Goods

Overview

The BCTT seeks a broad, ambitious, and comprehensive Transatlantic Trade and Investment Partnership (TTIP) that includes market-opening measures for all aspects of U.S.-EU trade in goods, including: the elimination of tariffs and border taxes; use of trade facilitative rules of origin that reflect today’s business practices and enhance businesses’ ability to reap the benefits of tariff elimination; and the elimination of non-tariff barriers, including localization requirements.

Such improvements in market access will eliminate taxes on competitiveness, improve efficiencies, and substantially grow and facilitate the efficient movement of goods across the Atlantic.

Why Liberalizing Goods Trade Matters

Eliminating tariff and non-tariff barriers and improving rules of origin will promote substantial new growth in trade, while enhancing U.S. and EU competitiveness. Trade in goods between the United States and the EU exceeded $658 billion in 2013, representing the largest international exchange of goods in the world. While tariffs between the U.S. and the EU are relatively low –less than 4% on average and even lower for manufactured goods –the high level of trade means that tariffs add up to billions of dollars paid on both sides of the Atlantic. A recent Bloomberg study notes that U.S. firms pay approximately $6.4 billion in tariffs to the EU, money that could otherwise be dedicated to investment and job creation. Moreover, since as much as 40% of transatlantic trade in goods is intra-company, firms often pay duties on both sides of the Atlantic as they ship components and products back and forth. This double taxation significantly affects the global competitiveness of U.S. and European firms.

Eliminating tariffs alone would have an immense economic impact. According to a 2010 econometric study1 by the European Centre for International Political Economy (ECIPE), transatlantic trade would increase by $120 billion within five years of tariff elimination, and U.S. and EU GDP would expand by a combined $180 billion. Cutting tariffs will also lead to growth in the services sector, as goods producers rely on a wide range of services to lower costs of manufacturing and improve productivity; promote product quality and safety; comply with regulatory standards; and, increase sales and access into foreign markets.

The use of trade facilitative rules of origin will also reduce inefficiencies and enhance the ability of industries on both sides of the Atlantic to benefit fully from tariff elimination. Allowing accumulation of inputs from trading partners that have agreements with both the U.S. and EU will further boost the benefits to manufacturers of both parties, and encourage future multilateral trade liberalization.

By setting forth strong standards to eliminate non-tariff barriers more broadly, the U.S. and EU can help respond to the growing use of “forced localization” measures which have proliferated around the world, limiting market access opportunities.

Objectives for the TTIP Negotiations

  • Eliminate all tariffs on transatlantic trade in qualifying goods. All or virtually all tariffs should be eliminated immediately upon entry into force. In limited cases for sensitive products where tariffs remain high, use phase-out periods no longer than the longest period scheduled under other U.S. and EU trade agreements.
  • Use trade facilitative rules of origin that reflect business practices and enhance companies’ ability to reap the benefits of tariff elimination.
  • Maximize the net commercial benefit for U.S. and EU businesses, including by considering the potential accumulation of inputs with countries that have trade agreements with both the United States and EU.
  • Eliminate transatlantic import-related fees, border fees or other charges that have similar effects as tariffs.
  • Reaffirm disciplines on national treatment and most-favored nation treatment for each others’ exports.
  • Eliminate non-tariff barriers, including through the adoption of strong disciplines targeting “forced localization” measures, by ensuring that market access is not conditioned on requirements to invest in, develop, or use local R&D, intellectual property, manufacturing or assembly capabilities; transfer technology to another party involuntarily; or disclose proprietary information.

For more information about this working group, please contact:

Ken Monahan, National Association of Manufacturers (NAM)
kmonahan@nam.org

Marjorie Chorlins, U.S. Chamber of Commerce
mchorlins@uschamber.com

                                                                                                                                                                                    

[1]  European Centre for International Political Economy, “A Transatlantic Zero Agreement: Estimating the Gains from Transatlantic Free Trade in Goods, Fredrik Erixon and Matthias Bauer, Occasional Papers 4/2010, Oct. 2010.