Lesson 8 Trading standards

What makes trading between rich countires difficult?

Chickens slautered in the United States, claim officials in Brussels, are not fit to grace European tables. No,say the Americans: our fowl are fine, we simply clean them in a different way. These days, it is differences in national regulations, far more than tariffs, that put sand in the wheels of trade between rich countries. It is not just farmers who are complaining. An electric razor that meets the European Union's safty standards must be approved by American testers before it can be sold in the United States, and an American-made dialysis machine needs the EU's okay before it hits the market in Europe.

As it happens, a razor that is safe in Europe is unlikely to electrocute Americans. So, ask businesses on both sides of the Atlantic, why have two lots of tests where one would do? Politicians agree, in principle, so America and the EU have been trying to reach a deal which would eliminate the need to double-test many products. They hope to finish in time for a trade summit between America and the EU on May 28th. Although negotiators are optimistic, the details are complex enough that they may be hard-pressed to get a deal at all.

Why? One difficulty is to construct the agreements. The Americans would happily reach one accord on standards for medical devices and then hammer out different pacts covering, say, electronic goods and drug manufacturing. The EU -- following fine continental traditions -- wants agreement on general principles, which could be applied to many types of products and perhaps extended to other countries.