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TTIP – an update

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TTIP – an update

TTIP – an update

Negotiations between the EU and US on the proposed Transatlantic Trade and Investment Partnership (TTIP) are gathering pace, with four rounds of talks already held and the fifth round due to take place later this month in Arlington, Virginia.

At the end of the fourth round held in Brussels in March, the EU and US chief negotiators em­phasis­ed their commitment to ensuring that the partnership especially helps small and medium enterprises, which form the backbone of both economies and which particularly bear the brunt of regulatory barriers the TTIP is striving to eliminate.

Chief US Negotiator Dan Mullaney described small business in the US as “engines of growth, job creation and innovation” and said this was also true in Europe.

It is envisaged that the final TTIP document will include a chapter dedicated to SMEs in order to assist them to take full advantage of the benefits the partnership will offer, and this has been described as a first for Europe by the chief EU negotiator Ignacio Garcia Bercero, who said this inclusion demonstrated how seriously the issue was being taken. He said over 20 million EU firms and over 28 million US (over 99 per cent of all companies) are SMEs.

At a public consultation seminar held in Malta last week, a representative of the Finance Ministry said there were no studies on the potential impact of TTIP in individual member states. Having said this, Maltese exports to the US in 2012 amounted to an estimated four per cent of all local exports, mainly consisting of pharmaceuticals and electrical machinery. The elimination of trade and investment barriers between the two blocs presents an opportunity for Maltese SMEs to examine the potential advantages of penetrating the US market, possibly for the first time.

Maltese businesses are also in line to reap the benefits resulting from TTIP, with the most obvious one being the removal of trade tariffs. This situation is prevalent in the US in the case of food and drink exports from the EU. It is reported that US tariffs on some dairy products are as high as 139 per cent while certain canned foods are subject to a tariff of 15 per cent.

Likewise, it was also claimed that EU duty on US exports of women’s denim jeans had increased to 38 per cent.

Once such tariffs are eliminated, it is anticipated that both US and EU companies will be exploring the possibility of exporting their goods across the Atlantic.

It is envisaged that SMEs stand to benefit to a greater extent from the elimination of regulatory barriers and non-tariff barriers, which very often impact on them and act as a greater disincentive, owing to their disproportionate financial burden when compared to the financial clout of larger firms, and the value of the goods or services exported.

US SME exporters have cited the complexities in obtaining the CE mark on various products – ranging from toys to machinery – as a clear example of an effective trade barrier. Examples of such non-tariff barriers cited by their EU counterparts include the ban on the provision of certain maritime transport services by foreign service providers.

Another clear example of non-tariff barriers is the strict regulation of pharmaceuticals and chemical exports by both the US and the EU, resulting in two different sets of strict compliance rules for manufacturers. These duplicated requirements result in high testing requirements and can be prohibitive to SMEs, since the costs are fixed, irrespective of the eventual quantity of the products shipped.

It is anticipated that the elimination of such barriers to trade would also benefit service providers working in smaller businesses and would also create improved transparency and access to participate in public procurement markets.

Tanya Sciberras Camilleri is the honorary secretary of the American Chamber of Commerce in Malta.

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