How Companies and Consumers Can Benefit from TTIP
During August, we're reposting our favorite articles from 2014. For our third 'summer rerun,' this May 20th Op-Ed argues for the benefits of the Transatlantic Trade and Investment Partnership (TTIP). TTIP is a huge opportunity for German Industry, not only from an economic, but also from a strategic and geopolitical perspective. Both companies and consumers can benefit from a high-standard transatlantic trade deal.
The US market is already crucial for the German economy, as are US investors who do business in Europe. TTIP is a chance to further leverage the opportunities of the transatlantic economy; if we manage to eliminate industrial tariffs, to enhance our regulatory cooperation, to facilitate services and investments and to open procurement markets to large, medium-sized and small businesses enterprises will be able to growth their business and to create jobs on both sides of the Atlantic. Additionally, if we agree on joint standards and trade rules, we can strengthen our strategic leverage in the global economy and give a boost to the world trading system. This will, in turn, bolster our ability to jointly address geo-economics and geopolitical challenges in the future.
Yet civil society views this project with growing concern – to put it mildly. Some NGOs have made defeating TTIP their primary policy goal. Their main concerns are that consumer, environmental, social and safety standards will be compromised and that the power of corporate interests will increase at the expense of ordinary citizens and of democratic decision-making processes.
In order to facilitate a fact-based debate, it is useful to deconstruct some of the major concerns that prevail in the current TTIP debate.
TTIP is not about deregulation: All political actors involved – the EU institutions, the US government, the German government – have stated time and again that TTIP is not about lowering standards. This has also been the position of the German industry from the beginning; high quality products "made in Germany" are at the core of the German business model. We would ultimately hurt ourselves if we allowed negotiators to lower EU safety standards. If this is not convincing, take a look at the record; the EU has concluded dozens of free trade agreements with non-OECD countries that have lower standards than the United States. However, there is no empirical evidence that these agreements have watered down standards in the EU, as the economist Gabriel Felbermayr has recently pointed out. This is true for food standards, as it is for social and worker's rights or for safety regulations.
TTIP will not undermine the right to regulate or to legislate: We think that it is beneficial to all if EU and US regulators increase their cooperation in the future. That way, they can avoid creating unnecessary barriers to trade when developing new regulations. A mechanism to enhance a regulator-to-regulator dialogue, to step up early consultations and to allow stakeholders to comment on proposals could be critical to reach this goal. Yet such a mechanism will not take away the responsibility or the authority of parliaments and of regulatory bodies to make regulatory or legislative decisions, according to the best interest of their citizens. An obligation to cooperate does not imply an obligation to agree. Early consultations and increased cooperation are not a substitute for elected parliaments or other public entities.
Then how can we reap the benefits from regulatory cooperation?
If a German company produces for both the EU and the US market, it very often has to comply with two separate certification requirements, test procedures, or inspection standards, even though safety requirements in both markets are comparable. This leads some companies to produce different products with the same functions and performance for different markets, resulting in unnecessary costs. The status quo is particularly burdensome for small and medium-sized enterprises that do not have the resources to deal with duplicative and redundant procedures. For some, these costs are de facto barriers to enter the US market. If TTIP led to a mutual recognition in these areas, companies could expand their business and create jobs. they would also save money when producing their goods – money that can be passed on to consumers or be invested in R&D activities.
We are therefore convinced that TTIP will deliver growth opportunities that ordinary citizens will feel through the creation of new jobs, through a wider variety of choices for consumers as well as through potentially lower prices. By the way: This could be particularly important for EU countries with a troubled economy and high unemployment. We should not deny them and use this opportunity.
Dr. Stormy-Annika Mildner is head of the External Economic Policy Department of the Federation of German Industries. She also sits on the board of the German Institute for International and Security Affairs (SWP), a policy-oriented think-tank based in Berlin.
Fabian Wendenburg works at the External Economic Policy Department of the Federation of German Industries (BDI), where his main focus is on US and Canadian economic policy.