The US is already the second biggest customer for Irish SMEs, and a successful TTIP agreement will only make this relationship stronger, writes Ian Talbot.
Ian Talbot is deputy president of Eurochambres and chief executive of Chambers Ireland, the largest business network in Ireland.
Ireland has a long history of Transatlantic co-operation with the United States. Our shared history relates not only to the many millions of Irish people who left our shores over the past several centuries for the United States, but it also relates to our strong economic links.
When the failed policies of economic protectionism were abandoned in the late 1950s under our Taoiseach (prime minister) Sean Lemass, the Irish state began to pursue policies that encouraged increased trade and exporting among our indigenous businesses along with the introduction of incentives to attract foreign direct investment (FDI). Ireland also sought to join the EU, or European Economic Community as it was then, and finally did so in 1972.
The past fifty years have seen Ireland go from being the poor relation in the north-west of Europe to a prime investment hub in the North Atlantic that is currently the number one destination in the world for US Foreign Direct Investment (US FDI stock in Ireland was $240 billion in 2013). This trade relationship is mutually beneficial as overall Irish investment in the US was $26.2 billion in 2013.
It is this shared history with the United States that makes the Transatlantic Trade and Investment Partnership (TTIP) such an important opportunity for Ireland which, according to a study carried out by Copenhagen Economics on behalf of the Irish Department for Jobs, Enterprise and Innovation, will benefit by more than double the European average should an EU-US trade deal be successfully negotiated. Additionally, a survey commissioned by European Movement Ireland in May also found that on average, Irish people are broadly supportive (about 70%) of a trade deal between the EU and US, significantly higher than the European average.
Reports have shown that across Europe, SMEs will almost certainly benefit from the trade deal. Since SMEs make up nearly 99% of businesses active in Ireland and with the United States (after the United Kingdom) being the top destination for Irish exports from SMEs, there is no reason to doubt that small businesses in Ireland will see a significant benefit from such a trade deal.
However, in order for small businesses to truly feel the benefit, the trade agreement will need to prioritise the introduction of certain measures that will help encourage and facilitate SMEs to both begin to export under the trade agreement and increase their activities. A report published by the European Commission in April of this year identified a number of barriers currently faced by SMEs when trying to trade with the US, barriers which would be eased through the implementation of the Transatlantic Trade and Investment Partnership. The findings of the report confirmed what we in Chambers Ireland have been saying all along: that reducing non-tariff trade barriers will likely be more of an opportunity for SMEs than for large firms. The report also highlighted a significant knowledge gap for SMEs in the area of regulation and internationalisation.
These findings support our view that if SMEs are to benefit not just from TTIP, but from trade agreements more generally, they will need to be provided with tailored information on trade. The proposed SME Chapter in the TTIP negotiations should go some way in making it easier for small businesses to reap the benefits of the TTIP agreement. However, there will also need to be similar commitments when it comes to agreeing other aspects of the trade agreement. This relates to ensuring that Rules of Origin are simple and user-friendly for both manufacturers and exporters. Likewise, when it comes to agreeing co-operation on regulatory issues, TTIP must also take into account the impacts on SMEs.
Small businesses are at the heart of EU and US economies and are major drivers of economic growth and employment on both sides of the Atlantic. If TTIP is to deliver on the promises of increased growth and jobs, it is absolutely necessary that the interests of SMEs are at the forefront of the minds of negotiators.