Sunday 24th Sep 2017 - Logistics & Supply Chain

Pressure is on EU-US trade negotiators

Negotiators from the European Union and United States government are meeting in New York this week to hammer out  the terms of a new free trade agreement – it’s the ninth round of negotiations on the Transatlantic Trade and Investment Partnership.

Malory Davies FCILT, Editor.

Malory Davies FCILT, Editor.

The idea of a free trade area for the EU and US has been talked about for about 25 years. But it is only in the past couple of years that serous negotiations have been taking place on what we now know as the TTIP.

The plan has received strong support from two of America’s biggest carriers. Back in 2013, Scott Davis, chairman and chief executive of UPS, argued that: “The successful negotiation of the Transatlantic Trade and Investment Partnership would open up new dynamic trade opportunities for small, medium, and large enterprises on both sides of the Atlantic, while boosting exports and creating new jobs.”

And a report commissioned by FedEx last year, concluded that small and medium enterprises would be particular beneficiaries of any deal.

However, there are plenty of critics. A petition against it has now got more than 1.7 million signatures, and “Guardian” columnist George Monbiot has described it as “a reckless destruction of democratic principles”.

Not only that, Professor Richard Baldwin argued at the World Economic Forum that mega-regional trade deals like the TTIP could undermine world trade governance – and the World Trade Organisation in particular.

Nevertheless, the European Commission has now produced a report suggesting that a deal will bring big benefits to SMEs. It found that 150,000 SMEs exported to the United States in 2012, accounting for 28 per cent of all EU exports there. SMEs in sectors linked to food, beverages & agriculture; clothing, textiles & leather; as well as chemicals had an above-average share of EU exports.

And it argues that problems facing European SMEs will be solved by the TTIP – these include complying with technical regulations, being legally excluded from parts of the market, and differences in regulation between US states.

But everyone can benefit if the TTIP results in a lowering of policy-induced supply chain costs. Indeed, the WEF’s Logistics & Supply Chain Council has argued that it will be a failure if it does not achieve this.

The clock is ticking on the TTIP – the original aim was to complete it last year, but negotiations have dragged on. And once a final text has been agreed, it will have to be approved by the European Parliament and all 28 of the EU’s national governments. It could be a long wait.

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