As with the Trans-Pacific Partnership agreement (TPP), the long-awaited Transatlantic Trade and Investment Partnership (TTIP) between the European Union (EU) and the U.S. means new social and economic opportunities for businesses and communities on an international scale.
Small and medium-sized U.S. companies stand to be among the biggest beneficiaries of the TTIP. By removing tariffs and other barriers to trade, the TTIP will help level the playing field, allowing smaller firms – with fewer financial and human resources – to compete with larger businesses that historically have been better positioned to manage complex and costly trade requirements.
This leveling of the playing field is particularly good news in an era defined increasingly by e-commerce, home-based start-ups and small direct-to-consumer shipments.
The news is even better when you consider that the EU is a critical marketplace for U.S. small businesses. Consider that EU countries generally have similar customer demands, consistent cultural sensibilities and broad access to technology, and you begin to understand that the challenges associated with engaging in trade in the region are significantly reduced.
Want to know more about the TTIP and how your business can benefit? Let’s take a closer look.
Under negotiation between the U.S. and the EU since 2013, the TTIP has set the ambitious goal of boosting economic growth in both regions, while maintaining high levels of health, safety and environmental protection. The agreement would achieve these goals by creating more regulatory compatibility between the U.S. and the EU, removing certain tariff and non-tariff barriers, and improving transparency and compatibility in Customs processes.
The best way to promote trade is to make it easier and more affordable for businesses to buy and sell goods and services across borders. Under the TTIP, U.S. and EU businesses would see certain tariffs removed, resulting in large decreases in a product’s cost due to reduced tariffs.
For example, the U.S. exports more than $250 billion worth of industrial products to the EU. With the elimination of tariffs on industrial products, U.S. companies will be able to compete with goods from the EU’s other trade agreement partners and China. Just as important, non-tariff barriers – which make up 75 percent of all trade barriers – would be lifted. These include product standard requirements, licenses and Customs clearance burdens.
The complex requirements regarding how goods are regulated, and how they are processed through Customs, are particularly difficult for small and medium-sized businesses that have fewer in-house resources to manage paperwork.
Onerous and inconsistent customs procedures make selling goods between the U.S. and the EU inefficient, leading to lost time and money – and increasing hassles – for SME’s. Like other trade agreements, the TTIP pays particular attention to the specific barriers presented by Customs processes. While the U.S. and the EU, continues to work on modernizing its Customs procedures, principally in the area of automation, the TTIP would quickly advance improvements as they relate to goods moved between the U.S. and the EU.
The goal of the agreement in this area is to modernize Customs standards through simple and effective customs rules that are easy to understand and follow, and through customs procedures that are transparent.
In addition, the TTIP would implement common requirements between U.S. and EU customs agencies regarding information that must be submitted, along with uniform electronic processing systems, for example by making them available online. The agreement also aims to expedite the movement of low-value shipments – an issue of great importance with the rise of e-commerce.
Today, more than 13 million American and EU jobs are already supported by transatlantic trade and investment. While TTIP negotiations are still ongoing, its eventual implementation is sure to substantially increase this employment number – and that’s good news not just for U.S. and European economies, but for individual businesses like yours.
To make sure your organization is ready to begin or expand business in Europe, now is the time to plan. What are you doing to prepare for expanded international trade opportunities, and how can we help? Let us know at @DHLUS.