TTIP for SMEs
A major issue in the TTIP debate pertains to small and medium-sized enterprises (SMEs) and whether they will really benefit from the free trade agreement or rather be overshadowed even more by large companies. Official EU and US publications insist that TTIP will reduce policy and language barriers, as well as currency risks currently impeding SMEs to export across the Atlantic. Still, issues such as rule of origin regulation pose a particularly difficult barrier to easing market accessibility for SMEs.
Proponents of the agreement strongly promote this argument that TTIP will make exporting goods and services easier and faster for SMEs because of reduced tariffs and increased transparency of customs processes. However, many people are skeptical that TTIP will rid of enough barriers to actually make it easier for SMEs who do not already export across the Atlantic, to do so.
As it is right now, companies that export between the US and the EU have to be inspected by local and foreign authorities, which ends up being expensive for an SME. TTIP is meant to reduce the frequency of these inspections and thus, reduce the expense of exporting for SMEs. In order for these inspections to be consolidated into, say, one inspection, the differences, although they may be minor, between EU and US legislation and regulation will have to be sorted out. This is another point of contention for those who oppose TTIP, arguing that the harmonization of regulation will bring down standards on both sides of the Atlantic, albeit in different spheres.
Still, proponents of the agreement argue that this harmonization will reduce customs delays, particularly important for time-sensitive products. Furthermore, an important part of TTIP for SMEs is the information that is meant to be easily and readily accessible regarding market requirements that must be met to be able to export. One of the biggest impediments to SMEs exporting is simply the difficulty they might have in finding information about the process and standards for exporting. An online information and help website has been proposed to help SMEs find out what must be done in order to export.
It is clear that the proponents of TTIP provide many positive arguments to SMEs as far as reasons why TTIP will help them by easing tariffs, shipping costs and the complicated nature of the export process from one side of the Atlantic to the other. However, there is one stickler of an issue that many of the pro-TTIP publications do not mention, and that is rule of origin regulation. Although some might say that this will be worked into harmonizing EU and US legislation and regulation on exporting, it is still something that should be addressed more directly.
Rule of origin requirements, or in simpler terms "made in" requirements, pose a complicated challenge to EU companies in particular "to reveal detailed information as to their sources of production, which are very difficult to meet, especially for SMEs, without risking to reveal sensitive business information." In other words, for an EU-based SME to export to the US even under the TTIP agreement, they have to prove that the materials used in the production of their product or service are entirely from within the EU. Unfortunately, this is more difficult for SMEs to do than for larger companies, for example. Larger companies likely have the resources to find a way to fill their material demands from somewhere within the EU, while this might be much more difficult for an SME with a smaller budget and less overall resources. Therefore, this rule of origin requirement poses one of the greatest problems to market accessibility for SMEs even under TTIP and should be more directly addressed by pro-TTIP supporters on both sides of the Atlantic that try to convince SMEs of the assets of TTIP.
Thus, it is clear that others still insist that it will be too costly and complicated for many SMEs to effectively export in the transatlantic market and that larger companies will benefit more from TTIP; and those TTIP skeptics certainly may have a point.
There is strong anti-TTIP sentiment particularly in Germany, where the "KMU Gegen TTIP" (SME's against TTIP) petition has garnered over 1500 signatures from different SMEs and entrepreneurs. It may very well be true that German SMEs will not benefit as much from TTIP as larger companies will. Currently, Germany has the third-highest number of SMEs exporting to the US from the EU; however, the export value of SMEs exporting to the US as a proportion of all enterprises exporting to the US is only 15% in Germany. Compare this figure to France's 32%, Spain's 35% or the Netherlands 59% export value, coupled with the fact that these three countries actually have less SMEs exporting to the US than Germany. Therefore, we can see where, at least some of, the anti-TTIP sentiment in Germany and amongst German SMEs is coming from.
However, perhaps Germans and German SMEs should look at the big picture a little more. If other country's SMEs have the potential to really benefit from TTIP, this could ultimately be positive for Germany, who has been more or less the strongest country in the EU economically in recent years. Thus, some of the pressure could be eased from Germany, if the gains from other country's SMEs are enough to bolster and strengthen their economies.
As with many of the issues with TTIP, the debated effects on SMEs have positive and negative potential effects. Most of the negative aspects can probably be worked out through harmonization of processes and regulations, but an issue like rule of origin is a bit more difficult and complicated to work out. Even if TTIP is not agreed upon, more information that is easily accessible should be provided for SMEs about the rules and regulations vis-à-vis exporting across the Atlantic.
There are some definite opportunities that TTIP offers for SMEs and for growth in countries that are not as economically strong in the EU right now. It is important to look at the facts of the debate and to keep the dialogue open about these issues with TTIP so that the final agreement really can benefit as many people and companies as possible.
This article was written by Tess Snodgrass of the Editorial Team at the Atlantic Community. She is pursuing her MA in Political Science with the TransAtlantic Masters Program at the University of North Carolina at Chapel Hill.
This article is part of our project TTIP Review supported financially by the US Embassy in Berlin. Click on the link to read more articles and our governance rules.
- Atlantic-Community.org in Transition
- Towards a More Inclusive Transatlantic Partnership: Update on the 2nd Atlantic Expedition
- Topic of the Month: The Future of Health Care
- Do We Need Data Donations?
- eHealth - Tele-Monitoring and Tele-Medicine - Digital Innovation in the Life Science Sector in Germany