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What is TTIP & Why Should US SMEs Care?

posted in EU E-commerce, International by

ttip Ask most US small or medium sized businesses if they’d like to open up their business to the European marketplace and you’ll hear a resounding “yes”. Why wouldn’t they; half a billion citizens, many speak English, good internet penetration, and a desire for US goods. However in practice, the wheels of the great global e-commerce machine can get tangled with the likes of; VAT, payments, currencies, tariffs, customs, duties, shipping, etc. EU businesses face the same issues as they look towards the US market. These issues have not gone without notice amongst the commerce/trade departments of the US & EU. Enter the Transatlantic Trade and Investment Partnership or “TTIP”.

President Obama notified Congress in March 2013 of the US intention to enter into negotiations with the EU to finalize TTIP. The second paragraph in this letter includes the economic justifications.

“Transatlantic trade and investment are the ket pillars of the world economy and of American and EU prosperity. Last year the United States exported $458 billion in goods and services to the EU, estimated to support more than 2.2 million U.S. jobs. The stock of the U.S. and EU investment in each other’s economy totaled nearly $3.7 trillion in 2011, and EU affiliates in the United States employed an estimates 3 million Americans in 2010. The EU and the United States together account for nearly half f the global output of goods and services and 30 percent of global trade.”

One of the US stated objectives for this agreement is to “eliminate  all tariffs and other duties and charges on trade in agricultural, industrial and consumer products between the United States and the EU, with substantial duty elimination on entry into force of the agreement, transition periods where necessary for sensitive products, and appropriate safeguard mechanisms to be applied if and where necessary”.

The US ships $730 million in goods to the EU every day.

Where TTIP faces the greatest challenge to acceptance:

-In the US the primary concern voiced by those opposed to free trade is American jobs will not be protected. The fear is that economic gains by an increase in exports to the EU will not compensate for a loss in US jobs overseas as tariffs on EU imports are removed making goods imported less expensive.

-The EU has a number of concerns to deal with. TTIPs is being negotiated at a time when EU participation is being questioned in many of the stronger countries. Germans, for example, have stated a desire for greater trade with the US, however, they also believe the deals should be made in Berlin rather than Brussels. Another commonly cited concern centers on the variation in standards and regulations between the US and Europe. Genetically modified organisms(GMOs) are being used in the US whereas the EU does not universally consider them as safe for consumption.  94% of Germans trust EU food safety standards while only 2% of them trust US standards. (only 67% of Americans trust our own standards!)

The following graphic is from a recent post by the Pew Research Center website. The accompanying article and further explanation can be found on their site PewResearch.org

free trade europe

(c) Pew Research Center

TTIPs has a long way to go before leveling transatlantic playing field for all SMEs. This February the eighth round of talks were held in Brussels. It is expected to be negotiated for 2-3 more years.

Learn more about the Transatlantic Trade and Investment Partnership (TTIP) from these websites and publications produced by the EU/US government offices:

Opportunities for Small & Medium Sized Enterprises (SMEs)

In the European Union and the United States, small and medium-sized enterprises (SMEs) and start-up enterprises are critical motors of growth and job creation. Ninety-nine percent of European and U.S. companies – over 20 million companies in the European Union and 28 million in the United States – are SMEs. In the European Union, SMEs provide two-thirds of all private sector jobs and have a tremendous capacity to create new employment. 85% of net new jobs between 2002 and 2010 were created by SMEs. In the United States, small businesses have provided over half of all jobs and two-thirds of all net new jobs in recent decades. On both sides of the Atlantic, SMEs are an important source of innovation, new products, and new services, and are already benefitting from transatlantic trade. Here are some examples.”

 Trade Barriers That SME Perceive as Affecting Exports to the EU

“This report catalogs trade-related barriers that U.S. small and medium-sized enterprises (SMEs) perceive as disproportionately affecting their exports to the European Union (EU) relative to large exporters to the EU. Various approaches were used to gather information directly from SMEs and other interested parties (“respondents”) for this report. “

European Commission’s Policy site TTIPs page (updated regularly)

PEW Research Center: Support in Principle for U.S.-EU Trade Pact (survey)


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12 Mar, 15

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