Smaller businesses stand to gain much from TTIP

STRASBOURG, Nov 15 (Xinhua): The Socialists & Democrats group in the European Parliament (PE) is hosting a conference on the Transatlantic Trade and Investment Partnership (TTIP) next Tuesday in Brussels.
While TTIP has been perceived as being mainly in the interests of big corporations, a report published Friday says small and medium sized enterprises (SMEs) also stand to gain significantly from TTIP.
The report, by the Atlantic Council, a U.S. think-tank, argues that with limited financial and human resources, small businesses find it more difficult than big corporations to understand complex regulations when it comes to exporting.
"As two highly-regulated, highly-competitive, and highly-integrated markets, it only makes sense that the United States and the European Union (EU) endeavor to remove some of the unnecessary barriers that still exist between them," said the report's author, Garrett Workman, associate director of the Atlantic Council's Global Business and Economics program.
The Council conducted a survey and interviews with SME executives on both sides of the Atlantic. The resulting study cites three core challenges for SMEs: a lack of clarity on how to get started, problems finding the right clients, and what the report calls a "confusing mix of regulatory differences and contradictory registration requirements".
SMEs with fewer than five hundred employees form the backbone of the American and European economies. More than 99 percent of all businesses in both the United States and the EU are classified as SMEs. These small companies account for the vast majority of employment and have contributed almost two-thirds of all net new private sector job creation in the United States over the past 20 years, adding more than 14.3 million new jobs to the US economy. In Europe, SMEs are even more important, creating 85 percent of all new European jobs between 2002 and 2010.
TTIP marks the first time that an American or European trade agreement includes a specific chapter on SMEs and particular recommendations to help smaller businesses increase trade and investment between the world's two largest economies.
So far TTIP has seen seven rounds of negotiations in 16 months. It would be the largest trade deal in history.
The European Commission's (EC) own estimate of TTIP's impact suggests the EU's economy could benefit by 119 billion euros (148 billion U.S. dollars) a year, equivalent to an extra 545 euros for a family of four in the EU. According to the same study, the US economy could gain an extra 95 billion euros a year or 655 euros per American family.
Tariffs between the EU and the US are already low (4 per cent on average), but the combined size of the EU and the US economies and the trade between them means that dismantling tariffs could be a massive boost for growth and jobs.
However, TTIP has also drawn criticism over the investor-state dispute settlement (ISDS) mechanism. This would give US companies investing in Europe - and vice versa - the power to by-pass domestic courts and directly challenge governments at international tribunals if they believe that laws in areas such as public health or environmental or social protection infringe their right to do business.
Critics claim this would be an open door for multinationals to whittle away at laws passed by elected governments.
The original intention behind ISDS was to encourage foreign direct investment by protecting corporations from having their assets expropriated by hostile governments.
But over the past 20 or so years, the number of cases brought to international tribunals has rocketed - from a handful in 1994 to nearly 60 in 2012.
What particularly irks the opponents of ISDS is that proceedings take place behind closed doors and are fully confidential, even when cases being disputed involve matters of public interest.
Negotiations on ISDS have been frozen by EC president Jean-Claude Juncker and the Commission is reviewing the results of a public consultation before deciding how to proceed.
But a wider game is at stake. US trade negotiators generally do not doubt the strength of property rights in the EU. However, they see the role of ISDS within TTIP as setting a precedent for future trade deals with other countries.
Brazil continues to receive lots of foreign investment, despite its longstanding refusal to sign any treaty with an ISDS mechanism. Other countries are following its lead. South Africa has said it will withdraw from treaties with ISDS clauses and India is considering doing the same. Indonesia plans to let such treaties lapse when they come up for renewal.