E.U.-U.S. Pact

At Businesses, Strong Support for TTIP

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Nicola Leibinger-Kammüller of German company Trumpf supports TTIP.
  • Why it matters

    Why it matters

    The majority of German businesses back the trans-Atlantic trade deal, TTIP, which enters its next round of talks later this month.

  • Facts

    Facts

    • Talks on TTIP began in 2013 and the next rounds of the negotiations are taking place in New York from April 25 to 29.
    • Around 90 percent of German family-owned businesses support the deal, according to Die Familienunternehmer association.
    • Public opinion in Germany is hostile, with only 39 percent for the deal and 41 percent against, according to a 2015 Pew Research survey.
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    Audio

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When Nicola Leibinger-Kammüller wants to move materials from one part of her company to another, she has to pay customs fees.

Her company, Trumpf, which makes machine tools, lasers and electronics, often ships items from Germany to her subsidiary in the United States and vice-versa, and the transfers are subject to tariffs.

Trumpf, which is based in the southwestern town of Ditzingen in Baden-Württemberg, has 11,000 employees globally and last year generated revenue of €2.72 billion, or $3.1 billion.

Ms. Leibinger-Kammüller, who took over the management of her family’s business in 2003, says she pays €7 million annually to U.S. tax authorities for shipments to and from the company’s U.S. subsidiary.

That is why she is one of the many German business owners who hope that progress can be made in the next round of negotiations over the Trans-Atlantic Trade and Investment Partnership, or TTIP, between the United States and the European Union, which take place later this month.

“TTIP is very important for us,” Ms. Leibinger-Kammüller told Handelsblatt Global Edition. “It is not the one – but one of many trade agreements with the United States that we should support and that many small and medium-sized businesses in Germany will benefit from.”

“We worry that we won’t be able to close a deal before Obama is leaving office”

Michael Moritz,, managing partner, CatCap finance consultancy

After all, Germany and the United States have very strong trading ties. Germany exported goods and service worth €114 billion to the United States last year, according to the The Association of German Chambers of Commerce and Industry. In fact, the country, which is Europe’s biggest economy, prides itself on being an “Exportmeister.” It is the world’s third largest exporter with €1.2 trillion worth of goods and services traded abroad last year.

As such Germany would be one of the biggest beneficiaries of the deal, at least when it comes to the removal of tariff barriers.  That is why German business associations and lobbyists such as the BDI Federation of German Industries and Die Familienunternehmer, an association representing family-run businesses, are campaigning for TTIP.

The BDI has even designated an entire section of its website, including video messages from industry leaders, to convince the public of the trade deal.

“We worry that we won’t be able to close a deal before Obama is leaving office,” said Michael Moritz, managing partner at CatCap, an owner-operated corporate finance consultancy firm based in Hamburg, and head of the regulatory commission at Die Familienunternehmer.

“The current presidential candidates seem to be more protectionist than Obama when it comes to trade,” he added, referring to Donald Trump, Hillary Clinton and Bernie Sanders, who have all made protectionist statements in their primary campaigns.

Meanwhile, populist movements on the left and right in Europe are also opposing the deal.

Mr. Moritz is concerned that if the European Union failed to negotiate a deal now, there will be no second chance in the near future.

“If we don’t manage to sign a deal with the U.S., it will be a strong message, namely that with Europeans you can’t negotiate, and the U.S. will turn to Asia to close a similar deal,” he told Handelsblatt Global Edition. “If we fail, there will be nobody in the near future who will get up and say, ‘let’s try this again.’”

Still, public opinion in Germany is largely against the trans-Atlantic trade deal.

According to a survey by Pew Research from January 2015, Germany, along with Austria, is among the most skeptical of European Union countries. In both countries only 39 percent support the deal, while 41 opposed it in Germany and 53 percent opposed it in Austria. In contrast, more than half of the people in the United Kingdom, Denmark, Ireland and Spain were found to be supportive of TTIP.

According to a poll by the statistical website Statista from July 2014, 59 percent of people in Germany think that only the United States would benefit from the deal, and only 14 percent think that Germany may also profit.

“It is fear more than reason that keeps people from supporting a trans-Atlantic trade agreement,” Ms. Leibinger-Kammüller of Trumpf argued.

“But if we don’t start setting the rules for international trade agreements with the United States now, somebody else will do it: The world is not waiting for us to act,” she said. “The United States will simply set up trade rules with the rest of the world and we will just be watching and lose all influence.”

The TTIP talks between the European Commission and the United States first began in 2013.

Opposition groups, including NGOs and individual public figures on both sites of the Atlantic, have sought to stop TTIP, arguing that the talks have not been transparent enough and that the deal will undermine individual countries’ sovereignty and quality standards.

“On both sides of the Atlantic, there is resistance. For instance, when it comes to public procurement in the U.S., individual states are often obliged to only work with U.S. companies, goods and services,” Mr. Moritz said. “The federal government argues it has no influence when it comes to individual state legislation. This attitude has to change if we want to make progress and find a deal.”

Although public opinion is hostile, the German business sector is largely pro-TTIP, Mr. Moritz said, with around 90 percent of the 180,000 family-owned businesses that he represents supporting a deal.

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According to Pew Research from January 2015, Germany, along with Austria, is among the most skeptical of European Union countries. Source: DPA

 

Nevertheless, there are also some doubters even within the business community.

While the engineering sector is largely pro-TTIP, agriculture and food industries in Germany, for example, are more skeptical.

“The U.S. sugar market is heavily regulated and subsidized. Sugar companies also benefit from low energy costs as well as lower environmental and social standards,” the German Sugar Industry Association said in a recent statement. “Unless there is fair competition, the European sugar industry needs protection against the United States.”

According to the German Association for Small and Medium Sized Businesses, TTIP may pose risks to German businesses.

“The devil is in the detail,” said Mario Ohoven, the head of the association, in a statement released in November 2014. “TTIP has many undisputable advantages when it comes to trade between the European Union and the United States, but it also represents a threat to small businesses that we should not hide.”

In particular, Mr. Ohoven voiced concerns about investor protection and the Investor State Dispute Settlement (ISDS) that would grant investor the right to use arbitration proceedings against a foreign government. These have proved to be among the most controversial parts of the deal.

“Small and medium sized businesses reject the current form of investment protection,” he argued. “ISDS favors large companies so that they can find a way around national law.”

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Playground equipment maker Ernst Maier in his factory in Bavaria said he has ambivalent feelings when it comes to TTIP. Source: Franziska Scheven

 

Other small business owners worry about the difference in cultural and technical standards. For example, Ernst Maier, the owner of Spielzeuggeräte Maier, which manufactures playground equipment. “We don’t sell our tools in the United States because they simply don’t share the same understanding of how children should interact on a playground,” he told Handelsblatt Global Edition.

“Americans have a different perception of risk and liability than Germans or Europeans do,” said Mr. Maier, who sells swings and slides in Germany, as well as Austria, Luxembourg, Switzerland and Belgium. The company, based in the Bavarian town of Altenmarkt an der Alz, has annual sales of about €15 million.

Meanwhile, many TTIP critics are also skeptical about how increased deregulation could lower environmental, food safety and labor standards. Furthermore, Germany’s economy is relatively strong, with low unemployment, and so many people don’t see the necessity of rocking the boat for intangible gains.

“If you look at the Pew-surveys, you find that among those in Germany who oppose trade, people are mainly worried that their high standards could diminish with TTIP,” said Laura von Daniels of the German Institute for International and Security Affairs in Berlin.

Industry leaders say it is probably the worst time in Europe to promote any trans-national agreements, with the growing support for populist forces such as the Alternative for Germany and the Front National in France, which both oppose TTIP.

“We see a strengthening of nationalism everywhere in Europe. Everybody just wants to stay within their own national borders,” Ms. Leibinger-Kammüller of Trumpf said. “But this is not how it works in a globalized world, and certainly not when you want to be successful in business.”

 

Franziska Scheven is an editor with Handelsblatt Global Edition. To contact the author: scheven@handelsblatt.com

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