TRANSATLANTIC TRADE

AND INVESTMENT PARTNERSHIP (TTIP)

An Exporters Guide to the

UK

The TTIP and transatlantic opportunities for your company

An overview of the UK export environment

from the perspective of American SMEs

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INSIDE YOUR WHITEPAPER

ibt partners, the go-to provider for companies seeking an optimal online presence in Europe and the USA.
WHO SHOULD BE READING THIS WHITEPAPER?

OVERVIEW

CURRENT TRANSATLANTIC RELATIONSHIP

BENEFITS

SUPPORT AND OPPOSITION

12

OPPORTUNITIES FOR US AND EU SMEs

13

NEXT STEPS AND ABOUT IBT PARTNERS

15

Produced by the ibt partners publications team. More resources available at:
http://www.ibtpartners.com/resources
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WHO SHOULD BE READING THIS WHITEPAPER?

This ibt partners TTIP whitepaper is for business owners and leaders, corporate C-Suite, directors and managers responsible for international
Development as well as all those concerned by transatlantic trade and investment relations.
We introduce the TTIP, the current transatlantic relationship, the benefits, the opportunities, and conclude with tips and next steps to help you
and your company benefit.
The advantages the TTIP will bring are enormous and include transatlantic:
Market access
Regulatory cooperation
Multilateral rules
But it is not without risk. There will be an increase in competition as protective barriers to trade and investment are removed.
Companies should increasingly engage in assessing, questioning and identifying the tangible and attainable benefits, as well as the risks, of TTIP.
Companies that do not address TTIP will lose out. A good understanding of, and preparation for, TTIP will enable companies to leverage the
opportunities to their benefit.

Implementation, subject to both EU and US political approval, should start mid-late 2015.

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OVERVIEW
Origins of the agreement
The prospect of a trade agreement between the EU and the USA has gained momentum over the last five years.
During the EU-US summit of November 2011, a High Level Working Group on Jobs and Growth was created, which released its
report in February 2013, strongly recommending TTIP.
TTIP had a strong political support:

February 2013, US President Obama requested the beginning of formal negotiations

On the same day, EU Council President Van Rompuy and EU Commission President Barroso initiated negotiations
20th March 2013, the Obama administration formally notified Congress of its intent to launch negotiations
14th June 2013, EU member states confirmed their support, thereby allowing TTIP to enter into negotiation
In March 2014 leaked draft text containing seven chapters was made available. It states the overall objective of "a better climate for the
development of trade and investment", particularly the "liberalisation of investment and cooperation on e-commerce.
April 2014 PewResearch reports that 53% of Americans and 55% of Germans view TTIP as beneficial,
as opposed to 20% and 25% respectively who view it as a bad thing.
13th

But obstacles have been revealed more recently:

May 2014 and most extensive round of negotiations, terminated without substantial advancement, revealing increasing difficulties.
July 2014 - 6th round of negotiations, in Brussels, stakeholders invited, push to transparency.
Summer 2014 EU countries negative sentiment around US approach to data privacy is having impact on negotiations.
5th

When will the partnership come into effect?

Formal negotiations began in July 2013 and will intensify through 2014. Currently, there are teams negotiating TTIP in Washington DC and
Brussels. This is going through a series of rounds. For more information on TTIP negotiations see: http://www.euintheus.org/
It is planned that negotiations will be concluded in Q4 2014, but this is more likely to be postponed until Q2 2015 at the earliest. This will be
followed by a ratification process; US congress, European Parliament and all 28 member states will need to approve the agreement.
Implementation will take place in stages, mid-late 2015.

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OVERVIEW
Objectives
TTIPs aim is to strengthen the transatlantic relationship in a manner that is mutually beneficial. The EU and US economies are intrinsically linked.
TTIP is considered by many to signify a new era in transatlantic relations and will:
Remove tariff and non-tariff barriers across a range of sectors in order to facilitate the buying and selling of goods
Address standards, approval procedures and technical regulations
Facilitate investment in each others economy
In 2009 a European Commission study concluded that removing 50 % of current non-tariff barriers on bilateral trade could boost EU and US
GDP by more than 160 Bn.
TTIP will send a clear message to the rest of the world in terms of evolution of global rules on trade, and the transatlantic commitment to the
development of universal standards.

Overview summary
Transatlantic relations - strengthened
Tariffs - already low, will be cut
Non-tariff barriers - removed
Trade and investment - facilitated
Implementation mid-late 2015

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CURRENT TRANSATLANTIC RELATIONSHIP

GDP, trade, investment and employment

Global economy
The transatlantic relationship very much defines the shape of the global economy. According to the European Commission, either the EU or the
USA is the largest trade and investment partner for the large majority of all other countries in the global economy.

GDP
The USA and EU are the largest and wealthiest markets in the world. The transatlantic relationship is the single most important trading
relationship in the world. Transatlantic markets account for approximately 54% of global GDP
and transatlantic trade accounts for a third of global trade.

Trade
2 Bn worth of goods and services are traded bilaterally every day
Commercial sales valued at $6.65 Tn annually
Europe buys twice as many products from the USA as it does from China($368 Bn vs. $180 Bn)
US annual exports to Europe are two and a half times those to China ($268 Bn vs. $110 Bn)
27 of 50 US states had record breaking exports to the EU (2012)
One third of transatlantic trade consists of intra firm trade

Employment
The transatlantic economy is also responsible for the employment of 15 million people in mutually onshored jobs on both sides of the Atlantic.

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CURRENT TRANSATLANTIC RELATIONSHIP

Investment
The EU and USA are each others main source and destination for Foreign Direct Investment (FDI). The significance of the transatlantic
relationship is evident when comparing figures relating to other economic powers.
The Centre for Transatlantic Relations (CTR), states that between 2000 and 2010, compared to China, US investment in:
Netherlands was nine times greater
UK was seven times greater
Ireland was three times greater
Further the CTR notes that no other commercial artery in the world is as integrated and fused together as the transatlantic economy.
According to the office of the United States Trade Representative the stock of US FDI in the EU was $2.1 Tn in 2011. In the same year the stock of
EU FDI in the US was $1.6 Tn.
The sheer size and wealth of the US and EU economies and population, will ensure TTIP is big business for all businesses.
USA

EU

States/Countries

50

28

GDP (2012)

15.7 Tn

16.7 Tn

Population

317 million

507 million

Current transatlantic relationship summary

Global economy - #1 influence
54% of global GDP
Trade - 2 Bn of goods and services
Investment - Each others main source
Employment - 15 million jobs

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BENEFITS
Benefits that the partnership promises

Macro-economic
The US Chamber of Commerce states that eliminating trade barriers could add a combined $300 Bn to the transatlantic economy per year.
Global
Add a further 100 Bn outside EU and USA
The EU and US will be able to influence multilateral trading and shape global rules on trading, standards, rules and regulations
Europe
GDP annual gains of +0.5% = 120 Bn
Exports to the USA +28% = 187 Bn, rest of the world 33 Bn
Increase business production + 107 Bn
+ 400,000 jobs in the EU (+ 110,000 jobs in Germany, + 200,000 jobs in UK, France and Spain)
EU exports would increase in almost all sectors but the boost in total EU exports to the rest of the world would be particularly significant
in metal products (+12%), processed foods (+9%), chemicals (+9%), other manufactured goods (+6%), other transport equipment (+6%), and
specially in motor vehicles (41%).
USA
GDP annual gains of +0.4% = 95 Bn
Exports to the EU +24% = 159 Bn, rest of the world +60 Bn
Increase business production + 71 Bn
Manufacturing will see the greatest increase in exports to the EU (motor vehicles +$4.9 Bn, electrical machinery $1.4 Bn, other $2.2 Bn)
750,000 jobs
Greatest number of jobs in the business services sector
40 out of 50 states will see increases in jobs in the business services sector

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BENEFITS
Corporate
Companies that trade across the Atlantic will benefit from TTIP for several reasons.
Removal of tariffs
TTIP aims to remove remaining tariffs. Existing tariffs are low, on average 4%. Nevertheless, the complete removal of tariffs will reduce
the cost and save the overhead of implementation.
If we apply this across the transatlantic value and the volume of trade, it is clear that this will save businesses billions.
Removal of non-tariff barriers
The removal of non-tariff barriers will:
Save time
Save money
Make transatlantic trade easier
It will bridge the unnecessary differences that currently mean that EU-US business cannot reach its full potential. It is estimated that
non-tariff barriers increase costs by between 10 and 20%.
All transatlantic businesses are hindered by:
Paperwork
Cost of awkward bureaucracy
Assessments
Larger corporations have greater resources to manage and pay for the non-tariff barriers. They will save considerable time and money as they
better reallocate their resources.
SMEs struggle to overcome non-tariff barriers, some abandon the effort. Figures suggest that 69% of SMEs exporting to foreign markets struggle
with international trade as a direct result of restrictions and regulations. Measures such as cutting administrative costs will account for
80% of the potential wealth gains associated with TTIP.

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BENEFITS
Corporate
Regulations and standards
The regulation of standards is an example. At present, US companies whose products have already met safety standards in the USA have to go
through further testing to gain the CE mark in order to be able to enter the EU markets. In turn, EU companies have to go through a similar
process in order to enter US markets.
TTIP will introduce the mutual regulation and recognition of such standards. An example at present, a car that meets US safety standards
may not meet EU safety standards and vice versa. Under TTIP, the car will need to meet just one common set of standards.
New opportunities
No tariffs, no non-tariff barriers, recognized standards will present a flatter playing filed for businesses to compete providing new
opportunities for EU and US manufacturing as well as services industries.

Consumer
Consumer protection is at the forefront of the TTIP mandate.
Choice
TTIP will lead to more choice for consumers. Due to regulations, some EU products cannot be sold in the US and some US products cannot be
sold in the EU. TTIP will allow the introduction of new products and services to markets and give consumers a greater variety of products
from which to choose.
Prices
Consumers will also benefit from lower prices. It is estimated that removing both tariff and non-tariff barriers will reduce costs by between 10
and 25%. Some or all will be reflected in consumer prices.
Also, the agreement on standards will remove the requirements for two sets of specifications; there will be one set of rules
for both the EU and USA. This will cut prices significantly.
Businesses in the tech sector will benefit tremendously. For the consumer, this will result in access to electronics at a significantly lower cost.

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BENEFITS
Consumer
Consumer gains
Equally, the removal of tariffs will yield significant benefits for consumers, estimated at: USA 95 Bn per year, EU 86 Bn per year.
This will allow the average US family an extra $863 of annual spending power, while the average EU family will gain 545. These figures are
considered cautious estimates reflecting slow TTIP implementation.
Standards
The TTIP mandate ensures that the highest levels of standards, including health and safety and the strengthening of IP protection, will be
maintained.
Regulations
The compatible, mutual recognition of regulations set by both EU and US regulatory authorities will simply life for consumers.
Smarter cooperation will make regulation more effective: regulators can learn from each other. Regulatory cooperation can be achieved by:
Working on existing regulations
Coordination when making laws in the future
Regulatory cooperation will ensure that products remain as safe and environmentally friendly as they are now.
In terms of institutional implementation issues, an institutional framework will be adapted to facilitate the process.
Transatlantic cooperation on regulatory approaches will set standards for the rest of the world to follow.

Benefits summary
US and EU GDP annual gains of 0.4-0.5%, increase in trade flows, business production and job creation
4-20% savings by removing tariffs and non-tariff barriers, further savings by cutting admin costs
Mutual regulation and recognition of standards
Consumer protection, lower prices, more choice
Increased spending power: US family $863, EU family 545 per year

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SUPPORT AND OPPOSITION

General views and sentiment
TTIP has many stakeholders: politicians, businesses, industries, citizens each with their own view.
Public and business opinions were initially very favorable, but have deteriorated as negotiations progressed.
Most public concerns originate from the fact that a mandate for negotiation has never been made public. People, including academics call for
increased transparency, as the public is unaware of what is being discussed and agreed.
Big businesses and industries, including automobile, chemical and pharmaceutical are currently perceived as the greatest beneficiaries.
This only adds to the publics negative sentiment.
The Greens are in opposition, on both sides of the Atlantic.

The European perspective

Herman Van Rompuy, President of the European Council believes that TTIP is a game-changer in the making of the US-EU economic
relationship, and will have a huge economic impact and political significance.
However, high European standards have to be maintained, especially in the food and farming industry. TTIP is currently perceived as a
challenge to European restrictions on hormone treated beef, poultry washed in chlorine, and GM food products.
Nationalist parties had considerable success in the EU elections; for example Frances National Front, the outright winner, is demanding
immediate suspension of the negotiations.
Summer 2014 demonstrated negative sentiment of some European countries, such as Germany, France, Spain and Italy, following revelations
of spying by the U.S. National Security Agency, general data privacy issues, and importance of maintaining national standards and interests.
Furthermore, the perceived "secrecy of TTIP documentation and negotiations" has an unhappy linkage to US NASA activities.

The American perspective

Timing of American elections is crucial to further developments and progress with the TTIP, which has become a political, partisan issue.
TTIP now acts a chip in the bargaining between the Democrats and the Republicans.
Americans are more likely to support TTIP as part of a broader effort to boost competitiveness with China.

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OPPORTUNITIES FOR SMEs

How will the TTIP help your company?
According to the US International Trade Commission (USITC) US Small Medium Enterprises (SME) account for 99% of the number of US
businesses, but only 13% of the value of US exports. EU SMEs account for 31% of exports.
We note that an SME in the US is a business with less than 500 employees, while in Europe, the number is less than 250 employees.

No more restrictions!
TTIP offers a unique opportunity for SMEs
69% of these companies struggle with international trade because of foreign restrictions
Abolish restrictions
Common rules and regulations
Save time, money and facilitate transatlantic trade

New and expanded markets

SMEs will be offered new and expanded markets for their products, without the inconvenient regulations and protocols that surround
customs and licensing. The process of importing raw material will also be facilitated.

Less complicated
Doing business on both sides of the Atlantic will be less complicated and the issues that currently burden SMEs will be removed.

Exporting
Exporting SMEs that are already exporting to foreign markets will clearly benefit from TTIP. However, TTIP also presents a unique opportunity
for first-time exporters that have been put off by tariffs and non-tariff barriers such as administration and regulations.

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OPPORTUNITIES FOR SMEs

Sectors
Businesses in the tech sector have been highlighted amongst those that should benefit the most from TTIP. TTIP will remove barriers to
innovation and lower the cost of required raw materials.
SMEs tend to dominate sectors which are predicted to see the highest levels of increased trade as a result of TTIP, namely:
Automotive
Chemicals
Machinery
Pharmaceuticals
Processed foods

Explore new opportunities

TTIP brings with it the opportunity for SMEs to explore new business opportunities across the Atlantic.

Opportunities for SMEs summary

Lower direct costs
Lower indirect costs
Unified regulations
Simplified processes
Faster to market
New and expanded markets
Already exporting - expand markets
Not exporting - new market access
The time to act is now

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NEXT STEPS
Start preparing now. Look at your expanded and/or new transatlantic markets, the opportunities outlined and look online!
Our recommended next step is to obtain 15 tips to improve your international online presence from ibt partners!
Europe has moved online. Get visible in Europe with online presence. Speak to Europe with online marketing.

Your exports and business development are at the heart of our scalable proposals
to build and market your business Online in Europe

DOWNLOAD
15 TIPS TO IMPROVE YOUR
INTERNATIONAL ONLINE PRESENCE
Please see our website for more information and help on international business development: www.ibtpartners.com

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ABOUT IBT PARTNERS

We are a team of experienced and professional multinational business developers and web-marketers, based in the UK,
France, Germany, and the USA. We provide international business and trade development through the application of online
technologies and services, in Europe and the United States. Our clients are European and American SMEs with export and
international business development objectives, and Economic Development Agencies supporting those corporates.

Get in touch! Email: [email protected] You can also find us on Twitter, Facebook and LinkedIn

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US sources
American Chamber of Commerce to the EU
British American Business
Centre for Transatlantic Relations
Council on Foreign Relations
German Marshall Fund of the United States
US Mission to the EU
US Commercial Services

USEFUL LINKS
Recommended reading
European Commission, 2013. EU-US Transatlantic Trade and Investment
Partnership: Trade Cross-Cutting Disciplines and Institutional Provisions
Francois, J. Centre for Economic Policy Research, London, 2013. Reducing
Transatlantic Barriers to Trade and Investment
German Federal Ministry of Economics and Technology, 2013. Dimensions and
Effects of a Transatlantic Free Trade Agreement between the EU and US
Hamilton, D. & Quilan, J. 2013. The Transatlantic economy

US International Trade Commission

House of Commons Library, Transatlantic Trade and Investment Policy

Factsheet

US National Small Business Association

NSBA, 2013, 2013 Small Business Exporting Survery

US Small Business Administration

World Trade Organisation

Transatlantic Policy Network, 2011, Towards a Strategic Vision for the

Transatlantic Market

EU sources

We recommend to follow

Bertelsmann Foundation

ibt partners monthly TTIP blog update

British Embassy Washington

Export - US to Europe LinkedIn group

Centre for Economic Policy Research

British American Business

Chambre de Commerce et d'Industrie

EU in the US

Delegation of the EU to the US

US Chamber of Commerce

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