Wiping out U.S.-EU rules disparities would yield big savings

WASHINGTON -- $42 million.

That's how much one automaker spent to change 100 parts and do the additional design and development needed to make a popular 2013 U.S. vehicle comply with European safety regulations, so it could be sold across the Atlantic, according to the Alliance of Automobile Manufacturers.

And all that money makes little difference in overall safety, researchers say.

That's why automakers are pushing their governments to streamline safety regulations in the Transatlantic Trade and Investment Partnership free-trade deal the U.S. and European Union are negotiating. With the prospect of new regulations on autonomous driving technologies, the industry views the talks as a critical opportunity to bring harmony to the disparate rules.

"We are at an important inflection point in automotive regulations," said Matt Blunt, the former Missouri governor who lobbies on trade issues for the Detroit 3 as president of the American Automotive Policy Council in Washington. 

Blunt and his counterparts from the Alliance of Automobile Manufacturers and the European Automobile Manufacturers' Association were in Brussels this month to press their case with negotiators from both sides during the tenth round of the trade talks. 

Big money is at stake. Eliminating the regulatory disparities would save automakers hundreds of millions of dollars in costs currently sunk into re-engineering vehicles for each market. 

It also would boost U.S.-EU auto trade by 20 percent, according to a recent study by the Peterson Institute for International Economics, because automakers could more easily afford to sell even low-volume products in overseas markets. 

The two sides wouldn't have to agree on a single set of rules. The goal is "mutual recognition of one another's regulatory standards," Blunt said. "We believe they both achieve the same high safety outcomes in both economies." 

A regulatory analysis by the Center for Automotive Research found that U.S. and EU vehicle regulations differ in ways that require automakers to make more than two dozen design or engineering changes for the two markets. Fourteen of those differences require minor changes to components or designs, such as a U.S. rule requiring a release latch inside the trunk to allow a trapped person to escape, which Europe does not require.

Others, such as differing headlight rules, require "considerable" component or subsystem changes, and a few involve "major design considerations," such as tougher U.S. rules on roof structures. 

Yet the Peterson study found that despite the differences, the regulatory regimes "are not significantly different in terms of the safety outcomes they deliver." Instead, the study found that factors such as road quality, terrain, law enforcement and even weather had a far greater effect on road safety as measured by fatality rates. 

Even so, getting regulators to endorse their counterparts' standards will be difficult. In part, that's because they take very different approaches to regulation. 

In Europe, vehicles must pass government crash tests and inspections prior to sale. In the U.S., automakers must certify that their vehicles conform to federal standards. If lapses are found, they would face fines or recalls. 

"We recognize there are going to be some instances where it's not going to be easy to recognize one another's standards," Blunt said, "but that should be our aspirational goal." 

Jennifer Thomas, vice president of federal government affairs for the Alliance of Automobile Manufacturers who also lobbied negotiators in Brussels, says harmonizing rules will help cement U.S. and EU regulators as the definitive authors of future regulations. 

"In terms of the bigger global picture," she said, "it's a way to ensure that the U.S. and EU are global standard setters."