TTIP: Leveling the Playing Field for Small and Medium Size Enterprises?
On Tuesday, November 11, 2014, the German Marshall Fund of the United States (GMF) co-hosted a panel discussion with the European Liberal Forum (ELF) and the Friedrich-Naumann-Stiftung (FNS) about the potential impact of a Transatlantic Trade and Investment Partnership (TTIP) on small and medium-sized enterprises (SMEs) in the United States and Germany. Panelists included Stormy-Annika Mildner, head of external economic policy at the Federation of German Industries; Dieter Janacek, speaker on economic affairs for Bündnis 90/Greens in the German Bundestag; Alexander Graf Lambsdorff, vice-president of the European Parliament and member of the Parliamentary Committee on International Trade; and Burkhard Stein, CEO of Grotrian-Steinweg GmbH & Co. KG. Ursula Weidenfeld, economic affairs editor at Der Tagesspiegel, moderated the discussion, and opening remarks were made by Jürgen Martens, state minister for justice and European affairs in Saxony and vice-president of ELF, and Wolf-Dieter Zumpfort, member of the board at FNS.
Transatlantic trade is increasingly the business of SMEs. Nevertheless, SMEs are disproportionately affected by the complicated rules governing international trade. The German Association for Small and Medium Sized Enterprises (BVMW), for example, opposes the inclusion of investor-state dispute settlement (ISDS) mechanisms in TTIP on the grounds that the costs would essentially preclude smaller companies from employing the ISDS mechanism. Against this background, panelists encouraged TTIP negotiators to consider the inclusion of clauses that guarantee the right of appeal and prevent abuse, which have been negotiated for the Comprehensive Economic and Trade Agreement with Canada.
Panelists emphasized that reducing non-tariff trade barriers is not equal to reducing standards. Instead, the common goal of the U.S. and the EU is the mutual recognition of equivalent standards. The reduction of costs achieved by mutual recognition of standards is important for SMEs in particular. Panelists argued that their attempts to export goods and services too often fail due to the costs related to adapting the standards required by the other side of the Atlantic. One panelist pointed out the widespread concern in Germany that TTIP will compromise the country’s environmental standards as well as worker and union rights. Another panelist warned that overloading a trade agenda with issues not directly related to trade will lead to standstill or even failure to reach an agreement.
The panel also looked at the potential implications of TTIP for multilateral trade negotiations. One panelist suggested that TTIP could potentially serve as a positive move for the Doha Round. It was proposed that other parts of the world might follow suit if the U.S. and EU were to adopt common standards, and that TTIP could lead to an elevation of global standards. In this context, U.S. Assistant Secretary of State Victoria Nuland’s comparison of TTIP to NATO was referenced: “if we do this right, TTIP can be for our economic security and prosperity what NATO has been for our military security.” While panelists agreed that Europe’s strategic partnership with the U.S. continues to be crucial, they felt that the idea of an economic NATO should be avoided as it could be misunderstood by some as a plan to create a new Western bloc. It should rather be seen as a building block within the multilateral international trading system.
Finally, the panel reflected on the impact of the U.S. mid-term elections on the Obama administration’s ability to conclude TTIP negotiations. Some felt that the Republican majority in Congress will do anything to prevent an agreement that can be viewed as a success for President Obama, while others argued that the business-friendly Republican Party and public pressure for Congressional performance will make Congress amenable to showcase results, including on TTIP.