Trump’s TPP Withdrawal Dashes Hopes For Cosmetics Regulatory Alignment
This article was originally published in The Rose Sheet
Executive Summary
President Trump’s executive order to pull out of the Trans-Pacific Partnership trade deal is intended to help American workers, but for the cosmetics industry, the move likely marks a foiled opportunity.
While it was promised and widely expected, President Trump’s decision to withdraw the US from the Trans-Pacific Partnership trade agreement during his first days in office ends years of negotiations toward lower trade barriers and cosmetics regulatory harmonization across member countries.
With the US walking away from the table, the pact cannot achieve the ratifying signatory heft, in GDP terms, required for it to come into force. There is talk of the possibility that remaining members will pursue a renegotiated deal without the US, which the US could potentially join down the road.
But President Trump seems intent on going his own route, pledging to “negotiate fair bilateral trade deals that bring jobs and industry back.” He called the US separation from the TPP “a great thing for the American worker.”
It’s certainly not so great for the US cosmetics industry, which had much to gain from the accord.
US cosmetics already enjoy a trade surplus, a rarity in the manufacturing sector. In 2014, the personal-care industry exported $16.9bn worth of products, while imports totaled $11.1bn, and it saw the TPP as an opportunity to further widen the gap. (Also see "PCPC Touts Cosmetic Trade Surplus In US, Which TPP Could Enhance" - HBW Insight, 15 Mar, 2016.)
According to a study conducted by PricewaterhouseCoopers for the Personal Care Products Council, 48% of US cosmetics exports go to TPP countries – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam – and their 800m consumers in sum.
The TPP would have lowered or eliminated tariffs on cosmetic products in participating countries, which can reach up to 30% in Vietnam, for instance.
The deal’s dedicated cosmetics annex sought to remove trade barriers by streamlining product labeling and registration requirements, doing away with Certificates of Free Sale and eliminating the need for re-authorization of established products and separate authorizations for different color or fragrance variants, for example.
The TPP’s cosmetics provisions also were designed to promote regulatory alignment across the bloc, spreading the gospel of risk-based safety programs and post-market surveillance as opposed to hazard-based doctrine and premarket approval systems. (Also see "PCPC Keeps Up Push For Trans-Pacific Partnership Ratification" - HBW Insight, 27 Jan, 2016.)
In short, the TPP would have encouraged cosmetic regulatory frameworks like that in the US.
Regulatory authorities that make up the International Cooperation for Cosmetics Regulation are working to achieve similar goals, but they represent just three TPP participants (or former participants) – the US, Canada and Japan. Brazil and the European Union also are involved in the ICCR, but not the TPP.
ICCR has led to agreements on numerous cosmetics issues, for instance on limits for heavy metal content, approaches to nanomaterials, animal testing alternatives and preservatives, but the positions they adopt do not necessarily translate to concrete regulatory steps.
When they do, it can be at a crawling pace. For instance, ICCR agreed on a recommended 10-ppm limit for lead in cosmetic products in 2013, but it took more than three years for FDA to issue related guidance. (Also see "FDA’s Holiday Gift To Cosmetics Industry: 10ppm Recommended Lead Cap" - HBW Insight, 22 Dec, 2016.)
Further, ICCR participants tend to avoid addressing trade-specific details such as labeling.
The group also has been slow to bring new members on board. Chinese regulatory reps have been participating for years now strictly as observers.
Francine Lamoriello, PCPC’s executive vice president for global affairs, said in 2016 that she hoped the TPP’s example would help to guide ICCR in the future.
In a presentation to ICCR members on regulatory convergence, she drew attention to the TPP cosmetics annex “in the hope that ICCR regulators would understand the broad trend and movement toward using regulatory convergence as both a way of ensuring consumer safety but also promoting trade.” (Also see "TPP Cosmetics Annex Is 'Signal To The World' For Regulatory Best Practices" - HBW Insight, 16 Nov, 2015.)
With the TPP now out of reach, the hoped-for “signal to the world” about regulatory best practices will not be transmitted, at least not without a new instrument of similar magnitude.
Cosmetics stakeholders were optimistic that China would be among non-TPP participants receiving the signal and potentially taking cues from the cosmetics annex in its own regulatory reform efforts.
Reportedly, China had even expressed interest in attaching itself to the TPP at a later time. Observers are now speculating that China could take the US’ place at the bargaining table for a new deal with TPP remainders.
Trump also is expected to scrap the Transatlantic Trade and Investment Partnership with the European Union.