T-TIP AND U.S. RATIONALE

1. Trade in Goods: The United States ships more than $730 million in goods to the EU every day. In today’s highly competitive global marketplace, even small increases in a product’s cost due to tariffs can mean the difference between winning and losing a contract. The U.S. manufacturing base is growing, and the U.S. makes some of the world’s most advanced industrial goods. The U.S.  exported more than $253 billion worth of industrial products to the EU in 2012. With elimination of EU tariffs on industrial products, including innovative and high technology products such as industrial and electrical machinery, precision and scientific instruments, and chemicals and plastics, U.S. products will be put on equal footing with goods from the EU’s other free trade agreement partners – including Chile, Mexico, South Korea, and South Africa – which receive duty-free treatment when shipped to the EU, as well as with exports from one EU Member State to another.

The United States is the world’s largest agricultural export economy. U.S. farmers and ranchers increasingly rely on agricultural exports for their livelihoods, 20 percent of farm income comes from exports, and those exports support U.S. rural communities. In fact, U.S. food and agricultural exports to the world reached an all-time high in 2013 of over $145 billion. In that year, the U.S. sent just over $10 billion of agricultural exports to the EU, a figure that can and should be much higher. The U.S. goal in T-TIP is to help U.S. agricultural sales reach their full potential by eliminating tariffs and quotas that stand in the way of exports.

Eliminating tariffs would provide a level playing field for U.S. agricultural producers, including for apple growers who pay more than seven percent in duties when shipping to the EU, but whose EU competitors pay no duties on their shipments of apples to the United States. U.S. olive oil producers would also benefit from tariff elimination, since U.S. olive oil is subject to $1,680 in duties per ton on shipments to the EU, but their EU competitors pay only $34 per ton on shipments to the United States. Eliminating tariffs and quotas will help U.S. farmers, ranchers, manufacturers, workers, and their families, while giving Europeans access to safe, high-quality American food and agricultural goods.

2. Textiles and Apparel: U.S. textile and apparel manufacturers sold nearly $2.4 billion worth of products to the EU last year. Eliminating the remaining duties on U.S. exports will create new opportunities for integration into European supply chains and to sell high-quality “made-in-USA” garments to European consumers. Enhanced U.S.-EU customs cooperation will also help ensure that non-qualifying textiles and apparel from third countries are not being imported into the United States under T-TIP.

3. Non-Tariff Barriers and Regulatory Issues: Non-tariff barriers (NTBs) can decrease market opportunities for U.S. exports and provide unfair competitive advantages to EU products. These barriers take the form of restrictive licensing, permitting, and other requirements applied at the border, but also barriers behind the border, such as unwarranted technical barriers to trade and sanitary and phyto-sanitary measures. Through T-TIP, the U.S. seeks to identify ways to reduce costs associated with regulatory differences by promoting greater compatibility between both systems, while maintaining high levels of health, safety, and environmental protection. Achieving an outcome that results in greater transparency, participation, and accountability in regulatory processes is also critical to addressing and preventing NTBs.

With respect to TBT, the United States and the EU already have a shared commitment and responsibility to prevent and reduce unnecessary TBTs through the World Trade Organization’s Agreement on Technical Barriers to Trade. Achieving TBT objectives in T-TIP would mean going beyond existing commitments by setting both sides on a path to increase transparency and openness in the development of standards and technical regulations, ensure that U.S. bodies are permitted to test and certify products sold in Europe, promote EU recognition of international standards used to support global trade by U.S. exporters and producers, and establish an ongoing mechanism to discuss TBT concerns. Not only would U.S. companies be more competitive, innovative, and efficient as a result, but T-TIP could set a positive example to other countries around the world.

With respect to SPS, ensuring that the rules governing agricultural and food products are based on science and do not pose unwarranted obstacles to trade is as important to American farmers and ranchers as eliminating tariffs and quotas. If successfully addressed certain SPS barriers in T-TIP, Europeans will be able to enjoy safe, high-quality U.S. beef, pork, poultry, and other products that the U.S. currently ships to consumers all over the world. In addition to eliminating barriers and opening markets for U.S. farmers and ranchers, the U.S. seeks to have the EU provide greater regulatory transparency and to engage in regular dialogues to help prevent barriers from being erected in the first place.

With respect to “regulatory coherence and transparency,” T-TIP offers an opportunity to develop cross-cutting disciplines on regulatory practices that have long been known to support economic growth, market integration, and removal of “behind the border” trade barriers. This includes the promotion of greater transparency, participation and accountability in the development of regulations. It also includes evidence-based analysis and decision-making, and a whole-of-government approach to regulatory management. Giving stakeholders – public and private, foreign and domestic – adequate opportunity to comment on proposed regulations and ensuring that regulatory processes not only respect the democratic principles on which U.S. laws are built, but provide regulators with input from a wide range of stakeholders. Transparent regulatory processes ensure better quality regulations that can achieve important objectives, such as protecting health, safety and the environment. On the other hand, a lack of transparency and accountability in regulatory and standards processes can lead to unnecessary, costly, or duplicative rules that reduce competitiveness and act as discriminatory barriers to U.S. exporters. Embracing sound regulatory objectives in T-TIP will not only draw both economies closer together, but will serve as a positive example for third-country markets around the world.

Finally, the United States and EU will be examining ways to increase regulatory compatibility in specific sectors through a range of regulatory cooperation tools as well as other steps aimed at reducing or eliminating unnecessary regulatory differences. With extensive input from stakeholders, and in collaboration with regulators, both sides aim to promote greater regulatory compatibility while maintaining high levels of health, safety, and environmental protection.

4. Rules of Origin: The U.S. believes that only qualifying U.S. and EU goods should benefit from the T-TIP agreement, not goods produced in third countries. Larger companies with complex supply chains and smaller businesses that can’t afford consultants gain when they can determine whether their exports or imports will be subject to reduced or zero duties when crossing borders. Through T-TIP, the U.S. will seek to put objective and transparent rules online that explain: (i) to U.S. exporters and producers whether their goods qualify for preferential treatment when shipped to the EU; and (ii) to U.S. importers whether their goods qualify for preferential treatment when shipped from the EU. Rules of origin would also establish clear, transparent procedures for claiming origin and record-keeping and other requirements for those who prepare origin certifications.

5. Trade in Services: The United States is the largest services exporter in the world, and services industries account for four out of five U.S. jobs. Whether ensuring that U.S. express delivery firms are able to compete for EU shipping business or permitting telecommunication service providers to connect U.S. companies with EU consumers online, lowering barriers in the services sector will have a beneficial impact on the entire U.S. economy. Reducing barriers between the United States and the EU will make it easier, for example, for U.S. architecture firms to send blueprints for projects in Europe in real time and without costly delays. Open and transparent trade in services also benefits U.S. startups by increasing access to otherwise unreachable customers. Achieving objectives to improve market access in the EU would improve choice and quality for consumers on both sides of the Atlantic and give U.S. services companies access to a large number of new customers.

Financial services are also an important component of the transatlantic economy. U.S. goals are to ensure high-standard rules for investment in the financial services sector, as well as lock in existing and create new market openings for financial services suppliers. A successful T-TIP will increase financial services market access to the EU as well as provide consumers with access to high-quality financial services and greater choice with regard to suppliers. At the same time, the U.S. we will continue to ensure that the government retains full discretion to regulate the financial sector and to take the actions necessary to ensure the stability and integrity of the U.S. financial system.

6. Electronic and Information and Communication Technology (ICT) Services: The Internet provides U.S. retailers and service providers with an increasingly powerful platform for selling their goods and services to purchasers in some of the world’s wealthiest economies, such as France, Germany, the United Kingdom, and Italy. U.S. filmmakers, musicians, and software developers should be able to sell their movies, music, video games, and other digital products to Europe’s more than 500 million consumers without having to worry about customs duties and fees, or otherwise being disadvantaged, just because their products are delivered over the Internet instead of by CD or DVD. And European purchasers should generally be able to validate their online purchases of these items with an electronic signature rather than having to put pen to paper. Furthermore, free flows of data are a critical component of the business model for service and manufacturing enterprises in the U.S. and the EU and key to their competitiveness.

7. Investment: The United States and the EU have the world’s largest investment relationship. Transatlantic investments total $4 trillion, directly supporting seven million American and European jobs, with millions more in indirect jobs. These investments help the U.S. manufacturing sector, generating 18 percent of U.S. exports to the world. Furthermore, jobs created by foreign investment tend to pay better than other private sector jobs. That is why the U.S. needs to build on these achievements and help generate more jobs, growth, and exports through certain, clear, and fair investment rules that encourage even more investment in job- and export-supporting economic activity.

8. Customs and Trade Facilitation: Red tape at the border adds costs and creates delays. U.S. exporters benefit from knowing ahead of time precisely how much they’ll pay in customs duties and fees – and from the ability to pay electronically – so that they can build those costs into their goods’ final price. Further, farmers and ranchers succeed when their products don’t perish on the dock and they don’t have to pay for additional warehousing simply because of arbitrary delays at the border. Reducing the amount of time spent moving goods through border procedures benefits all traders and has the compounding effect of reducing trade costs.

In today’s fast-paced world, it is critical that people have the ability to move goods on an expedited basis without burdensome customs filing requirements. Procedures that allow for pre-arrival processing, advance rulings, release of goods under bond, uniform appeal procedures, express shipments and use of de minimis values also contribute to expedited release that benefits U.S. exporters. Additionally, greater cooperation among customs authorities helps ensure not only that high-quality, authentic U.S. goods can be delivered to consumers more rapidly, but also that those genuine goods are not competing with smuggled or counterfeit products.

9. Government Procurement: Both U.S. and European governments buy a broad range of goods and services from private sector businesses, which leads to job-supporting opportunities for industries that provide information technology goods, consulting services, infrastructure, and other products. Achieving T-TIP objectives will ensure U.S. companies get a fair shot at eligible government procurement opportunities, as well as open new opportunities for U.S. companies in the 28 EU Member States. This would mean expanded opportunities to bid on government contracts in areas including construction, engineering, and medical devices.

10. Labor: U.S. trade agreements are designed to prevent a race to the bottom on labor protections. They include strong labor commitments to help ensure that increased levels of trade and investment with U.S. partners are not being driven by a weakening of worker rights. Trading partners must not only have laws and regulations on their books that recognize fundamental labor rights; they must also enforce them. U.S. businesses can’t compete fairly if their foreign competitors aren’t required to provide their workers the same levels of protection afforded workers in the United States.

The United States and Europe already maintain high levels of protection for their workers. T-TIP should reflect this shared commitment, which may become a model for others to follow, and encourage even greater transatlantic cooperation.

11. Environment: The United States is a leader in seeking high levels of environmental protection and the effective enforcement of environmental laws in trade agreements. The U.S. includes strong environmental commitments in its trade agreements to help ensure that its trading partners do not weaken environmental protections in order to encourage trade or investment. Through its  agreements, the United States has joined with trading partners in eliminating barriers to trade in cutting-edge environmental technologies like clean energy, promoting the protection of wildlife and endangered species, and addressing key issues like harmful fisheries subsidies and illegal logging. The United States and Europe already maintain high levels of environmental protection. T-TIP should reflect this shared commitment, which may become a model for others to follow, and encourage even greater transatlantic cooperation.

12. Intellectual Property Rights: The United States and the EU have the world’s most successful creative industries, and intellectual property protection and enforcement are essential for encouraging innovation in new technologies, stimulating investment in research and development, and supporting exports of U.S. products and the creation of American jobs. Nearly 40 million American jobs are directly or indirectly attributable to “IP intensive” industries. These jobs pay higher wages to their workers, and these industries drive approximately 60 percent of U.S. merchandise exports and a large share of services exports. The U.S. will seek in T-TIP to build on shared strengths and principles reflective of our strong and balanced systems, while promoting good policies in third countries as well.

13. State-Owned Enterprises: U.S. and European businesses and workers deserve a level playing field, especially when state-owned enterprises (SOEs) that receive significant government backing engage in commercial activity. Achieving this objective would help establish disciplines to encourage SOEs to operate in markets in a transparent manner that does not distort trade or put U.S. companies at a disadvantage. Agreed SOEs rules in T-TIP can also serve as a model to third country markets around the world.

14. Small-and Medium-Sized Enterprises (SMEs): SMEs are the backbone of the American and European economies. The United States’ 30 million SMEs account for nearly two-thirds of net new private sector jobs in recent decades. SMEs that export tend to grow even faster, create more jobs, and pay higher wages than similar businesses that do not. T-TIP will enhance already strong U.S.-EU SME cooperation and help SMEs on both sides of the Atlantic seize job-supporting trade and investment opportunities.

15. Transparency, Anticorruption and Competition: For U.S. businesses to compete in the global market, they must have clear, predictable laws and regulations that are administered by officials who are not subject to undue influence. That is why the U.S. is seeking commitments in T-TIP to publish promptly all laws, regulations, administrative rulings and other procedures that affect trade and investment. The U.S. will also seek opportunities for interested parties to learn about and provide meaningful input on measures before they are adopted and finalized.

Corruption distorts competition and often prevents the public from receiving the highest quality goods and services. Accordingly, the U.S. has sought to ensure that its trade agreements include appropriate provisions to address corruption, and will be doing so in the T-TIP negotiations. The U.S. and the EU also agree that the sound and effective enforcement of competition law is a matter of importance to the efficient operation of their respective markets and trade between them. Competitive markets provide the environment necessary for entrepreneurship and innovation, protects against anticompetitive behavior that distort market outcomes, and helps consumers obtain more innovative, high-quality goods and services at lower prices.

16. Dispute Settlement: The U.S. recognizes that trade agreements that are effectively enforced establish a set of high-standard rules and obligations that help keep markets open to U.S. exporters and investors and ensure a level playing field. When the U.S. negotiates and implements a trade agreement, it expects its trading partners to stick by the rules and obligations they agreed to. However, when trading partners fall short of what they promised – whether to reduce tariffs, implement strong labor and environment provisions, or otherwise provide U.S. exporters fair and non-discriminatory treatment – the U.S. needs a means to hold them accountable. This is why the U.S. has this important objective to establish a fair and open dispute settlement mechanism. Dispute settlement gives a means to discuss concerns in a timely way and to seek compensation if they are not addressed. Dispute settlement with trading partners in T-TIP will give the American public the confidence that the U.S. not only negotiates strong, high-standard obligations, but that also has the means to enforce them.