TTIP and SMEs: a missed opportunity?

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Cindy Miller, President of UPS Europe

EU and US negotiators need to step up efforts on TTIP (Transatlantic Trade and Investment Partnership) to bring SMEs fully into the fold – not with good intentions and unsupported promises, but with constructive arguments, writes Cindy Miller.

Cindy Miller is the President of UPS Europe

“With the Seventh Round of the Transatlantic Trade and Investment Partnership (TTIP) wrapping up, there is still the opportunity for further focus on the historic agreement’s advantages to small and medium-sized enterprises (SMEs) as it progresses. But a recent survey by UPS of SMEs in Italy and other EU countries show the message isn’t getting through. When it does, it’s met with the pronounced skepticism that TTIP is an agreement by and for the big global players.

This disconnect risks a missed opportunity for smaller local businesses to become larger global ones. SMEs have much to gain from reduced obstacles to trade, and their support is vital to overcoming the anti-trade talk that is beginning to take hold in TTIP discussions.

While critics generally support the needs of small and medium-sized businesses, they point out that TTIP discussions to date have not connected to their real needs – making trade with the U.S. easier, faster and less expensive, by eliminating tariffs and simplifying customs processes. Instead, they have been largely limited, critics say, to providing better access to information on EU and U.S. regulations. As Green Party Member of Parliament Reinhard Butikofer put it: “Not exactly the most ground-breaking suggestions.”

We must leverage TTIP to cut down the very real — and very costly – regulatory barriers to trade. And the stakes in engaging SMEs are obvious in a few numbers.

There are 20 million of them in the European Union – including 3.8 million in Italy –and 28 million in the United States. In the EU, 99 percent of businesses are SMEs, and they account for two thirds of all private sector jobs – including 85 percent of net new jobs between 2002 and 2010. In Italy, they provide paychecks to eight in ten of the country’s employees.

With SMEs, a critical strategic focus in the EU and around the world, UPS has an up-close view of their global possibilities. For one example: Ferno-based Rizoma, which makes and markets motorbike components and accessories. It exports to more than 30 countries – with just one plant and approximately 60 employees.

That kind of exporting success – although hardly unusual– is currently in the minority. According to the European Commission, only 25 percent of SMEs currently export or have exported within the EU, and only 13 percent are active outside the EU.

Consider that a transatlantic agreement could not only make it easier for SMEs to export, but also increase overall trade with the U.S. by 28 percent – €187 billion. The lost-opportunity cost of staying on the sidelines is clear.

SMEs have incredible potential to take part in the exponential increase in trade – either directly or indirectly as part of global value chains. TTIP could remove the costs and complexities that affect all companies – both large and small. In fact, removing the daunting bureaucratic barriers from the process can impact SMEs even more than the larger companies that already have the scale and resources in place to manage them.

According to UPS’s European SME Exporting Insights – a survey that reached out to over 8,000 owners and directors of businesses with fewer than 250 employees in Germany, Italy, Poland, France, Belgium, the UK and the Netherlands – there is ample evidence that those advantages are not resonating.

One issue is simply awareness of the agreement – a low of 11 percent in the UK and the high in Germany of nearly 50 percent. Even more striking is the strong belief that a transatlantic agreement won’t really change things. In France, for example, 94 percent of the SMEs surveyed believe the benefits would go to big organizations exclusively. Italy was the most optimistic, with 24 percent saying SMEs would gain most of the benefit.

There are many more rounds and tough negotiating between now and the target date of 2016. But now is the time to step up efforts to bring SMEs fully into the fold – not with good intentions and unsupported promises, but with arguments that show real SME potential by connecting with real SME needs.”

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