"Time to break fresh ground"
by Frank Appel, CEO, Deutsche Post DHL Group
Many people feel that today's world is out of joint. From shifting trade flows to national crises to military conflicts and increasing volatility, our global community is faced with questions that have no easy answers. Against this backdrop, many feel a great temptation to disengage and only look out for themselves. But that's the wrong way to solve these problems. What we need is more connectedness, more exchange, and more cooperation. Isolation and protectionism will only lead us astray. Ultimately, they threaten our political and social stability and thus the foundations of our community.
In my mind, the Transatlantic Trade and Investment Partnership is another vital component for facilitating a globally connected world in which the exchange of goods, capital, information, and people contributes to the development of economy and society.
Evolved partnership over many decades
The partnership between the EU and the US has evolved over many decades, and it could grow even closer once TTIP is concluded. It's a partnership that extends far beyond just economic ties. The European Union and the United States currently exchange about two billion euros worth of goods and services every day. More than 15 million jobs on both sides of the Atlantic directly depend on the economic interdependence between the US and Europe.
TTIP would immediately benefit the European-American community of shared culture and values. Such an agreement would provide new economic stimuli for Europe, which is something that some of our crisis-ridden European economies can't afford to give up.
Open borders and the free movement of goods number among the basic freedoms of the European single market. Implementing these freedoms has laid the groundwork for Europe's strength. But Europe must open up further, especially if it doesn't want to lose its competitive edge versus the booming emerging markets.
Depth of global economic connectedness
The DHL Global Connectedness Index 2014, which measures the depth of global economic connectedness, clearly shows that advanced economies have not kept up with the big shift of economic activity to emerging economies. The ten countries where global connectedness increased the most from 2011 to 2013 are all emerging economies. Over the last few years, the world's economic center of gravity has distinctly shifted eastward. In this new global context, TTIP can act as a transatlantic counterbalance — a historic opportunity we shouldn't recklessly squander.
The exchange of goods is based on logistics services, which make up close to a third of all trade between the EU and the US. The volume of the European logistics market alone is estimated at about 900 billion euros. For Deutsche Post DHL, both of these regions are important markets. Despite the increasing importance of emerging markets, in Asia for example, Europe and the US remain important pillars of our company's growth strategy.
Efficient, competitive, and sustainable supply-chain
Everything that helps to simplify logistics also leads to better market access, especially in an international setting. Increases in global integration and trade, and thus in prosperity, largely depend on an efficient, competitive, and sustainable supply-chain for customers.
In this area, much remains to be done. Tariff barriers and, more importantly, non-tariff barriers to trade still impede the free, cross-border exchange of goods and services. These barriers are obstacles that TTIP can help overcome.
Non-tariff barriers make up around 75 percent of all trade barriers today. This category includes different product standards, norms, and licenses, as well as customs clearance procedures that lag behind the times. The current state of affairs presents great challenges, especially for small and medium-sized companies with cross-border expansion plans.
Modern customs standards
TTIP would create modern customs standards that go far beyond the status quo. Common requirements regarding the information that must be submitted to customs as well as uniform electronic processing systems and reasonable de minimis limits to ensure that small shipments are exempt from duties, charges, and taxes would greatly facilitate and accelerate the process of customs clearance.
It makes no sense to collect import duties on shipments with low merchandise value. For those goods, the cost of collection is out of all proportion to the income that is generated.
Only 13 percent of small and medium-sized companies are active beyond the borders of the EU today, and a full 75 percent never even venture outside of their respective domestic market. However, according to a study commissioned by DHL Express in October 2014, the majority of these businesses believe there is growth potential in foreign markets, with the possibility of up to 50 percent of their sales being generated abroad within the next five years.
Barrier-free cross-border logistics processes
Exploiting this potential will require barrier-free cross-border logistics processes. This is particularly true when it comes to the booming e-commerce sector.
At Deutsche Post DHL, we are convinced that logistics services contribute real value: We connect people and improve their lives. The world's largest free-trade area, as envisioned by TTIP, would serve to deepen these connections between 800 million people on both sides of the Atlantic and ensure more growth and jobs. TTIP also offers the opportunity for a more integrated transatlantic labor market and thus opportunities for an easier exchange of urgently needed professionals.
Even today, trade between the European Union and the US amounts to about one-third of global trade. Together, the two economic regions carry a lot of weight, and we can strengthen this dynamic by implementing TTIP.
I understand that an agreement as comprehensive as TTIP gives rise to certain fears as well. Chlorine-washed chickens, hormone-treated meat, and even the new arbitration tribunals—these are just some of the oft-mentioned topics that frequently dominate the debate. On this point, however, we shouldn't forget that the EU, and especially a strong exporter such as Germany, has much to gain from legal certainty for investors. We still need more dialogue and persuasion to ensure that TTIP will ultimately find broad support among the population.
A huge opportunity
Notwithstanding the details that the negotiators must still work out, there is one thing we should not forget: TTIP is a huge opportunity both for Europe and for the United States. And it's an opportunity that we have to seize now.
TTIP can set standards that are based on our shared values. In that endeavor, the United States is our natural partner. A strong transatlantic free trade area would set new benchmarks and strengthen the position of both our regions in global commerce. It is especially important for Europe — now more than ever — that we display an ability to act and a will to shape global economic conditions.
A transatlantic trade and investment partnership could lead the way toward more open markets around the world and a truly global trading system. It would also strengthen the Western community of shared values from within—a community that is currently confronted with a variety of threats to its common principles of freedom, democracy, and the rule of law.
The great challenges of our times can only be solved if we act as partners and on the basis of the greatest possible openness and harmonization. The conclusion of TTIP would send a clear message that that's exactly what we intend to do.