In a twist that surprised some, the Treasury Department is signaling its intent to sign a bilateral agreement between the United States and the European Union covering insurance regulation in the world’s two largest insurance markets. This development has to be considered a positive sign coming from an administration that has hitherto signaled skepticism toward international trade.
The agreement is the result of almost two years of negotiations headed up by Treasury’s Federal Insurance Office, which concluded the pact in the Obama administration’s waning days this January. The substance of the U.S.-EU covered agreement focuses on harmonizing regulation in three areas: reinsurance, group supervision, and the exchange of insurance information.
The agreement’s ultimate goal is to ensure that regulators in the U.S. and Europe view each other’s systems as “equivalent” when it comes to licensing, oversight, and operation, making it easier for U.S. companies to do business in Europe and for European companies to do business in the U.S. Probably the single-biggest change is a pre-emption of state laws that require European reinsurers without a U.S. subsidiary to post 100 percent collateral for any cross-border business they write.
But Treasury’s decision to move forward has implications beyond harmonizing insurance standards. What is particularly noteworthy for trade watchers is the extent to which it appears to set a precedent that the administration views negotiations with the EU to be bilateral, rather than multilateral.
With its professed hostility toward multilateral trade negotiations, there has been concern that the Trump administration would abandon the Transatlantic Trade and Investment Partnership (T-TIP), a potential trade agreement with the EU. Treasury’s announcement went out of its way to emphasize that the covered agreement with the EU is “bilateral.” This is the strongest signal yet that T-TIP may avoid the same fate as the Trans-Pacific Partnership,…