementing the Children's Online Privacy Protection Act of 1998. Very little progress has been made by the US government to provide sufficient protections against interactive marketing and advertising, consistent with the TACD recommendations. The Commission supports the five TACD principles, but its action has been so far limited to recommendations, promotion and encouragement for the adoption of voluntary codes of conduct.
  

Despite the stated support of both governments for the principle of consumer participation in policy-making, its application in practice in the areas of e-commerce has been limited. The US has included non-governmental representatives in some official US delegations to international meetings, but consumer representatives are not present in the Department of State advisory board on information policy or the USTR board on intellectual property rights. The FTC has just appointed an advisory board on e-commerce privacy that is predominantly made up of business representatives. The Commission agrees that consumer participation is important, and has sought input from consumer organizations on some, though not all, issues of public concern.

Food Safety and Standards Working Group

Food issues have a special importance to all of us. Food is basic. Because we eat to preserve life and health, it is not surprising that consumers everywhere are extremely reluctant to assume unnecessary risks from the food we consume. When it comes to food, the precautionary principle is a personal as well as a governmental issue. Consumer organizations in both the EU and the US are actively involved in efforts to improve food safety and nutrition. Those who wish to further international trade in food must meet these concerns or risk a serious loss of confidence in the safety of the food supply and, ultimately, the failure of their efforts.

The recommendations of the TACD Food Working Group reflect these concerns.

Consumer organizations on both sides of the Atlantic seek effective government action to assure complete, mandatory safety reviews and approvals of novel foods and technologies before they are marketed; clear and accurate labeling of all food products; vigorous, and effective public health based government food inspection to reduce microbial contamination and food-borne illness. These goals will be met only if there is active consumer participation and complete transparency at all levels of both national and international government decision making on food safety and nutrition. Both equity and plain, old common sense require that governments follow the precautionary principle in any case where the scientific evidence necessary to assure protection of public health, safety and the environment is not complete and overwhelming.

Consumers insist that governments act to address consumer concerns about human health risks from genetically engineered food products and certain dietary supplements. Consumers also ask for a ban on the use of certain antibiotics in animal and food production, and, given animal health effects and other concerns, on recombitant bovine growth hormone as well.

Clear and accurate labeling is basic to a consumer's right to know and ability to choose foods that are safe and healthful. We must have labels that show the nutrition content of all foods, the presence of genetically modified organisms and whether products come from animals treated with rBGH.

It has been nine months since TACD relayed these requirements to governments of the EU and US after our meeting in Brussels. The following summarises the present position of the respective governments.

Genetically Modified Organisms The European Commission has taken specific steps to address consumer concerns, requiring mandatory environmental impact assessment, assessment for food use, and some labeling. The White Paper on Food Safety has committed the EU to reviewing legislation on novel foods. However, consumers advocate additional steps, including labeling of animal feed. The US currently requires no special labeling of genetically engineered food and opposes mandatory labeling at Codex. The US Food and Drug Administration (FDA) safety reviews are voluntary. However, the US FDA held hearings in late 1999 on whether these policies should be changed. The US Department of Agriculture has created an advisory committee on agricultural biotechnology including consumer and environmental activists. And the Biosafety Protocol to which both the EU and US agreed, acknowledges the rights of nations to regulate genetically engineered food on the basis of the precautionary principle.

Antibiotics in Animal and Food Production The US FDA has acknowledged the importance of this issue but has not banned the non-therapeutic use of human antibiotics as growth promoters in animal feed. The US Trade Representative has challenged the EU ban on such antibiotics, despite a US Center for Disease Control finding that it is scientifically justified. The European Commission position is consistent with TACD recommendations, including banning four antibiotic growth promoters.

rBGH (recombinant bovine growth hormone) The Commission bans use of this animal drug. The US FDA does not acknowledge any human health concerns and views animal health risks as manageable. It does not require labeling of products produced from dairy cows treated with rBGH, and discourages voluntary labeling.

Microbial Safety The US, to some extent, is addressing three of the four TACD recommendations, but should expand sampling programs to additional foods and pathogens. The Commission endorses hazard analysis and control programs and has in the White Paper made a commitment to ensure more effective implementation as well as more effective surveillance. TACD will monitor its progress.

Inspection The US inspection system is divided among federal agencies and does not meet TACD's recommendation for a coherent, hazard-based program. The EU has been plagued by a series of food safety scares throughout 1999. The EU White Paper includes proposals to address the issue, but the new Food Authority would have limited powers.

Nutrition Labelling With the exception of labeling for fresh meat and poultry products, the US is meeting TACD recommendations. In the EU, nutrition labeling, at this time, is largely voluntary.

Consumer Participation Both the EU and the US support, for the most part, TACD recommendations on participation and transparency. The US supports consumer observers at Codex Executive Committee meetings. However, the US WTO delegation did not have sufficient consumer representation and it is too early to see how EU consumers will be involved in the work of the Food Authority.

Overall, it appears that the US and the EU have both made minimal progress towards our goals, but each government has made some progress in specific areas. For example, the EU is relatively strong on GMO labelling while the US is relatively strong on nutrition labelling. Hopefully, governments on both sides of the Atlantic will learn form each other and improve their consumer policies by "harmonizing upward." This approach will ensure that consumers in both the US and Europe will be provided with a high level of protection.

Trade Working Group

The TACD trade working group's main focus of 1999 on the production of a comprehensive policy statement for the WTO Seattle Ministerial. Our position paper was published as a brochure and distributed to government representatives both prior to and in Seattle by the TACD delegation.

The TACD position called for Seattle's WTO ministerial to launch a review of WTO outcomes and texts so as to make the repairs necessary to limit the erosion of a broad spectrum of core consumer rights and interests.

• The US policy has not been in line with the TACD recommendations. For instance, the U.S. Government agreed to EU demands to launch a major WTO expansion through a "Millennium Round". The US promoted WTO expansion in areas of great consumer interest, such as biotechnology regulation and services sector liberalization. The TACD, however, welcomes the fact that the U.S. Administration stood against inclusion of investment rules similar to MAI in the WTO as demonstrated by the absence of this EU priority in draft texts of the Seattle Ministerial. The TACD considers that the EU, though responsive, continued to proceed in the opposite direction with its initiative to launch a broad Millennium Round WTO expansion. The European Commission explicitly supported the inclusion of binding multilateral rules of investment in the WTO system (opposed by the TACD), while calling for flexibility and a 'bottom-up' approach on the admission of investors. However, the Commission does mention strengthening the currently non-binding OECD Guidelines for Multinational Enterprises, though it does not make this a condition for any investment regime.
  

The Trade Working Group has also made recommendations on fair trade issues, supporting the principle of application of internationally-agreed social, environmental, health, safety and consumer protection rules to companies operating internationally and welcoming the development of fair trade labeling which must be permitted under the WTO Technical Barrier to Trade (TBT) Agreement.

• This issue has not received much attention on the US side, and no proposal has been raised by the Administration concerning fair trade labeling. It has furthermore showed opposition to both mandatory and voluntary eco-labels, in part by submitting an industry proposal to bring eco-labels under the constraints of the WTO's TBT Agreement. The European Commission supports eco-labeling, and states its support for voluntary fair trade labeling, and has put the subject on its workload. The Commission has provided funding for "development education" on the topic, but has yet to issue Recommendations. The European Commission further directed discussion on the topic to the WTO where consumers cannot participate.
  

On the issue of Pharmaceuticals, the TACD has made a series of specific recommendations connected with links between World Health Organization and WTO, patents, parallel imports compulsory licensing and developing countries access to medicine and medical Technology.

• The US Administration is opposed to TACD proposed exceptions from the WTO's 20-year monopoly patenting for seeds and pharmaceuticals. Also not in line with TACD is the US position to extend WTO TRIPS rules to life forms and to broaden the existing TRIPS Agreement coverage. On the positive side, the US did finally cease its trade pressure regarding parallel importing and compulsory licensing of pharmaceuticals in South Africa, though such pressure is now directed at other countries seeking to provide improved access to medicines. The EU positions are similarly not in line with those of TACD - it does not support the possibility of requesting an opinion from the WHO in WTO disputes regarding health policy issues. It also does not support the TACD proposed patent right exemptions, or the TACD recommendations on parallel imports.
  

In sum, while consumer groups in Europe expressed satisfaction with the process in Europe, they also expressed a desire for greater strides on the part of the European Commission. On the US side, there is a growing sense of frustration, both with the process and with the lack of measurable gains from the dialogue. Our great challenge this week is to take some significant steps forward, both in process and substance. We look forward to working with you on these issues this week and in the coming year.