TTIP: mechanical engineering firms do not feel threatened by agreement

Mechanical engineering firms in Germany believe that a well-negotiated TTIP free trade agreement with the USA would represent a major opportunity for more exports to the United States – and certainly do not consider it a threat to their survival.

Mechanical engineering firms in Germany believe that a well-negotiated TTIP free trade agreement with the USA would represent a major opportunity for more exports to the United States – and certainly do not consider it a threat to their survival. “Analyses claiming that SMEs in particular would suffer only disadvantages and be crushed by large corporations as a result of the TTIP paint a totally distorted picture,” says Ulrich Ackermann, head of the foreign trade department at the VDMA.

Such analyses completely fail to recognise the potential that would arise from a free trade agreement with the USA, particularly for medium-sized companies:

  • Eliminating customs duties would bring cost savings totalling hundreds of millions in the German mechanical engineering industry alone.
  • In addition, standardisation of licensing requirements and norms would mean that a high amount of personnel and material costs would no longer be required. For example, the ventilation systems specialist ebm papst puts the costs of certification in the USA at over EUR 40,000 for every EUR 10 million in revenue – a considerably higher sum than in any other major sales market.
  • Firmly establishing investor protection would bring legal security, particularly for small and medium-sized companies, as there are no laws in the USA that prohibit discrimination against foreign investors.
  • “In my view, a free economy and free trade are inextricably linked,” affirms VDMA President and family business manager Dr Reinhold Festge. Mechanical engineering companies in Germany also do not fear that – as is often claimed – norms and standards would automatically be lowered under the TTIP and the European regulations would be undermined. “The TTIP provides an opportunity to do away with unnecessary trade barriers on a long-term basis,” explains Ackermann. “As such, it would be a serious mistake to remove the planned mechanical engineering section from the negotiations.” The VDMA had intervened in this regard with European Commissioner for Trade Cecilia Malmström and German Federal Minister for Economic Affairs Sigmar Gabriel prior to the last round of TTIP negotiations.

VDMA reiterates its requests of the USA

At a meeting in Munich on 1 March, the VDMA discussed the key aspects for the capital goods industry with the US chief negotiator for mechanical engineering and the automotive industry, Bryant Trick (Office of the United States Trade Representative, USTR). “The elimination of double inspections is an important component of the TTIP for the mechanical engineering industry. A stronger focus on international ISO and IEC standards in the US regulations is also essential, particularly with regard to occupational health and safety, in line with the principle of 'one standard, one test, accepted everywhere',” emphasised Naemi Denz, a member of the Executive Directorate of VDMA.

The US chief negotiator Trick emphasised his country's efforts to formulate a proposal for the mutual recognition of testing organisations and test results. However, he also explicitly stated that the US side was not willing to recognise a self-declared label – such as the CE label – as part of the TTIP. The VDMA clearly opposes this position. His statements regarding the necessity of a separate mechanical engineering section from the USA's perspective remained unclear.

The European Commission also wants to reduce unnecessary costs

The twelfth round of TTIP negotiations was held last week (22-26 February 2016) in Brussels. The topics discussed included investor protection, regulatory cooperation and opening up the US procurement markets. The EU and US negotiation groups are also meeting up between the official rounds. For example, discussions on rules of origin and public procurement are to be held over the next few weeks.

Both sides have exchanged their offers for the planned regulatory cooperation. This is intended to facilitate existing and future cooperation on regulatory issues. The EU text proposal on regulatory cooperation clearly states that the European Commission wants to reduce unnecessary costs. The proposal also reflects the promise by European Commissioner for Trade Malmström that existing high standards for the protection of human health and safety and of the environment will be maintained or raised.

Last week the European Commission's proposal for modern investor protection was also discussed.
EU chief negotiator Ignacio Bercero expects that the EU will have put forward all of its proposals for the areas of regulatory cooperation and trading regulations by the summer. Bercero indicated that the negotiations could be concluded before the end of this year, provided the content of the agreement is suitable. Two more rounds of negotiations are planned before the summer.



Jessica Göres
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Image provided: Arburg