The key to rallying support for the Transatlantic Trade and Investment Partnership (TTIP) among skeptical politicians and voters in the United States and the European Union may be to highlight the growing evidence showing that small to medium-sized enterprises (SMEs) stand to gain greatly from a comprehensive TTIP agreement. While many skeptics characterize TTIP as a corporatist agenda designed to benefit large multi-national corporations, this study produced by the Office of the United States Trade Representative and European Commission, effectively counters these claims. Politicians and business leaders from both sides of the Atlantic should illuminate this study’s findings, in order to advance the TTIP jobs and growth narrative, which would further engage the public and help to expel the myths about the negotiations.
Analysts argue that while the Obama Administration and the EU’s engagement with stakeholders during negotiations has been strong, these stakeholder meetings are often attended by groups who already follow the TTIP negotiations closely. Stakeholder engagement is crucial, but a better narrative is needed that will gin up broader support among American and European populations. Focusing the TTIP narrative on SMEs makes sense because of their economic importance to the overall population. A narrative that supports the growth of the middle class economy will resonate with a large constituency in both the United States and Europe. According to the US-EU study, SMEs make up 99 percent of the companies on either side of the Atlantic. Of the 300,000 US companies that export, 98 per cent of them are SMEs. They also produce about 30 percent of goods exported from both US and EU markets. In the European Union, about 85 percent of new jobs were created by SMEs between 2002 and 2012, and account for two out of every three private sector jobs in the EU. In the United States they account for 50 percent of all jobs in the economy. A report by the International Trade Commission released in March 2014 said that SMEs were affected disproportionately by tariff and nontariff barriers (NTBs), because of the large costs associated with the barriers. These barriers to trade are often fixed regardless of a firm’s size or revenue, accentuating the advantage larger firms have when exporting goods to the EU.
A recent Pew Research Global Attitudes survey conducted in February and March 2014 seems to suggest that a lot more work needs to be done in terms informing the public about the benefits of the agreement, beyond the simple “jobs and growth” refrain. The survey indicated that 88 percent of Germans and 71 percent of Americans are in favor of increasing international trade with the rest of the world. However, only 53 percent of Americans and 55 percent of Germans say TTIP will be good for their countries. The Pew analysis argues that the tepid level of support for TTIP comes from a lack of understanding of TTIP and a lack of trust in its benefits. The Pew Research Center calls it a “double deficit”. Focusing the narrative on the fact that TTIP stands to greatly benefit SMEs may actually deliver a clear message to the populous. Given the current lack of understanding and trust pertaining to TTIP; it may give the agreement a better chance of surviving a vote in Congress and the European Parliament.
SMEs are the backbone of industries ranging from agriculture to manufacturing and services, and the current barriers they face are real and inhibiting. Many SMEs cannot withstand the high costs associated with meeting different EU standards and regulations, logistical issues, lengthy customs requirements, differing harmonized tariff classification systems, high tariff rates on specific product lines and a lack of harmonization between EU and US regulations, and regulatory processes.
The barriers that SMEs face even extend to the digital market. A recent European Court of Justice ruling now requires Internet search engines like Google to process requests by internet users to have outdated information of themselves removed from the internet. EU regulators are still drafting guidelines to help tech companies interpret whether removing the information would be against public safety. Meeting this new regulation will require additional staffing and software that small companies will have to use to process the requests. This will negatively affect small to medium-sized enterprises in the tech industry, especially start-up tech firms looking to expand into the EU market. Recently, Google CEO and co-Founder Larry Page said that if Google was still a “three person in a garage” start-up, it would have made it incredibly difficult to do business in Europe. He fears that the new ruling adds a “new layer of regulatory complexity” that internet start-ups will struggle to overcome, given their limited resources. AES Digital Solutions, a UK-based tech firm that provides Software as a Service (SaaS) solutions and on-line business management systems to clients in the United States, is an example of a small tech firm that would benefit from TTIP. According to Lesley Moody, Managing Director of AES Digital Solutions, “TTIP offers an opportunity…by providing a platform for trade growth and by simplifying and harmonizing processes and procedures.”
Stakeholder engagement on TTIP by the Obama Administration and the European Commission has been strong. However, a narrative that will resonate with a broader sector of the public in the United States and Europe is needed to ensure that TTIP has the support necessary to pass Congress and the European Parliament. The SME narrative could be just the solution that negotiators have been looking for to both combat public criticism and explain just how TTIP stands to benefit everyday citizens and their neighbors.