Let’s Go: Europe
K Street Builds a New Beachhead in the European Union
Europe came to K Street last week to invite K Street to Europe.
Former European Union Parliament President Pat Cox made a flurry of visits to lobbying operations to pitch his new venture: a strategic consulting firm with one foot in Washington and the other in the E.U. capital of Brussels.
Packing 20 meetings into four days, Cox, flanked by his two American partners, wowed audiences with a PowerPoint presentation highlighting some jaw-dropping figures: American business invested 10 times as much in the Netherlands than in China; roughly half of America’s foreign direct investment in the 1990s was in Europe; and the value of trade across the ocean is nearly $670 billion.
The meetings were only introductory, as European Integration Solutions, the trans-Atlantic firm, has not been formally launched and only signed a lease for Washington office space last week.
But its emergence signifies a dawning recognition among corporate interests in Washington of the E.U.’s importance to the future of American industry — and, consequently, the need for businesses to have a lobbying presence in Brussels.
Some American companies have already learned that lesson the hard way. Most famously, General Electric and Honeywell had their hopes for a merger dashed in 2002 when, after sealing the deal with Washington regulators, they took E.U. approval too lightly. European commissioners blocked it, torpedoing the deal.
Both companies promptly opened offices in Brussels. Indeed, GE’s office there is now something of a global headquarters, employing about 10 lobbyists and occupying a prominent place on the Rond Point Schumann, squarely in the neighborhood that is increasingly home to the E.U.’s booming advocacy industry.
“In the last several years, you’ve seen several companies start to beef up their presence in Brussels,” said Tim Keating, a Honeywell lobbyist in Washington. His company now has three full-time lobbyists there.
“The E.U. was in its infancy then,” Keating says of the 25-nation alliance at the time it blocked the merger. “It happened we were caught up when the E.U. was starting to flex its muscles. Now it’s coming into its own.”
And as the E.U. asserts its regulatory might, several American industries are feeling the squeeze.
The cosmetics industry, represented in Washington by the Cosmetic Toiletry and Fragrance Association, is facing an E.U. directive handed down in February that calls for potentially harmful ingredients to be removed from personal-care products sold in Europe.
American food giants face E.U. limits on their ability to market products to kids. Genetically modified food, which is widely unpopular in Europe, has been a bone of contention for American agribusiness seeking to sell to E.U. nations. And American car manufacturers by 2006 must comply with an E.U. program requiring all cars sold on the continent to be built from material at least 85 percent of which is recyclable.
While environmental and health directives pouring from the E.U. are legion, one regulation with particularly wide-ranging impact could require manufacturers of everything from computers to Barbie dolls to test the products and disclose all chemicals they contain.
“It’s not that we’re beginning to get it — we’ve gotten it,” said Michael Walls, a lobbyist for the American Chemistry Council, whose members include Dow, DuPont and ExxonMobil. “We’ve been following this from the very inception. In a global industry, you can’t afford to ignore the E.U., because they’re setting the standard for regulation.”
Walls said the testing required by the E.U. rule alone could cost American chemical manufacturers more than $900 million.
He declined to discuss specifics of the industry’s strategy for lobbying the regulation, but he noted their approach is not unlike a Washington lobbying campaign.
“Just like in Washington, there are a number of consultants available, and we’re working with some,” he said. “Brussels is very much an access-oriented town, but there’s definitely a role for expertise as well. In that sense, it’s not so different from Washington.”
Despite the similarities, there are differences that complicate lobbying at the E.U. For one, E.U. directives are subject to interpretation and implementation by all 25 member states, each with an individual history and tradition and many with their own languages.
That means the pressure points are multiple, geographically diffuse and potentially protected by language barriers.
And whereas big money often carries the day in Washington, American companies often find they get less for their euro in Brussels: Elections there cost significantly less, reducing fundraising pressure on members of parliament, and much of the decision-making takes place in an entrenched, professional bureaucracy that is relatively immune from traditional American-style lobbying campaigns.
Nevertheless, many E.U. institutions are relatively new and still forming, and American consultants report that as Americans extend their reach in Brussels, they can influence how the process takes shape.
“What you’re seeing is the emergence of a traditional-style lobbying community that’s textured and structured with corporate offices, consultancies, think tanks, trade associations and other types of civil society NGOs,” said one industry source in Washington who’s monitoring developments across the Atlantic. “It’s increasingly got the look and feel of a Washington.”
There is evidence that the revolving door may now be starting to turn. APCO Worldwide, one of a clutch of Washington PR firms with a beachhead in Brussels, counts many former staffers and officials among its 45-member office at the E.U., according to the firm’s Europe chairman, Brad Staples.
“A lot of our clients are looking to build strong relationships with decision-makers across the parliament and commission,” Staples said Friday in a phone interview as he waited in London to board a flight to Brussels.
In addition to APCO, the PR firms Hill and Knowlton and Burson-Marsteller both have E.U. operations, and the firm formerly called the Dutko Group recently rechristened itself Dutko Worldwide to reflect its global reach.
Just as in Washington, corporate offices interact closely with trade groups, such as the U.S. Chamber of Commerce, which keeps two lobbyists in Brussels and six staffers in Washington to focus on European issues.
“It’s sort of like our embassy,” said Gary Litman, the chamber’s vice president of Europe and Eurasia affairs.
Cox’s European Integration Solutions, meanwhile, is not trying to displace any of these operations.
“We’re not going to do traditional, door-to-door lobbying,” said Bill Dal Col, a founding partner in the firm. Instead, he said the firm will focus on giving corporate clients strategic advice on how to navigate two very different bureaucracies that may be legislating on their interests in very different ways.
Dal Col, who ran the failed presidential campaigns of Steve Forbes in 1992 and 1996 and then-Rep. Rick Lazio’s (R-N.Y.) unsuccessful Senate bid in 2000, will anchor the firm’s Washington office. He’s joined by Ross Mandel, a Dallas-based venture capitalist who made the introduction to Cox.
Dal Col, who now consults for Potomac Communications Strategies, spent much of the past year studying the E.U., its institutions, idiosyncrasies and young history. “It’s where Washington was 25 years ago,” he said. “It’s growing. And as it evolves the ability of the private sector to grow will too.”