REVIEW OF 14 U.S. SECTORS AND CURRENT BARRIERS TO TRANSATLANTIC TRADE

1. Business Services (Estimate 9.5% of total US GDP): The US business services sector includes a wide variety of professional services: legal services, accounting and tax services, architectural and engineering services, management and consulting services, information technology services, research and development, advertising and public relations, and similar industries.  Current Barriers to Transatlantic Trade: US business services exporters face a variety of non-tariff measures (NTMs) that restrict access to the EU market, particularly in legal, accounting, and engineering services. It is estimated that these NTMs are equivalent to a 14.9 percent tariff on US exports.

2. Chemicals (Estimate 6.2% of total US GDP): The chemicals sector is comprised of several related industries, including basic chemicals, synthetic resins, pesticides, pharmaceuticals, paints and adhesives, and cleaning agents, as well as plastics and rubber products. Current Barriers to Transatlantic Trade: US exports face EU tariffs averaging 2.3 percent, although the EU applies tariffs of up to 6.5 percent on many top chemical exports like nucleic acids. Additionally, a number of non-tariff measures (NTMs) restrict access for US producers to the EU market. It is estimated that these NTMs are equivalent to additional tariffs on US exports of 34.6 percent for cosmetics, 23.9 percent for generic chemicals, and 15.3 percent for pharmaceuticals.

3. Communication Services (Estimate 2.4% of total US GDP): The US communication services sector includes wired, wireless, and satellite telecommunications services, as well as cable subscription services. Current Barriers to Transatlantic Trade: US communication services exporters face a variety of non-tariff measures (NTMs) that restrict access to the EU market. It is estimated that these NTMs are equivalent to an 11.7 percent tariff on US exports.

4. Electrical Machinery (Estimate 3.0% of total US GDP): The US electrical machinery sector includes computers and semiconductors, A/V and communications equipment, navigational and measuring instruments, electric motors and generators, lighting equipment, appliances, and wires and cables. Current Barriers to Transatlantic Trade: While overall US electrical machinery exports face EU tariffs averaging just 0.6 percent, tariffs for particular products of key interest to US exporters can be much higher. For example, US engine or turbine parts exported to the EU may face tariffs of up to 4.2 percent. In addition, significant non-tariff measures (NTMs) like differing import/export licensing regimes for encrypted products and varying energy efficiency requirements increase costs for US exporters to the EU market. It is estimated that these NTMs are equivalent to a 6.5 percent tariff on US exports.

5. Financial Services (Estimate 4.8% of total US GDP): The US financial services sector includes commercial and savings banks, credit card issuers and other non-depository credit intermediators, investment banks, securities brokers, and financial advisory services, such as portfolio management and investment advice. Current Barriers to Transatlantic Trade: US financial services exports face a variety of non-tariff measures (NTMs) that restrict access to the EU market. These barriers often stem from divergent regulatory requirements for banking in individual EU member-states such as local licensing requirements, approval to set up operations, and the absence of national treatment in some cases. In addition, differences in accounting standards have a major impact. It is estimated that these NTMs are equivalent to a 11.3 percent tariff on US exports, and regulatory divergence caused by the recent financial crisis has worsened, rather than improved, these problems.

6. Insurance Services (Estimate 2.9% of total US GDP): The US insurance services sector includes direct life, health, and property insurance carriers as well as reinsurance carriers, insurance agencies and brokerages, and long-term insurance and employee benefits funds, such as pensions. Current Barriers to Transatlantic Trade: US insurance services exporters face a variety of non-tariff measures (NTMs) that restrict access to the EU market. It is estimated that these NTMs are equivalent to a 10.8 percent tariff on US exports.

7. Machinery (Estimate 2.5% of total US GDP): The US machinery sector produces a wide variety of heavy equipment, including agricultural, construction and mining equipment, industrial machinery, commercial and service industry machinery, HVAC and refrigeration equipment, metalworking machinery, engines and turbines, and other general purpose machinery. Current Barriers to Transatlantic Trade: US machinery exports face EU tariffs averaging 1.3 percent. In addition, non-tariff measures (NTMs) like differences in testing and certification procedures restrict access for US producers to the EU market.

8. Metals (Estimate 11.7% of total US GDP): The US metals sector produces a wide variety of iron and steel, aluminum, and non-ferrous metals, along with their derivative products. Current Barriers to Transatlantic Trade: US metals exporters face EU tariffs averaging 1.6 percent, in addition to a variety of non-tariff measures (NTMs) that further restrict access to the EU market. It is estimated that these NTMs are equivalent to a tariff of 6 percent on US exports.

9. Miscellaneous Manufactured Goods (Estimate 8.4% of total US GDP): Miscellaneous manufactured goods include textiles and apparel, leather products, petroleum and coal products, nonmetallic mineral products, furniture, and “other durable goods” (i.e., medical equipment and jewelry). Current Barriers to Transatlantic Trade: US exports face EU tariffs averaging 2.4 percent, and some major export products can face much higher tariffs. For example, the EU applies most-favored nation tariffs of up to 4.7 percent on petroleum oils and up to 4.0 percent on certain types of jewelry. Additionally, non-tariff measures (NTMs) like regulatory divergence on safety and functional standards for medical equipment that differ across health care systems restrict access to the EU market for US producers.

10. Motor Vehicles: The US motor vehicle sector includes producers of finished motor vehicles, vehicle bodies and trailers, and automotive parts. Current Barriers to Transatlantic Trade: US motor vehicle exporters face EU tariffs averaging 8.0 percent, including tariffs of 10.0 percent on finished vehicles and 3.0 percent to 4.5 percent on most parts, in addition to a variety of non-tariff measures (NTMs) that further restrict access to the EU market. The estimated cost of the NTMs is the equivalent of a 25.5 percent tariff on US motor vehicle exports.

11. Non-Automotive Transportation Equipment: Aside from motor vehicles, the US transportation equipment sector also produces a wide variety of aerospace products and parts, railroad equipment and rolling stock, ships and boats, and other transportation equipment. Current Barriers to Transatlantic Trade: US transportation equipment exporters face EU tariffs averaging 1.3 percent, in addition to a variety of non-tariff measures (NTMs) that further restrict access to the EU market. For example, the estimated cost of the NTMs on US aerospace exports are equivalent to a tariff of 18.8 percent, driven by technical barriers to trade involving additional testing and certification.

12. Personal Services (Estimate 6.3% of total US GDP): The US personal services sector includes a wide variety of travel/tourism-related services: including spending at performing arts and sporting events, casinos, museums and parks, golf courses, ski resorts, hotels, and restaurants, as well as establishments providing services like auto repair, hair styling, and dry cleaning.

13. Processed Food (Estimate 5.4% of total US GDP): The US processed foods sector includes meat, dairy, and seafood products, milled grains, confections, preserves and specialty foods, baked goods, as well as beverages and animal feeds. Current Barriers to Transatlantic Trade: US processed foods exports face EU tariffs averaging 14.6 percent. In addition, significant non-tariff measures (NTMs) increase costs for US exporters to the EU market. The estimated total cost of the NTMs is the equivalent of a 56.8 percent tariff on US processed foods exports.

14. Transportation Services (Estimate 0.56% of total US GDP): The US transportation services sector includes all air and water transportation services, whether for passengers or freight (rail and truck transportation are included in “other services”). Current Barriers to Transatlantic Trade: US transportation services exporters face a variety of non-tariff measures (NTMs) that restrict access to the EU market. It is estimated that these NTMs are equivalent to an 8 percent tariff on US exports of maritime transportation services and 2 percent tariff on air transport services.