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Office of the Press Secretary

For Immediate Release December 16, 1996


Mutual Recognition Agreements

The U.S. and the EU have agreed in principle to complete a set of mutual recognition agreements (MRAs) by the end of January. We plan to conclude MRAs in the following sectors: telecommunications terminal equipment and information technology equipment; pharmaceutical good manufacturing practices; medical devices; electromagnetic compatibility; electrical safety; recreational craft; and (possibly) veterinary biologics. U.S. and EU trade in these product categories exceeds $40 billion. The MRAs covering telecommunications and electronics equipment combined with other potential agreements on basic telecom and the Information Technology Agreement (ITA) will constitute a major accomplishment in improving market access.


Under MRAs, governments agree to recognize the results of each other's testing, inspections or other procedures. Businesses on both sides of the Atlantic save money under an MRA. For example, without an MRA, many U.S. manufacturers selling in the European market first have their products tested in the United States to meet U.S. standards and then have the products tested and certified for approval again by European authorities. Under bilateral MRAs, each country agrees to accept product inspection, testing or certification results performed by the other country. Therefore, the manufacturer can meet both U.S. and EU standards by undergoing one inspection, testing or certification procedure by approved bodies in whichever country is most convenient.


The cost savings can be significant for industry as unnecessary testing and certification is eliminated. For example, for products like telecommunications equipment, rapid technological advances effectively shorten the product life cycle. Since an MRA allows products to move to the export market much more quickly, it clearly carries a major cost advantage to European and American suppliers and consumers. In addition, since industry pays for inspections and passes that cost to the consumer, an MRA can mean an immediate direct cost reduction. A single U.S. computer company can pay one million dollars a year in inspections. In the Transatlantic Business Dialogue (TABD), both the European and the American business communities have made clear their desire for MRAs. The Commerce Department estimates that U.S. companies will save over $100 million per year under these MRAs.


Government regulators also conserve resources under an MRA. The FDA performs inspections in European drug factories before allowing these pharmaceuticals into the United States. The manufacturer's plant also undergoes inspections by host government authorities. Each Good Manufacturing Practices (GMP) pharmaceutical plant inspection that the FDA performs costs the agency $100,000 and 150 such inspections are performed in the EU each year. If regulatory agencies in Europe perform equivalent inspections accepted by the FDA under the MRA, the FDA funds formerly used for inspections in Europe can be put to good use elsewhere in ensuring the highest levels of health and safety for the American consumer.

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