European and US supplier associations are jointly urging more effort be made to secure the Transatlantic Trade and Investment Partnership (TTIP) deal by the end of next year, citing vast savings in regulatory costs as a result.
TTIP has provoked huge controversy in the Old World, with some trade unions in particular voicing concern it may lead to a dominance of multi-national business, but the European Association of Automotive Suppliers (CLEPA) and the American Motor & Equipment Manufacturers Association (MEMA), point to massive increases in parts and vehicles exports on both sides, as well as significant efficiencies.
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In a letter to US trade representative, Michael Froman and European Commissioner for Trade, Cecilia Malmström, the two supplier bodies stress the opportunities for their 734,000 and 5m-strong respective workforces.
“On behalf of these motor vehicle suppliers in the US and Europe, we urge a renewed effort on TTIP negotiations this year, allowing for an agreement to be finalised before the end of 2016,” say MEMA president & CEO, Steve Handschuh and CLEPA CEO, Paul Schockmel.
“As you are aware, these two economies account for nearly half of the world’s GDP and represent 35% of global automotive sales. A recent EU impact assessment report found EU vehicle and parts exports to the US would increase by 149% and US vehicle and parts exports to the EU would increase by 347%, ten years after the implementation of a US-EU agreement to eliminate tariffs and reduce 25% of existing non-tariff barriers.
“There is no doubt a successful TTIP would bring about economic gains, enhanced job creation, innovation and investor confidence.”
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By GlobalDataCLEPA and MEMA insist both Continents face regulatory costs of around US$12.8bn, while automotive regulatory burdens add around 27% to US and EU trade.
The bodies say estimates put a reduction of 25% or US$3.2bn of automotive regulatory costs would nearly double the savings that would result from 100% elimination of bilateral automotive tariffs through TTIP.
Any such deal could also eliminate tariffs reciprocally and secure 100% liberalisation with what the associations claim are relatively short phaseout periods.
EU tariff rates applied to automotive component parts are as high as 8% say CLEPA and MEMA, while US tariffs are 2%-3%. In 2011, US$1.7bn in tariffs was paid on bilateral automotive exports.
Furthermore, the associations maintain the simplification of customs procedures, cooperation on public procurement, dual use items and export controls would provide a significant push for transatlantic trade, while any deal might equally address gaps between respective positions on intellectual property protection and rules of origin.
“A robust TTIP would send a message to the US’ and EU’s other trading partners globally, that important economic benefits can truly be derived from trade liberalisation, when partners are free from both tariff duties and technical barriers,” noted both CEOs.
“Our industry looks forward to working with all parties as we address these critical concerns.”
