AGBC-Berlin: Newsletter 2013 April/May The Transatlantic Trade and Investment Partnership

gemeinnützig AGBC-Berlin e.V. a not-for-profit organisation
American German Business Club-Berlin e.V.
The President informs

Newsletter April/May 2013

The Transatlantic Trade and Investment Partnership:

Opportunity and Challenge for International Trade.

American German Business Club Berlin (AGBC-Berlin) as umbrella

for contacts to politics and administration in Germany’s capital.

On February 13, 2013 U.S. President Obama and European Union representatives announced the launch of negotiations for a Transatlantic Trade and Investment Partnership (TTIP).

Talks between some of the world’s biggest economies

Given the sheer economic weight of the trading partners, this announcement has already transformed the landscape for global trade policy. Together, the EU and the United States account for (e.g.):

  • almost 60% of total foreign direct investments (FDI),
  • almost 50% of total output (in U.S. $),
  • almost 40% of the global GDP (in terms of purchasing power parity),
  • 1/3 of global trade in goods and services,
  • 1 in 3 patent applications in the world.

The figures for 2011 show just how important the EU and the U.S. are for each other: 18% of U.S. exports went to the EU. 16% of U.S. imports came from the EU. Direct investments (flows) from the EU accounted for almost 40% of total FDI in the U.S. Companies from the EU provide jobs for 6.4 million workers in the U.S.

Among the distinctive features of transatlantic trade are the similar cost structures and levels of productivity in the EU and the U.S. As a result, the differences in relative unit labor costs are small. Instead, transatlantic trade is driven by intra-industry trade and by transactions between associated companies. It is estimated that transactions between associated companies account for more than 75% of German exports in the automotive sector and chemical industry.

Talks focusing on key areas

Given the economic weight of both parties and the nature of transatlantic trade the high level of public interest and the key areas cited in the final report of the EU-U.S. working group do not surprise. So, tariff reduction and public procurement are emphasized. There is common understanding that the best way to boost trade and investment is to reduce technical barriers. Whilst the weighted average tariffs vary between 3 to 5% the burden on trade due to technical barriers is estimated between 7% to more than 100% depending on goods and calculation methods. There is enormous potential for agreements to mutual advantage.

Such agreements could comprise:

  • the aviation industry;
  • the automotive industry;
  • the electronics industry with focus on mutual recognition of safety/security and consumer standards;
  • a common framework for data privacy (i.e. new media).

The networks for trade, investments and services for global production chains require mutual understanding of competition policy, capital movement, and property rights. Competition policy means consideration of joint projects in third countries, too.

There are strong arguments – supported by the political will – that agreements to mutual advantage in these sectors could be achievable. But dismantling cultural barriers requires education, ignorance does not equal bliss where barriers to trade and growth in economic welfare are concerned.

Let me conclude with a short report about our activities in Alabama written by Angela Drees, Vice President AGBC-Berlin.

“Germany Does It Again! (ok, France helped too…)

Airbus is about to do the same thing to the Gulf Coast region of Mobile, Alabama that Mercedes did to the region around the University of Alabama at Tuscaloosa almost twenty years ago. Mercedes, followed by Honda, Hyundai and dozens of automotive suppliers, ushered in a wave of foreign direct investment that catapulted Alabama to become the nation’s fourth-largest auto manufacturing state.

Airbus is on track to do the same for Alabama’s aerospace industry, which already employs more than 80,000, primarily in the Huntsville area.

Airbus plans to assemble A320 single-aisle jets in Mobile beginning in 2015, but the project is already having an impact far beyond the state’s borders. The factory, which will employ about 1,000 at full production of four planes per month, is Airbus’ first manufacturing site on U.S. soil, expanding the European company’s global reach and giving it a strategic foothold against rival Boeing Co.

“It represents the real transformation of Airbus into a truly global company,” said Airbus President and CEO Fabrice Brégier at Monday’s groundbreaking. Airbus ranks as the world’s single largest customer for U.S. aerospace suppliers, purchasing more than $13 billion in American aircraft parts last year. The Mobile plant should only increase that figure, spreading jobs across a national network of suppliers that stretches from California to Connecticut.

It is certainly an exciting time for German/American relations!

– Angela Drees, Vice President – American German Business Club of Berlin (Source: al.com – keywords: Airbus, Mobile, groundbreaking.)

Finally: Driven by our new members “State of Indiana – European Office”, “State of Tennessee – European Office”, and “State of Virginia – European Office” the AGBC-Berlin is willing and offers support for U.S. Federal States in political affairs to the German government / administration, political parties and associations of companies.

Please do not hesitate contacting us.

Udo von Massenbach

President

American German Business Club Berlin e.V.
Mohrenstr. 1
D-10117 Berlin
Germany

tel: +49 30 224 888 96
fax: +49 30 224 888 94

<strong title="mailto:vice
www.AGBC-Berlin.de

registered at associations‘ registry
AG Charlottenburg VR 16032

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