WASHINGTON -- Differing auto safety regulations in the U.S. and European Union cost automakers as much as $2.26 billion annually, according to a study released today that was commissioned by automakers supporting alignment of the divergent regulatory regimes.
The study, conducted by the Center for Automotive Research and commissioned by the Alliance of Automobile Manufacturers, looked at 116 “vehicle variant groups” with models for sale in the U.S. and EU, made by U.S. and European automakers. It found that those automakers incurred $1.68 billion to $2.26 billion in incremental costs from the differing safety regulations in 2014, larger than the $1.6 billion in tariffs applied to U.S.-EU auto trade that year, according to the study.
“Policies that reduce regulatory costs and thereby enable consumers to buy today’s safer and cleaner cars should be a no-brainer,” Mitch Bainwol, president of the Alliance of Automobile Manufacturers, which represents the Detroit 3 and several European automakers, said in a statement.
The costs stem from the vehicle design and equipment modifications necessary for European-market vehicles to comply with U.S. standards, and vice versa. For example, automakers “almost universally” use larger airbags in North American-market vehicles because of unbelted crash tests conducted here, which European regulations do not require, according to the study.
Automakers on both sides of the Atlantic argue the costs are unnecessary because the differing safety regimes ensure equivalent levels of safety. They want EU regulators and U.S. regulators to recognize one another’s safety rules and are lobbying for trade negotiators to streamline auto safety rules through the Transatlantic Trade and Investment Partnership trade deal.
The 14th round of talks between U.S. and EU negotiators are taking place this week in Belgium.
“This study illustrates the costs of having to comply with two sets of regulations and the real savings that could be achieved for consumers and automakers if we can negotiate a strong TTIP agreement that eliminates the differences between the U.S. and EU auto safety regulations,” Matt Blunt, the former Missouri governor and current president of the American Automotive Policy Council, said in a statement.
Automakers are pushing negotiators to agree to so-called mutual recognition of safety standards, which would allow an EU-compliant vehicle to be sold in the U.S. market without modifications, and vice versa. Removing the non-tariff trade barriers could also enable automakers to offer more models for sale in each market, according to the study.
Automakers also hope the transatlantic trade deal will create a path for U.S. and EU regulators to craft future regulations, such as rules for autonomous driving technologies, in tandem.
“The CAR study confirms that if we want TTIP to fulfill its potential, regulatory convergence in the automotive sector should be considered as one of the key priorities of the entire agreement,” Erik Jonnaert, secretary general of the European Automobile Manufacturers Association, said in a statement. “This will not only be of benefit to the industry, but consumers will also gain from such convergence.”