FOUR REASONS WHY FINNISH COMPANIES SHOULD BE EXCITED ABOUT TTIP
This week, the United States and EU are conducting their 13th round of negotiations regarding the Transatlantic Trade and Investment Partnership agreement (TTIP) in New York City. The agreement aims to cut customs duties, unify regulatory approaches, protect investments and foster free competition. TTIP is a controversial agreement that has been in the making since 2013. There has been lots of pressure to get it finished by the end of president Obama’s second term. Many experts are sceptical about the deadline, and according to Helsingin Sanomat newspaper, most Finnish members of the European Parliament don’t believe that TTIP will be done in time. However, TTIP could be a real advantage especially to small and medium-size enterprise (SME) seeking opportunities in America. According to a study on TTIP by the European Commission from April 2015, SME’s already account for 28 percent of EU’s export to the States. FACC New York listed four reasons why TTIP could help Finnish and other European businesses enter the US market:
1. CUTTING CUSTOMS DUTIES WOULD SAVE COMPANIES BILLIONS OF EUROS
Customs duties make trade goods more expensive, which makes it hard for EU companies to sell their products in the States. Average customs duties between EU and US are already relatively low at just under 2 percent, but their abolition would still save companies billions of euros that could then be used to invest and expand.
2. GETTING RID OF EXCESSIVE REGULATION WOULD HELP SMALL & MEDIUM-SIZED COMPANIES
Entering the US is extremely difficult because of the legal environment and all the regulations. According to the study by the European Commission, these are issues that SME’s struggle a lot when coming to the States. These days, companies need huge budgets in order to make sure they follow all technical rules and regulations, and that limits small businesses opportunities in America.
3. UNIFIED REGULATION WOULD BOOST THE EXPORT OF GROCERIES
According to Finnish broadcaster YLE, it is likely that if the TTIP falls through, Finland would boost its export of groceries to the US since it would the be easier due to unified regulations. Experts hope that for instance Finnish health and wellbeing products would end up in America.
4. LIFTING THE JONES ACT WOULD BENEFIT EUROPEAN MARINE INDUSTRY
One of the less discussed but sensitive issues of the TTIP negotiations is the possible elimination or relaxation of the Jones Act, which is a law protecting the U.S. domestic maritime industry. The potential benefits of lifting the Jones Act within the TTIP include the possibility to sell vessels and marine equipment systems from EU to US. It could strengthen the Finnish and European maritime industry in general. However, a total elimination of the Jones Act through the TTIP seems unlikely given the economic, military, and political motives behind the US cabotage legislation. Although the benefits of TTIP are promising for small and medium-size companies, the agreement may prove too complicated, controversial and idealistic to succeed. To get the United States government to adjust its taxation, regulations or standards might be too much to ask. Nevertheless, it will be interesting to see how the negotiations in NYC proceed this week.