CEO of GE Europe: EU - US Trade agreement could help drive global growth

The EU/US Trade talks continue in Brussels this week all involved should be clearly focused on the significant benefits which could flow from a comprehensive trade and investment agreement.

2013-11-15 17:28:08

From GE perspective - a company which employs some 84,000 people in Europe with another 150.000 employees in the US - the outcome of these negotiations could provide a welcome stimulus to growth, drive transatlantic investment and ultimately create much needed jobs (skilled and unskilled) all at no cost to the taxpayer, says Ferdinando Beccalli-Falco, Senior Vice President, President and CEO of GE Europe, CEO GE Germany.

For the European Union such an agreement would greatly strengthen its position in a rapidly evolving global market place where it is estimated that by 2015 approximately 90% of global growth will be generated outside of the borders of the EU. It would also re-establish the EU standing on the world stage.

In addition a comprehensive Transatlantic Trade and Investment Partnership (TTIP) would not only reinvigorate the transatlantic partnership, which many perceived to have been somewhat diminished over the past decade with the emergence of other rapidly trading entities. It would create the world's largest internal market of 830 million consumers liberalising a third of global trade.
Today trade and investment between the EU and US amounts to a staggering USD 500 bn annually with foreign direct investment (FDI) of USD 300bn making it the largest trading and investment block in the world. But the potential of a comprehensive TTIP could yield even greater benefits to both partners. A report commissioned last year by the EU from leading think tank the Centre of Economic Policy Research (CEPR) estimates that such an agreement could drive an increase in economic activity of USD 275bn between both partners annually – a gain of EUR 119bn annually to the EU. DG Trade of the European Commission are even more bullish about the potential for such an agreement predicting that companies could be able to sell an additional EUR 187 billion worth of goods and services a year to the US creating much needed new employment.

To put it in perspective it is expected that every year an average European household would stand to gain an extra EUR 545 and our economy would be boosted by around 0.5 percent of GDP, once the deal was fully implemented.

The TTIP would also offer large savings to companies and bodies operating in both jurisdictions. On top of cutting tariffs, a key focus in these negotiations will be to tackle those non- tariff barriers that lie behind the customs border, like the differences in technical regulations, standards and certification. This is where we could make real savings for businesses and ultimately for consumers. DG Trade state that 80 percent of the benefits of an agreement would result from reducing this regulatory burden and bureaucracy, as well as from opening up services and public procurement markets.

Here also is an opportunity for the EU and the US. The TTIP would represent one third of the total global trade and as such any common standard would become the de facto world standard allowing both entities to be the standard setters for the rest of the world.

The benefits of the TTIP would not just be limited to the EU and the US. The CEPR report states that the rest of the world would also benefit from the liberalisation of trade increasing global income outside the US-EU by almost USD 128 billion. A successful TTIP could also act as a catalyst to further bilateral agreements.

As we have already seen while negotiations proceed it is clear that there will be many potential issues that could prove to be obstacles to a successful outcome. In any such agreement there can be losers and winner but the overall benefits completely out weight any downside. We need to remain focused on the incredible prize that a successful agreement promises. Protectionism is in the long term interest of anyone. Neither is it a strategy for growth.

With negotiations are scheduled to conclude by the start of 2014 the implementation may take much longer but there appears to be a strong momentum on both sides of the Atlantic to ensure the TTIP succeed. For my part I wholeheartedly support the efforts of all those involved and look forward to a successful outcome to these negotiations.