The European Commission has published a report setting out a proposal for a framework for regulatory co-operation in financial services in the context of negotiations for an EU-US trade deal, known as the Transatlantic Trade and Investment Partnership (TTIP).
The EU is proposing to establish, within the TTIP framework, a transparent, accountable and rule-based process that would commit the two parties to work together towards strengthening financial stability. The regulatory co-operation would be based on the following principles:
- joint work to ensure timely and consistent implementation of internationally-agreed standards for regulation and supervision;
- mutual consultations in advance of any new financial measures that may significantly affect the provision of financial services between the EU and the US and to avoid introducing rules unduly affecting the jurisdiction of the other party;
- joint examination of the existing rules to examine whether they create unnecessary barriers to trade; and
- a commitment to assessing whether the other jurisdiction’s rules are equivalent in outcomes.
These general principles would be backed up by specific arrangements for the governance of EU-US regulatory co-operation, guidelines on equivalence assessments and commitments to exchange necessary and appropriate data between regulators. Essentially though, the EU proposal would encompass the commitment to outcome-based assessments of whether the other party’s regulatory and supervisory framework is equivalent. This could potentially lead to mutual reliance on the rules of the other party.