No More Silos! (Part 5)

The New Transatlantic Trade and Investment Partnership (TTIP).

Andreas Pinkwart, former minister of science, technology, research and innovation, and now president of Handelshochschule Leipzig in Germany, said that if innovation and free trade are maintained, they will stimulate open borders. He sees negotiations on agriculture as a key impediment to progress in a transatlantic partnership but expects its success.

The TTIP, a newly inaugurated trade negotiation between the United States and the European Union may lead to further open export markets, expand the U.S. and E.U.’s investment partnership, address non-tariff barriers, and increase cooperation on issues including combatting discriminatory localization trade barriers and promoting SMEs’ global competitiveness.

The three key challenges that the partnership must address are climate problems, terrorism and economic imbalances. Also, the TTIP collaboration will serve well as a political and economic counterweight to China, even though the European Union and the U.S. combined are likely to soon have a lower GDP than China.

Speaking on behalf of the German government, Peter Fischer, head of economic affairs at the embassy of the Federal Republic of Germany, suggested strong encouragement of a TTIP. Since the E.U. and the U.S. are the largest economies in the world, their collaboration could only strengthen world trade, in particular with a convergence of regulatory approaches. Results would be achieved within 18 to 24 months, he said.

Howard Fogt, a partner at Washington, D.C.-based law firm Foley & Lardner LLP who specializes in international trade regulation, took issue with such a time frame. He believes that the implementation of an agreement would be long, slow and expensive. Politically, he sees the leadership for a TTIP as emerging from the bottom, if major movements are to be achieved. He also stated repeatedly that culture matters and economics cannot be negotiated by itself, particularly when fundamental issues such as food are to be discussed. (For example, the acceptance or rejection of hormone-injected beef demonstrates national differences.)

This article is a part of a series written by Michael Czinkota and Charles Skuba who report on the March 2013 meeting on trade policy and international marketing, a collaboration between the American Marketing Association, Georgetown University and the U.S. International Trade Administration. View part 4 hereGuest writer Charles Skuba teaches international business and marketing at Georgetown University. He served in the George W. Bush Administration in trade policy positions in the U.S. Department of Commerce.

WTO Report reveals high trade growth of least-developed countries (LDC)

On October 10, 2012, members of the Sub-Committee of Least-Developed Countries (LDC) discussed the high trade growth noted in a WTO Secretariat Report. In the report, the value of LDCs’ total exports grew by 23.9 per cent in 2011, reaching to US$229.8 billion. However, LDCs also raised concerns in the current economic situations such as volatility of prices on fuels as well as hunger and poverty issues in the meeting.

The secretariat report finds that most product categories that contributed to the 2011 trade expansion are fuels, mining products, and agricultural products. Almost all of these products have witnessed price hikes in the recent years. It is possible that price changes contribute to the overall trade growth. Nonetheless, share of world trade in LDC increased from 1.09 per cent in 2010 to 1.12 per cent in 2011.

In the meeting, many developing countries as well as LDCs suggest “more work to be done” such as better market access, aid for trade and funding.  In addition to China’s and Australian’s trade aids such as duty-free imports for LDCs, the European Union and other developed regions also urge more aid for trade for LDCs.

For more information:

For the Secretariat Report:  “Market Access for Products and Services of Export Interest to Least-Developed countries” 

The U.S. and E.U. Are Setting New Trends.

Source: USTR

Today, the United States and the European Union (EU), under the auspices of the Transatlantic Economic Council, announced an agreement on Shared Principles for International Investment, which reaffirms our commitment to open, transparent, and non-discriminatory international investment policies. International investment, both by American companies abroad and by foreign companies in the United States, benefits U.S. companies and American workers by creating high-paying jobs, boosting exports, and spurring innovation in the United States.

The principles embody a number of shared core values, including a commitment to open and non-discriminatory investment policies, a level competitive playing field, strong protections for investors and their investments, neutral and binding international dispute settlement, strong rules on transparency and public participation, responsible business conduct, and narrowly-tailored reviews of national security considerations. The joint statement recognizes that governments can fully embrace these principles without compromising their ability to regulate in the public interest.

To access the statement, click here.

The Relationship Between China and the EU. What Is Going On Between the Two?

Earlier this week the CNN Business Blog commented on the relationship between China and the EU in “Is Love in the Air for the EU and China?”.

Here is what I think about it…

It may not be love between the EU and China but necessity. The Europeans badly need money to prop up the weak member States. There is simply not sufficient supply (or willingness) to make the necessary transfers. In contrast, China has accumulated lots of surplus, some of which it may be willing to invest abroad in order to keep the overall economic machine (and therefore their own economy) alive. So if the Europeans can find a match between their needs and China’s capabilities, then this might be a marriage made in heaven (for the time being at least)!