The Impact of TTIP on German Electric and Electronic Industry Manufacturers

From the perspective of foreign trade, the United States is currently the largest export destination country for German electrical and electronic industrial products. In 2012, German electrical and electronic products exported 13.1 billion euros to the United States, a year-on-year increase of 6.8%. From January to October 2013, Germany’s electrical and electronic industrial products exported 11 billion euros to the United States, a year-on-year decline of 0.2 percentage points, but since 2000, growth has been a major trend.

In 2012, the export volume of electrical and electronic products from the United States to Germany was 9.2 billion Euros. Despite a year-on-year decrease of 2.5 percentage points, this achievement still made the United States the second largest source of imports for German electrical and electronic products. From January to October 2013, Germany’s imports of electrical and electronic products from the United States amounted to 7.3 billion euros, a year-on-year decrease of 3.1 percentage points.

The United States and Germany import each other's electrical and electronic products, which to a large extent reflect the status quo of the two sides of the Atlantic between Germany and the United States participating in the international division of labor. The link between Germany and the United States at the economic level is not limited to exporting products to each other, but also involves mutual direct investment between the two parties. According to the latest data, the direct investment of the German electrical industry in the United States is 11.3 billion euros. No country has such a large investment in the U.S. electrical industry.

As the German-American economy is closely linked, the German electrical and electronics industry expects a successful transatlantic trade and investment agreement, which will further drive future growth.

The entry rules for foreign manufacturers entering the EU market include: Product entry must comply with relevant laws, and manufacturers must fulfill the necessary safety obligations stipulated by law. In addition, the law requires the manufacturer to perform some specific conformity assessments on its own, and to place a compliance label on the product based on the accountability principle. In general, independent third-party testing and certification is not required. Only specific high-risk products, such as some medical devices or particularly dangerous machines, whose conformity assessment needs to be assessed by public assessment agencies. The purpose of this is to give manufacturers enough freedom to avoid unnecessary costs. This is actually a measure that is conducive to innovation, because the introduction of new products and technologies into the market does not depend on time-consuming certification procedures.

Elimination of trade tariffs between the European Union and the United States, members of the German Electrical and Electronics Industry Association held a unanimous welcome, and said that tariffs can be eliminated immediately and there is no need to set a transition period. Simplifying customs procedures is also a desirable aspect.

This is an essential part of any free trade agreement for setting rules of origin. The purpose is to prevent third countries from free riders from sharing their profits. In this regard, members of the German Electrical and Electronics Industry Association hope that the rules of origin do not differ from those that have been agreed with other countries. What is very disadvantageous is that the rules of origin concluded in the existing EU-Mexico free trade agreements are very different from those recently negotiated with Canada. However, on the whole, the total elimination of the benefits brought by the tariffs with the United States is far greater than the inconvenience caused by the strict establishment of rules of origin.

In order to seek new impetus for economic growth, the European Union is advancing European industrial products into the US government procurement market as trade liberalization. Since 1989, the European Union has been implementing measures to liberalize government procurement. There are two reasons for this. On the one hand, the cost effect at the procurement level of the federal government or local state government will be highlighted; on the other hand, this will Introducing more competition in the bidding process will help provide opportunities for innovative solutions, especially in infrastructure projects.

The most anticipated theme of the TTIP is the market access of technical trade barriers. The following lists the key issues:

The technical standards of both parties are in accordance with international standards. The basic precondition for eliminating trade barriers in transatlantic trade in goods is the coordination of technical standards. The harmonization of such standards must comply with WTO principles and comply with ISO and IEC international standards.

Both parties mutually acknowledged the test results. Based on the technical specifications of the same standard, both parties must accredit the test results of independent third parties. In the field of electrical electronics, since the CB process based on IEC standards has been widely used internationally, the United States testing agencies must incorporate this system to the maximum extent possible. At the same time, high-cost testing and additional re-testing must be prohibited, but the streamlined process cannot be denied.

Both parties recognize the conformity assessment. At present, both parties recognize that the conformity assessment cannot be effectively implemented because the EU and the United States have completely different regulatory principles. Of course, in order for one party to recognize the other party's conformity assessment, technical standards need to be harmonized, and the regulatory framework must be set up in accordance with the medium-term and long-term plans.

Involving local laws. It is essential that all efforts to eliminate technical trade barriers involve the laws of the US state and local governments. Only a small part of the technical requirements are regulated by the U.S. federal government. On the contrary, in many areas, the binding provisions are in what state and local governments pass, which is called the “authorities owned by the authorities”.

Mandatory recognition of the other party's certification body. Efforts should be made to mutual recognition of compulsory national accredited laboratories (NRTL) activities to avoid the monopoly pattern of certified suppliers. After all, the German electrical and electronics industry has high expectations for joining TTIP. The goal is to form a transatlantic agreement for the full liberalization of trade in goods and services. On the one hand, at present, the United States has the largest market in the world in the electrical and electronics industry. On the other hand, manufacturers in the German electrical and electronics industry hope to eliminate tariffs and non-tariff trade barriers, which will bring considerable benefits.

Therefore, the German Electrical and Electronics Industry Association strongly hopes that TTIP will not be fruitless due to specific interests. The reality is that large companies and many medium-sized companies in the electrical and electronics industry have already reached each other on both sides of the Atlantic. In other words, from a business perspective, free trade will bring benefits to both parties.

Finally, considering all the opportunities contained in the comprehensive free trade agreement, the association believes that it is worthwhile for both parties to make every effort to negotiate this agreement, as it will eliminate many obstacles in this huge market (having 800 million consumers).