A trade agreement for the 21st century?

How will the planned Transatlantic Trade and Investment Partnership between EU and USA affect the global transportation market?

When on 14 June, 2013, the Member States of the EU gave the European Commission green light to start trade and investment talks with the United States, some of the Member States still held reservations on the idea. Thus France was and still is in objections to the deal worrying that damage could be caused to its movie and television industry. Likewise, certain U.S authorities are concerned for the US about losing some of their strict regulations on food imports and and on their high car safety standards. German farmers and consumers are also worried that their national market might get flooded by genetically modified seed and meat from animals fed in the US with hormones that are forbidden in the European market.

Such objections currently affect no more than 2% of a movement of goods and services between the two partners worth  2 billion EUR per day, such disputes should certainly and rightfully be given attention and carefully be considered in the upcoming talks between the negotiating partners. Consumer worries and concerns for environmental protection may not be sacrificed to trade improvements, and the existing strict rules and mechanisms within the EU on consumer protection and environmental interests should certainly not be minimized for the sake of a fast end of the negotiations.

On the other hand, what is at stake is a unprecedented enhancement of global trade.The European Union and the United States already at this point have the largest bilateral trade relationship and rely on the most integrated economic connection in the world. When this planned agreement is in force in a few years, the new partnership will mean an additional EUR 187 billion worth of goods and services being shipped and transferred each year. The bottom line  of the new trade agreement is not so much focused on a further reduction on taxes and tariffs, which with an average of only 4%  are already at a low level. The area where the current negotiations could make a real saving for businesses and inspire more trading will be the removal of unnecessary rules and regulations, the so called “Non-Tarriff-Barriers (NTBs)”. NTBs are the result of differences in regulations and technical standards between the partners. By removing such barriers and by agreeing on common rules and standards, safety and consumer protection will still be upheld, at the same time as both economies will be pushed forward to enhance their mutual trade exchange.

Not only shippers and logistics providers focused on transatlantic freight could benefit from this enlarged market. But – as the European Commission points it out – there will be a “spill-over effect” on world economy. The increased trade between the two economic giants EU and USA will raise demand for raw materials, components and further transport equipments produced by other countries. The Commission expects that due to the new partnership agreement exports and imports  to and from the rest of the world of metal products could rise by about 12%, of processed food by 9%, of chemicals by 9%, of other manufactured goods by 6%, and of other transport equipment by 6%.

The “TTIP” will be a new challenge, but also a great new opportunity for the transportation and logistics market. It will be interesting to see how this step into the future will affect us all!