How companies--large and small--can benefit from the Transatlantic Trade and Investment Partnership.
Increased trade between the United States and Europe is critical for the continued growth of our two economies. And, while most people think that international trade agreements only benefit large, multinational companies, that’s not the case.
In fact, the potential impact on trade for thousands of small- and medium-sized businesses across the U.S is one of the major reasons we support the Transatlantic Trade and Investment Partnership (TTIP), a proposed new trade agreement between the United States and the European Union.
A new round of negotiations to reach a new agreement will begin later this month in Washington. In short, the negotiations aim to lower tariffs and streamline the maze of customs processes and regulations in a variety of countries that will further trade in a wide range of economic sectors.
When those discussions resume, small- and medium-sized businesses (SMEs) should be paying close attention because their potential benefits are substantial, including:
- Removal of Tariffs: Taking this action in sectors where tariffs are still relatively high could allow SMEs to sell their products across the Atlantic Ocean for the first time.
- Easing of Regulations: Compliance with “behind-the-border” barriers can be resource intensive and disproportionately affect SMEs.
- E-Commerce: Provisions that promote the duty-free treatment of digital products, and consumer access to services and applications of their choice on the internet, should help SME retailers and service providers thrive in the online marketplace.
- Services: Smaller service providers would benefit from the improved legal certainties and new market access.
- Intellectual Property Rights: TTIP will reaffirm a shared commitment to strong protection and enforcement of these rights. This issue is particularly important to SMEs since intellectual property rights are often highly vulnerable to infringement.
- Government Procurement: Improved transparency to government procurement markets will provide benefits to SMEs.
- Customs/Trade Facilitation: Lower costs, more transparency and less red tape at borders will make it easier for SMEs to participate in transatlantic trade.
- Gains through Value Chains: SMEs that don’t export now outside of their home markets can benefit by selling intermediate goods and services to companies that already trade across the Atlantic.
“ TTIP has the potential to become the largest bilateral free trade agreement in the world’s history. ”
This significant amount of trade has led to strong job creation on both sides of the Atlantic.
For example, there are approximately 4.2 million U.S. foreign affiliate jobs in the European Union today. Workers in countries that make up the European Union have experienced nearly the same gains, with roughly 3.8 million jobs in the United States held by EU citizens.
Approval of TTIP will stimulate greater economic and job growth through improved access to both markets and greater regulatory cooperation.
It will also develop principles that will strengthen international rules on issues such as state-owned enterprises, intellectual property rights, export restrictions on raw materials, localization requirements and competition policy.
Finally, it will strengthen the geopolitical relationship between the United States and the EU.
TTIP has the potential to become the largest bilateral free trade agreement in the world’s history. It’s estimated that a new agreement will boost the economies of the European Union and the United States by $157 billion and $125 billion per year, respectively. This is the equivalent of an extra $719 in disposable income each year per European household, and $865 for every U.S. household.
A new agreement will increase the global competitiveness of firms in the EU and the United States. And it will also lower prices on many products and services, increase wages in some sectors and create more jobs.
Considering the Obstacles
“ Approval of TTIP will stimulate greater economic and job growth through improved access to both markets and greater regulatory cooperation. ”
Despite all of these potential benefits, there are a number of obstacles to a new agreement.
The European Union and the U.S. are among the most heavily regulated societies in the world. Health, safety and environmental standards, as well as consumer protection regulations, are strong on both sides of the Atlantic.
Both sides are committed to maintaining these standards and protecting its citizens, but regulatory differences create costs that can be avoided.
The road toward a new agreement will be filled with many twists and turns. Every country has political constituencies that it must address.
We also know that trade draws mixed feelings, not only in Washington, but in many places outside of the Beltway.
At UPS, we move more than one million packages every day across international borders, giving us a unique view into global trade’s opportunities.
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Reprinted with permission of Longitudes, the UPS blog devoted to the trends shaping the global economy.