I was delighted to speak to the UK and US Chambers of Commerce in Stockholm yesterday, with my US counterpart and representatives from business and the trades union. Our subject was TTIP. The key points from my prepared remarks are below.
As I was speaking, news came out of a record-breaking year for foreign investment in the UK.
In total, 1,988 investment projects were set up by foreign businesses in the UK during the 2014/15 financial year – a 12 per cent increase from the previous year. We estimate that these projects have created 85,000 new jobs and 23,000 safeguarded jobs across the UK.
We estimate that total foreign investment into the UK has reached £1 trillion – the highest in Europe and third highest in the world after the United States and China. The UK is the top destination for investment in Europe, a performance contrary to global and European trends. OECD and UN data suggest that the global FDI flows declined by 11 per cent in 2014. However the UK’s FDI flow increased by more than 50 per cent in the same period.
The jobs that investment can bring is one of many reasons why the UK government believes that, in the months to come, Europe and the US have an historic opportunity to bring together the world’s two biggest economic blocs in a partnership that protects standards, boosts growth and sets an example to the wider world of what economically liberal, outward facing economies should be doing.
It’s great for Britain but a sad reflection of the situation in many other EU countries that the UK alone produced more new jobs between 2010 and 2013 than the whole of the rest of the EU combined.
So Europe needs growth and TTIP means growth. And the right kind of TTIP, which we believe is within reach, means growth with standards, protecting consumers and the environment.
The projected economic benefits of an ambitious and thorough TTIP are well known by now. Depending on the level of ambition in the final deal, TTIP could be worth an added 120 billion euro a year to the EU’s economy.
It’s not just about big global numbers, however. Small and medium sized businesses will see direct results from TTIP. It is estimated that 28% of the EU’s trade is derived from SMEs exporting to the US – an effective TTIP will be a great boost to the volume of trade and the number of firms able to participate. And it’s those SMEs who are most likely to bring employment benefits to smaller communities across Europe.
Under the sort of TTIP we want, tariffs, already much lower than in years past, will be almost entirely removed, leading to increased revenue for companies, especially in food and drink and textile industries. The sheer volume of trade means that, even where tariffs are already low, businesses will still be free from a significant accumulated cost, freeing them up to employ more people and invest in the future.
Regulations will also be harmonised without leading to a decrease in standards. Many SMEs have had difficulty meeting certain US regulatory requirements even if their products have been deemed safe by EU standards. Having dual testing procedures and licensing requirements has also prevented European companies from exporting. Big companies can afford to develop and run two distinct product lines, one to match EU standards and another for UE requirements. But that’s something SMEs can’t afford. Shared standards will be of the great help to the smallest entrepreneurs, a fact the critics of TTIP with their caricatures of predatory big business, choose to ignore.
The harmonisation process will not lead to a reduction in regulatory standards. All parties in the negotiations have made this clear. It is also plainly stated in the negotiating mandate, available for all to see on the Commission’s website.
Any food that enters the EU will need to meet EU food safety rules. Labour standards will be upheld, including the right to collective bargaining and protection against discrimination. The UK expects TTIP to reiterate the protection for domestic labour standards and to preserve European governments’ right to regulate including the right to have free public services, like Britain’s National Health Service. Similarly, environmental standards will be unaffected by TTIP.
So TTIP is a huge prize for Europe, with wider implication, in two senses. First, for global free trade, where the standards set by the US and Europe can, we hope, inspire wider trade liberalisation, to help developing countries gain access to developed markets.
Secondly, at and least as important, it is a strategic prize in these uncertain times, to bring Europe and the US even closer together. Britain, like Sweden, has long favoured an economically liberal, outward facing European Union. TTIP is a central part of that.
But a comprehensive Trade and Investment deal with the US, though a necessary part of the change we want to see in the EU, is not sufficient.
The EU is at a crossroads, with unresolved internal problems as well as big external challenges. In Britain’s view, the Union needs to take ambitious steps to stay relevant in the global market and to become more relevant to its own citizens. Britain wants to be part of a successful reforming European Union, but that requires real change. Our Prime Minister will have more to say about that at next week’s European Council.
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