The Transatlantic Trade and Investment Partnership (TTIP) will help improve the way we trade with each other, which can help our economy and keep Europe prosperous, writes Carl Martin Welcker.
Carl Martin Welcker is Managing Partner of Alfred H. Schütte GmbH in Cologne and Vice President of the German Engineering Association VDMA.
As a European entrepreneur, I know how important it is for the success of my business to sell our products around the world. My company, which employs around 600 people in Cologne, Germany, builds machine tools which manufacture spark plugs and other devices. Most likely, the spark plugs that are in your car are produced using the machines we make.
We are proud to sell our machine tools to Italy, Japan, South Korea and pretty much everywhere else. But there is one country where exporting is more problematic: the United States.
In 2014, 13% of all exports from the EU to the US came from the mechanical engineering industry. However, there is still potential to significantly increase exports to the huge US market. Apart from existing tariffs, it is mainly technical barriers to trade that prevent European companies exporting to the US.
That’s where the EU’s current free trade negotiations with the US, known as the Transatlantic Trade and Investment Partnership or TTIP, can help.
Currently, the requirements and regulations for the mechanical engineering industry differ significantly between Europe and the US in many areas. These regulations, which have been developed separately over time, ensure a high level of protection. They are in place to make sure that what we both produce meets high safety and environmental standards.
But very often the differences in these requirements are actually unnecessary, sometimes even counter-productive. This makes it extremely difficult for a medium sized company like ours to trade a complex product such as a machine tool to the US.
To give a simple example: the neutral wire in European electric circuits is blue. In the US, the same wire has to be white or light grey. Consequently, we have to use different wires in machines for European clients as for our American ones.
These differences lead to a huge amount of paperwork. Unlike Europe, the US does not have a harmonised internal market for machines. Product requirements can be set at state level or even at local authority level. Smaller companies with only limited resources can find it difficult to find their way through this complex system.
TTIP is the opportunity to change all this. By identifying areas in which technical regulations can be made more compatible, like the need to test the same product twice, we can remove many of these unnecessary differences. It is also planned that the agreement provides additional information and establish services to help small and medium-sized companies when they want to start trading with the US.
Of course, an EU-US free trade agreement would not and could not remove all technical differences between our economies, but a framework for regulatory cooperation would already be beneficial. Furthermore, the EU Commission has repeatedly underlined that the agreement would not lead to a lower level of protection in Europe.
The debate on TTIP continues to be intense in Europe, especially in my home country Germany. The agreement is the biggest of its kind ever negotiated. In my opinion, where there are concerns, it is important that we discuss these issues and find ways to address them.
With that in mind, we as Europeans should make sure that we also look at the things that we want to include in TTIP, and not just those that we don’t.
Currently, the EU and the US are negotiating a specific engineering chapter in the agreement. As a recent study commissioned by the European Parliament made clear, improving the trading environment between the EU and the US could lead to significant economic gains for the mechanical engineering industry and for Europe as a whole.
Making common sense changes to help improve the way we trade with each other can help our economy and keep Europe prosperous.
That, after all, is what TTIP is all about. And it is why we mustn’t let this opportunity pass us by.