The Transatlantic Trade and Investment Partnership (TTIP) is not about higher or lower standards but about the EU and US setting the same standards together. Doing so could save money and time for thousands of small and medium sized mechanical engineering companies, writes Reinhold Festge.
Dr Reinhold Festge is President of the German Engineering Association VDMA. The organisation represents more than 3,100 mainly small and medium sized companies.
I do not want to be another business representative telling you how wonderful the Transatlantic Trade and Investment Partnership (TTIP), the free trade agreement with the United States, would be. But I would like to tell you a little story about my own industry, mechanical engineering.
A few weeks ago, I met with a colleague who runs a machine tool company in my home country of Germany; it’s a mid-sized company with 600 employees. His company manufactures machines that automatically form metal parts that are used, for example, in the production of car airbags.
There is also demand for these machines in the US, but my colleague cannot just sell his machine to the States the way it is. In the EU, the electric cable that closes the machine’s circuit is blue coloured, as standard, but in the US, the colour of this specific cable needs to be white.
I personally doubt that one method is safer than the other, but the fact is my colleague needs to change the cables in his machines. Otherwise, he is not allowed to ship them over the Atlantic Ocean.
From different electrical connectors, via different-sized screw threads, to distinct views about how to write an insightful instruction manual, there is an impressive list of tiny barriers which an engineering company must overcome to do business in the US.
But machinery companies usually deliver tailor-made solutions to their clients; mass production is the exception, not the rule. So they are unable to spread fixed costs over millions of units they manufacture.
Due to modifications, it costs European machinery companies 5% to 20% more to build a machine for an American customer, and it often takes them several months longer. Current regulations cause a huge disadvantage for everyone who want to sell overseas and a ridiculous waste of resources.
Since the sixth round of TTIP negotiations in July, representatives from the EU and the US have been in talks about a specific chapter in the agreeement dealing with the barriers affecting the mechanical engineering industry. With a bit of luck, we will soon be able to sell the same machines in the EU and the US with an electronic system people will be able to understand.
I would regard this as a huge success. But in the public discussion about TTIP, I have never heard anybody wondering about the colour of some cables. I think we should start doing so.
In 2012, machinery deliveries made up almost 13% of total EU exports to the US. This is more than the automotive industry. About three million Europeans work in mechanical engineering.
Are you fed up with politicians who pamper huge companies? Fine. The companies I represent in the German mechanical engineering association have 173 employees on average.
I promised not to preach to you about the greatness of TTIP. I realise that TTIP is not only about mechanical engineering. I acknowledge that there are controversies that are not easy to solve. I understand Europeans have a lot of questions about TTIP, and they have a right to get answers.
But SMEs in the mechanical engineering industry are a good example of why it is worth the effort to make TTIP work.
I would like to ask you to bear three points in mind next time you think, talk or write about TTIP. Firstly, big companies might benefit from TTIP but export-oriented SMEs may benefit even more. Secondly, many European products are amazingly smart and they do not need to be protected from competition. Thirdly, TTIP is not about higher or lower standards – it is about setting the same standards together.