Automotive leads the way in TTIP debate

13 May 2014 #SMMT News

A Lords report, published today, has recognised the efforts of the automotive industry in ‘pressing its case on both sides of the Atlantic’ as part of ongoing Transatlantic Trade and Investment Partnership (TTIP) trade deal discussions. The report highlighted how other industries could learn from the way the motor industry is making its voice heard, but warned that negotiations are losing momentum and must be revived.

The TTIP represents a significant opportunity to increase trade between Europe and the US. The UK automotive industry has been singled out as the sector that could gain the most from this agreement with UK government-commissioned economic analysis suggesting that under an ambitions agreement, UK vehicle exports to the US could increase by 15%, resulting in a 7.3% rise in UK vehicle manufacturing.

The key TTIP priority for the automotive industry is to achieve agreement on safety and environmental standards, which would mean recognising the two regulatory regimes as equivalent. This could lead to a reduction in costs for manufacturers that currently have to build to two different sets of rules, as well as open the US market to more companies, particularly low volume manufacturers.

The report describes the deal, the Transatlantic Trade and Investment Partnership, or TTIP, as being both the most ambitious trade and investment pact ever attempted and an opportunity to revitalise the relationship between Europe and the US. It also represents a chance for the two sides to set a template for a new generation of 21st century trade and investment agreements.

As the EU and US combined account for nearly half of world GDP, the potential gains from such a deal could be substantial – as much as £100bn a year to the EU and £80bn to the US according some estimates. While warning that such figures must always be treated with caution, the committee believes that a deal would provide a substantial boost to employment on both sides of the Atlantic as well as benefiting consumers by widening choice and increasing competition. This would then lead to lower prices than would otherwise have been the case.  It argues that while getting rid of the remaining tariffs on transatlantic trade is important, some 80% of the potential gains will be derived from the removal of non-tariff barriers, a point of particular significance for SMEs.

The committee warns that without more political impetus from Washington and the big EU member states and without a concerted campaign to make the public in all the countries involved more aware of the potential benefits, the opportunity could be lost.

Commenting on the report, the Chairman of the Committee, Lord Tugendhat, said, “As these negotiations were launched at the 2013 G8 summit chaired by the Prime Minister, the British government has a big interest in helping to ensure that they are brought to a successful conclusion.

“Our message to the UK government is clear. Building on the all-party support for TTIP in Parliament it needs to work on two fronts: on the one hand it must commit more energy to spelling out the potential benefits to the public and to small businesses in this country. On the other, it must encourage other European governments to do the same and actively support the Commission’s efforts to ensure that Europe presents a united front.”

Recommendations from the report include:

  • The UK and the EU should not allow the opportunity to pass and with it the potential increases in employment and prosperity, the revitalisation of the transatlantic relationship and the chance to re-set the terms of world trade for the 21st century.
  • In a negotiation between equals it is not acceptable for one party to exclude a sector central to both economies as the US is doing with regulation of financial services. But the UK and the Commission need to build a more compelling case for why TTIP is the right vehicle for securing progress in this sector.
  • Disagreements around agricultural issues such as genetically modified organisms (GMO) and geographical indications will have to be resolved if an overall agreement is to be reached, owing to the political salience of those issues in some countries.
  • The government should formulate a communications strategy around the promotion of TTIP that involves ministers with sectoral responsibilities, not just trade ministers.
  • Other EU governments should do more to explain the issues at stake, to address concerns, and to mobilise support for an agreement.
  • The UK should continue to press all parties to ensure that that any deal is designed so that third parties can benefit.
  • Other industries can learn from the way the motor industry is pressing its case on both sides of the Atlantic.

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