Express operators have welcomed the agreement this week between the US and the EU to launchtalks on a Comprehensive Transatlantic Trade and Investment Partnership, expected to be the biggest
bilateral trade deal ever negotiated.The EU yesterday said the partnership would aim to “go beyond the classic approach of removingtariffs and opening markets on investment, services and public procurement” and would also focus on“aligning rules and technical product standards, which currently form the most important barrier totransatlantic trade”. Studies show that the additional cost burden due to such regulatorydifferences is equivalent to a tariff of more than 10%, and even 20% for some sectors, whereasclassic tariffs between the two trading blocs currently average around 4%, said the EU.
Together, the EU and the US account for almost half of world GDP (47%) and one third of globaltrade flows, with around €2 billion in goods and services traded bilaterally each day. Whenconcluded, the deal is expected to add 0.5% to the EU’s and 0.4% to US annual economic output by2027, equivalent to €86 billion of added annual income to the EU economy and €65 billion of addedannual income for the US economy.
One of the declared goals of the agreement is to get as close as possible to the removal of allduties on transatlantic trade in industrial and agricultural products, with a special treatment ofthe most sensitive products. And on the service side, transport was one of the sectors specificallymentioned as an example of a service market that both sides would be looking to open up.
Statements from the US and the EU yesterday said that by taking their economic relationship to ahigher level, the two parties had an opportunity to expand trade and investment across the Atlanticand also to contribute to the development of global rules that can strengthen the multilateraltrading system.
In response to the news, UPS said it had long been committed to breaking down barriers andencouraging the economic growth and jobs that come with increased trade. It believes the proposedtransatlantic partnership “would open up new dynamic trade opportunities for small, medium, andlarge enterprises on both sides of the Atlantic, while boosting US exports and creating new USjobs”.
UPS also praised US President Barack Obama’s commitment in his ‘State of the Union’ address onTuesday to conclude the 2013 Trans-Pacific Partnership negotiations, which the company claimedwould “be equally significant in unleashing economic growth through trade, and will send a strongmessage of confidence to the global economy and markets”.
UPS Chairman and CEO Scott Davis commented: “UPS sees strengthening and deepening the US-EUtrade relationship as a cornerstone of our own success. A stronger partnership in trade between theUS and the EU will bring tremendous benefits for US and European exporters alike. UPS is excitedabout the possibilities of what a US-EU free trade agreement means to our customers and how it willimprove the position of our economies.”
Davis said the US and the 27 European Union member states shared a common outlook and a similardetermination to maintain open markets and benefit from liberalised services trade regimes. As theworld’s largest economic relationship, it accounted for US$4.5 trillion in investment and trade in2011.
“At this critical point in the global economic recovery, it is essential that the US and the EUcontinue to lead in setting the most modern rules of trade for global markets,” UPS said.
FedEx Express chief operating officer and president of international, Michael Ducker, wasequally enthusiastic. “FedEx strongly supports the US-EU joint announcement to pursue aTransatlantic Trade and Investment Partnership. By widening the doors of free trade across theAtlantic Ocean, we can provide greater opportunities for economic growth and jobs here athome.”
Ducker said the benefits were obvious. “It’s simple – when large and small US companies, many ofwhom are our important customers, have greater access to markets, they gain critically importantopportunities to sell their goods and services to a wider marketplace. Further, a trade deal withthe EU would cut burdensome regulations and red tape that often slows and sometimes inhibits tradewith this close ally.”
He said FedEx would continue to support a robust free trade agenda “and we look forward to thecompletion of an ambitious and comprehensive trade agreement that will open up greateropportunities for trade and investment between the US and the EU”.
The European Commission said the regulatory area was where it saw “the highest potentialbenefit” for these trade negotiations. While not all regulatory divergences could be eliminated inone go, both sides envisaged a “living agreement” that allows for progressively greater regulatoryconvergence over time, against defined targets and deadlines.
“In today’s transatlantic trade relationship, the most significant trade barrier is not thetariff paid at the customs, but so-called ‘behind-the-border’ obstacles to trade, such as, forexample, different safety or environmental standards for cars,” the Commission said. “Currently,producers who want to sell their products on both sides of the Atlantic often need to pay andcomply with procedures twice to get their products approved. The goal of this trade deal is toreduce unnecessary costs and delays for companies, while maintaining high levels of health, safety,consumer and environmental protection.”
In that spirit, both sides intended “to align as far as possible or mutually accept theirstandards and procedures, by negotiating an ambitious agreement” on sanitary and phyto-sanitarystandards – for example for food products – as well as technical barriers to trade.
“In addition, they will work on regulatory compatibility in specific sectors, such as chemical,automotive, pharmaceutical, and other health sectors such as medical appliances,” said theCommission. “Business communities on both sides have provided guidance on where the mostsignificant barriers lie.”
Both parties now envisaged “starting internal procedures leading to the actual launch ofnegotiations at the earliest possible moment”, said the Commission. “On the EU side, the EuropeanCommission will present draft negotiating directives to Council, on which the latter has to decide.This is scheduled to take place towards the second half of March. The US administration plans tosend a notification to Congress triggering a 90-day layover period. Both sides aim to advance fastonce negotiations are started.”
