Trade Compliance

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Benefits of the T-TIP Trade Pact to Small & Medium Enterprises

Posted April 14, 2014

The Office of the United States Representative (USTR) recently issued a new report entitled “Trade Barriers That U.S. Small and Medium-Sized Enterprises Perceive As Affecting Exports to the European Union.” The study is the result of 28 roundtables held over the past six months in cities around the country about current trade barriers faced by small businesses exporting to the European Union (EU) as part of the USTR’s effort to gather public input concerning the ongoing Transatlantic Trade and Investment Partnership (T-TIP) negotiations.

Ambassador Michael Froman welcomed the report, stating that “Small businesses are the backbone of economic growth, job creation, and a stronger middle class in communities across America. Nearly 95,000 U.S. small businesses export to the EU, sustaining good jobs at home. Tackling trade barriers in the EU that may disproportionately affect small businesses, and expanding market access for U.S. firms of all sizes through T-TIP, will help U.S. companies, farmers, and workers unlock opportunity by finding new European customers and boost job growth.”

The EU is an important export destination for U.S. SMEs with merchandise exports to the region totalling $67 billion in 2010 and $76 billion in 2011 (latest available data). However, the report notes that “many SMEs reported that EU technical regulations and other trade barriers limit their ability to export, and they expressed concern that standards-related measures may pose a greater burden on SMEs seeking to export to the EU than on larger companies. Small businesses also cited difficulties involving patenting costs, logistics challenges, difficulties navigating customs requirements, and differing tariff classifications for products.”

Additionally, small businesses reported industry-specific barriers in chemicals, cosmetics, biofuels, emerging technology products, machinery, electronics, and apparel. For example, SMEs producing machinery, electronic, transportation, and other goods cited a lack of harmonized international standards and mutual recognition for conformity assessment, as well as problems complying with technical regulations and conformity assessment procedures. Agriculture SMEs reported a range of export barriers, including high tariffs, inconsistent EU rules and testing mandates, non-science-based regulations, and a lack of harmonization between U.S. and EU standards. U.S. services SMEs in the healthcare, engineering, testing, and audiovisual industries highlighted the lack of mutual recognition of licensing, credentials, and standards, as well as other issues.

The USTR states that in order to eliminate these concerns through the T-TIP, the administration’s negotiators are working their EU counterparts to eliminate tariffs and streamline their regulations and standards, while also focusing on environmental, consumer, and labor protection.

EU and U.S. trade officials originally set the end of 2014 for completing the talks. but in recent weeks Froman has said there isn’t a hard schedule for how the talks should proceed, especially given impending elections to the European Parliament in May and the European Commission’s term expiring later this year.