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A central goal in governing the interface of the economies of the United States and European Community (EC) is to reconcile the objectives of protective social regulation, on the one hand, and free competition facilitated through open trade policies, on the other. These policies can be both complementary and conflicted. This paper examines how these issues have been addressed bilaterally in a number of economic sectors through mutual recognition agreements and a hybrid form, the safe harbor principles on data privacy protection. The paper provides an overview and analysis of the 1997 Mutual Recognition Agreement and its six sectoral annexes, and the 2000 agreement on Safe Harbor Principles (for data privacy protection). The paper assesses what spurred these agreements, which actors participated in their negotiation, what constrains their implementation (in terms of both political and market forces), and, ultimately, what are the prospects and limits for their adoption in other areas. Although neither of these agreements directly prescribe harmonization of U.S. and EC laws or regulatory approaches, they have led to some de facto harmonization by regulatory authorities and firms. The paper concludes that, overall, transatlantic institutional adaptation has been slow (and often creeping), but where it has occurred, it has been rather unidirectional, and will likely continue to be so. Simply stated, the United States has made most of the changes, whether through adoption of international standards that mirror EC ones, through delegation of testing and certification responsibilities to private laboratories reflecting the EC's global approach, or through coordination and oversight of these laboratories under a new U.S. national program analogous to those operating in the EC for over a decade.

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Managing U.S.-E.U. Trade Relations through Mutual Recognition and Safe Harbor Agreements: 'New' and 'Global' Approaches to Transatlantic Economic Governance?