EU and U.S. have just concluded the first round of TTIP (Transatlantic Trade and Investment Partnership) negotiations last July 12th in Whashington D.C. The working groups met in a plenary opening session, emphasizing the importance of the partnership agreement to boost the reciprocal economic growth and set up the negotiating issues and directions for the next round in October in Bruxelles. Working throughout a week the teams covered several key issues the TTIP is set to include: market access for agricultural and industrial goods, government procurement, investment, energy and raw materials, regulatory issues, sanitary and phytosanitary measures, services, intellectual property rights, sustainable development, small- and medium-sized enterprises, dispute settlement, competition, customs/trade facilitation, and state-owned enterprises.
In my opinion it’s quite interesting that both the negotiators have met major industrial and financial stakeholders in their countries during the months preceding the negotiations kick-off. The European Commission set up a useful transparency web-portal in which it published access free documentation provided by the most important industry associations and lobby groups during the negotiating platform set up discussions. There are not only the well-known issues and disputes regarding the automotive industry, but also some excellence market nieches emerging in the documentation published. For example FederOrafi, an Italian jewellery manufacturers association, emphasizes the lack of trade reciprocity in the relations with the US market (the most important global market in this industry).
Jewellery manufacturers usually import raw materials from the US, then process it and realize the finished product re-exporting it in the US market. The lack of outward processing trade on the US side, involves the charge of higher custom duties calculated not only on the added value of the finished product, but also on the raw material (which is about 90% of the overall value, considering the specific sector). It’s not the same in EU market, and it would be quite simple to harmonise the customs regulations and fairly level the competitive starting conditions among different manufacturers in the US market.
But interesting opportunities aren’t missing in any industry: a relevant issue, in my opinion, is certainly the document on Non Tariff Barriers. The HLWG team (United States-European Union High Level Working Group on Jobs and Growth) suggested to set up a horizontal TBT chapter covering a wide industrial range and implementing a profitable bilateral mechanism on harmonising the non tariff barriers:
An ambitious “TBT-plus” chapter, building on horizontal disciplines in the WTO agreement on Technical Barriers to Trade (TBT),including establishing an ongoing mechanism for improved dialogue and cooperation for addressing bilateral TBT issues. The objectives of the chapter would be to yield greater openness, transparency, and convergence in regulatory approaches and requirements and related standards development processes, as well as, inter alia, to reduce redundant and burdensome testing and certification requirements, promote confidence in our respective conformity assessment bodies, and enhance cooperation on conformity assessment and standardization issues globally
Small and medium enterprise are also mentioned in the documentation, considering their specific needs and the higher impact of NTBs on their market approach. It’d be a great measure to jointly define a rulebook comprehensive of the several regulations, certifications and assessments requested both by the federal authorities (in USA and EU) and the local single federal states.
Interesting consequences would impact on current business if the negotiators will pursue a better technical regulations harmonisation: a good example is the EV (electric vehicle) industry. USA and UE are strongly co-operating in the UNCE (United Nations Committee of Experts) defining global technical requirements regarding health, safety and environment issues. Such an approach is perhaps difficult to achieve in the general case, but there may be sectors (particularly related to the innovative technologies) where it might be found profitable.
The big match just started, and prickly issues are many, as I’ve written in my last post on TTIP. But the economic (geopolitical?) incentives are about to generate relevant effects.