The Transatlantic Trade and Investment Partnership (TTIP) that the United States is negotiating with the European Union (EU) might be a hot button right now, but depending on what commodity or industrial group is being discussed, TTIP can represent a conundrum. A round of negotiations has already taken place in Washington, D.C. in mid July. Further negotiations are scheduled in Brussels in mid October, with a third round expected to be held in December 2013 in Washington D.C. The U.S. International Trade Commission (ITC) will also investigate and produce a report on trade-related barriers that US small-and-medium enterprises perceive as disproportionally affecting their exports to the EU. This report should be prepared by January 2014. The goal of TTIP is to further open EU markets and increase the $458 billion in goods and private services the United States exported in 2012 to the EU. EU companies are expected to be able to sell an additional $250 billion worth of goods and services a year to the United States. Besides strengthen rules-based investment to grow the world’s largest investment relationship, the TTIP would also eliminate all tariffs on trade and tackle costly “behind the border” non-tariff barriers that impede the flow of goods, including agricultural goods. Agricultural goods are among one of the hottest buttons on the agenda. Add to this the fact there’s much to be done, given that both sides want a completed agreement next year, and relations have been clouded over the NSA Snowden leaker incident and issues surrounding Syria. Food Fight Negotiations have already been complicated. Take food products, especially those regarding produce enhanced by Genetically Modified Seeds (GMOs). Already the EU has banned use of GMOs, meaning negotiations on this topic couldn’t be farther apart. As background, in 2003 the United States challenged a number of EU laws restricting the importation of GMOs arguing they are “unjustifiable” and illegal under the sanitary and Phytosanitary or SPS agreement. In May 2006, the Global Trade Organization’s (GTO) dispute resolution panel issued a complex ruling that took issue with some aspects of the EU’s regulation of GMOs, but dismissed many of the claims made by the United States. The EU has held firm to its belief that the presence of the banned hormones in food may present a risk to consumers’ health. The issue has been in front of the World Trade Organization. In 1997 and 1998, the WTO adjudicating bodies admitted United States and Canada claims and invited the EU to bring the directives into conformity with WTO law before end of May 1999. EU did not comply and the Dispute Settlement Body (DSB) authorized the United States and Canada to take countermeasures against the EU. The countermeasures took the form of increased custom duties applied by the United States and Canada on certain EU products, including the notorious Roquefort cheese. While the ban on hormone-treated meat was still in place in 2004, the EU initiated before the DSB new proceedings seeking the lifting of the countermeasures applied by the United States and Canada. EU alleged that it had collected new scientific data evidencing that the banned hormones may cause harm to consumers. According to the EU, the new scientific data provides sufficient ground for the ban on hormones, which may no more be sanctioned by the countermeasures imposed by the United States and Canada. As of January 2007, the proceedings initiated by the EU were still pending. Poultry is another topic hot on the list since the U.S. poultry industry has warned that it will not support the proposed TTIP agreement unless it guarantees better access to the EU market for US poultry exports. European rules ban poultry treated with chemicals such as hyper-chlorinated water as an anti bacterial rinse – a standard practice of most poultry establishments in the United States and considered safe by the Food Safety Inspection Services (FSIS) of the U.S. Department of Agriculture (USDA). The EU market is a potentially lucrative one for U.S. poultry exporters, with annual poultry imports ranging from $1.6 billion to $1.9 billion. However, while the potential is huge, industry groups say they would only support the agreement if the EU ban on sanitary and technical barriers is lifted. Trade marking of certain local products is another issue. For example, the only sparkling white wine that the French think should be sold as champagne has to come from the region of Champagne. U.S. wine producers, especially those who have been in business before 2006, take exception. They want to preserve the right to label some of their sparkling wines as champagne. The issue goes further when one considers American cheese-makers that make what they say is Feta, Gorgonzola, Mozzarella, Munster, Parmesan, and Provolone cheese. Like the French, the European regions that make these specific products feel their brands should be protected and see the issue quite different than their counter parts on the other side of the pond. Air Transport Issues Another big issue under discussion is air rights. Currently, EU airlines are disallowed to hold more than 25 percent of an U.S. carrier. This has serious negative effects also on the EU express and courier services industry. Japp Mulders, Chairman of the European Express Association (EEA), and Michael C. Mullen, Executive Director of the Express Association of America (EAA) sent a letter to the deputy assistant USTR for Europe in Mary expressing their support of the TTIP. DHK, Federal Express, TNT and UPS are members of both organizations. In that letter, the two gentlemen stated that the TTIP should include coordinated policy approaches across a range of mutually supportive areas, such as: the elimination of tariffs and non-tariff barriers to trade in goods; the removal of market access barriers to trade in services; achievement of a much higher level of regulatory convergence, removal of barriers to investment, and alignment of standards and practices, whether through harmonization, mutual recognition, adoption of international standards, or other methods. “Given the sheer size of trans-Atlantic trade, even marginal convergence in the aforementioned policy areas could have substantial positive effects for business,” they wrote. Both organizations also bring up the issue that through greater mutual cooperation the EU and the U.S. could develop considerable opportunities to streamline customs processes and speed up the flow of commerce through ports and airports. Consequently, they maintain that the TTIP should include a commitment to harmonize processes for customs clearance with a goal of the immediate clearance of goods on arrival. “With the levels of advance customs data already transmitted to the EU and U.S., customs authorities can carry out risk assessments well in advance of arrival, thus offering pre-clearance and the immediate release of goods,” they write. “Immediate release of shipments should not be solely reserved to businesses which are C-TPAT or AEO members, nor to a particular kind of trader. Such treatment should be available to any shipment that meets a set list of criteria.” They contend that the TTIP should include a commitment to collecting duties and taxes after importation and clearance from C-TPAT and AEO shippers without the need for a guarantee. “Customs duties and taxes are the only taxes generally collected on a transactional basis in advance or at the time that the tax is due,” they write. They also maintain that the EU and the US should adopt a similar approach to improving the security of the international operations of air cargo carriers bringing shipments into each jurisdiction from third countries. Among other statements, they add that the TTIP should include a commitment to collecting duties and taxes after importation and clearance from C-TPAT and AEO shippers without the need for a guarantee. Maritime Issues Meanwhile, maritime issues are being discussed, particularly the U.S. cabotage market, which is totally closed to EU maritime transport. European contend, however, that the reverse does not hold for the EU and that many of the additional regulatory barriers stakeholders brought to the attention of the European Commission (EC) are on the US sub-federal (i.e. state) level. They maintain that the maritime sector the U.S. Jones Act establishes the biggest barrier. The Jones Act (formally The U.S. Merchant Marine Act 1920) is a 1920 law that protects the U.S. maritime industry from competition. But it is the opinion of some that it also raises costs for many other industries, keeps foreign ships from helping when disasters like the BP oil spill strike. “The Jones Act requires all waterborne shipping between U.S. ports to be carried out by vessels built in the U.S. and these vessels have to be owned, registered and operated by Americans,” states Marietje Schaake, member of the European Parliament. “As a consequence of the Jones Act and its subsequent revisions, the European shipbuilding industry, including ship repair and maintenance has been effectively excluded from selling vessels to be used in American coastwise trades.” Schaake states that if the Jones Act would be partially lifted for European ship types, the European shipbuilding industry (including ship maintenance and repair, marine equipment) would be able to enter a new ‘market’ and to compete with the U.S. industry on a fair level playing field. German Perspective Not all is gloomy. German organizations, like those associated with the Representative of German Industry + Trade—the Washington, DC liaison office of the Federation of German Industries (BDI) and the Association of German Chambers of Industry and Commerce (DIHK), are in favor of the TTIP. In fact, the German Ambassador Peter Ammon, Ambassador of the Federal Republic of Germany to the United States, remarked during a conference held in Washington, DC in May, that the TTIP will work now because “there is an urgent need for growth on both sides of the Atlantic.” ”The only option is liberalizing trade and investment,” Ambassador Ammon said. “Economic models show that benefits stem from easing of regulatory barriers. The TTIP also shows strategic benefits in a world that is getting more restless by the day.” Dan Mullaney, Assistant US Trade Representative (USTR) for Europe and the Middle East, however, added that regulations and standards are an issue of global common concern. “Regulations are challenging,” he said. “Food safety rules and other regulations are deeply engrained standards. Negotiations need to be creative and careful with not compromising.” At the same time, he emphasized the need to reduce costs by creating greater compatible standards. “There needs to be transparency and good regulations,” he said. “This includes the Phytosanitary regulations.” The Agreement on the Application of SPS measures is an international treaty of the WTO negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade (GATT), and entered into force with the establishment of the GTO at the beginning of 1995. Under the SPS agreement, the WTO sets constraints on member-states’ policies relating to food safety (bacterial contaminants, pesticides, inspection and labeling) as well as animal and plant health (phytosanitation) with respect to imported pests and diseases. Robert M. Kimmitt, Chairman of the American Council on Germany, contends that the TTIP offers a real strategic opportunity for Europe and the United States for the next 50 years. “It’s very much an initiative set for by Chancellor Angela Merkel and strongly endorsed by President Barack Obama,” stated Kimmitt. “It will be difficult, but it is achievable.” For one, he states, the 5.5 million Americans who work for corporations headquartered overseas in Europe produce 20 percent of Europe’s annual exports. The Honorable Bart Gordon, former Member of Congress (D-TN), and Chairman of the House Committee on Science and Technology from 2007 until 2011, particularly emphasizes that the consequences of the TTIP not passing would be devastating to the world. “It’s important that it pass with the highest possible standards of harmonizing rules so that those standards can become the international standard,” he said. “Don’t forget the stalled DOHA round,” piped in Myron Brilliant, executive vice president and head of International Affairs for the U.S. Chamber of Commerce. “We need to buttress the world trade system. The crown jewel is the TTIP.” Gordon particularly emphasized the need to fast track authority. As he explained, in the United States, the regulations are a function of Congress. “In Europe, the European Commission maintains this function.” Shipper Perspective The medical device industry is another area earmarked in the TTIP negotiations. Device trade groups are urging the TTIP to include several provisions such as single audits of medical device quality systems, a common set of harmonized standards for marketing application and compliance documentation, a unique device identification program, elimination of tariffs and improvements in trade and customs facilitation in the final agreement. Johnson + Johnson Executive Director Zeger Vercouteren, Worldwide Government Affairs and Policy in Belgium, told this AJOT reporter in an exclusive interview that he hopes that negotiators can agree on zero tariffs for medical devices. “Zero tariffs would have a huge impact on our business since we are shipping between both the United States and Europe,” Vercouteren said. Other parts of the negotiations he is also interested in have to do with device identification. “An agreement on standards would help us with our logistics,” he said. “Zero tariffs, however, would offer huge advantages.”