Minister Toivakka's speech at the Central Union of Agricultural Producers and Forest Owners (MTK)
What can TTIP offer for Finland, Europe, the U.S. and the world?
Ms. Lenita Toivakka, Minister for European Affairs and Foreign Trade
The Central Union of Agricultural Producers and Forest Owners (MTK), Helsinki
17th October 2014
[Check against delivery]
Dear ladies and gentlemen,
Distinguished Professor Hamilton and Doctor Marttila,
It is an honor to be here in front of such a sophisticated audience. And it is a real pleasure to speak on an important topic like Transatlantic Trade and Investment Partnership negotiations.
TTIP, as we call the prospective deal is an opportunity beyond comparison. The European Union is the largest economy in the world with over 500 million citizens and the United States the second largest with over 300 million. Together with the US, European economies account for about half the entire world GDP and for nearly a third of world trade flows. Needless to say, this makes TTIP one of the most important single issues in defining the future landscape of global trade.
I returned back from Rome on Wednesday night where the EU Trade ministers had an informal council meeting. The chief negotiators from both sides - Trade Commissioner de Gucht and US Trade Representative Ambassador Froman - were both present. Therefore I would naturally like to begin with the current situation of the negotiations.
So where are we now with TTIP?
First and foremost, the message I can bring you from the meeting is that both the EU and the US are strongly committed to these negotiations. Sure, there are issues like in any large-scale negotiations that have to be dealt with. However, the uttermost feeling coming back from Rome is commitment and a mutual understanding from all parties on the importance of this trade negotiation.
As you are aware, the seventh round of negotiations took place at the end of September. This round, as well as the previous round, can be described as rather technical. This does not necessarily have a negative sound: sometimes technical discussions are very labor intensive. And we expect to get to full speed soon, so that the negotiations could be concluded in year 2015.
It is also very logical to proceed on more technical issues, as we have had the European elections and the change of Commission. On the US side, the mid-term elections are approaching. The previous Commission and Commissioner De Gucht have done an excellent work in the negotiations. But still, I would like to see the new Commission as a new opportunity. We should use this opportunity to see what works and what doesn't. After all, we are aiming at an ambitious and broad agreement that sets new, high standards to our trade, trade between the world's two largest economies.
The Juncker Commission has raised TTIP as one of its priorities. Commissioner-designate Cecilia Malmström has in her hearing stressed questions such as transparency, which have gained more and more importance in the discussions. And speaking about transparency, you have all noticed that last week something extremely important happened. The EU's negotiation mandate was made public. This was a long time goal for Finland. This is crucial as we want to prove that some of the fears about TTIP are not necessarily motivated.
Let me remind you why we are negotiating on TIIP on the first place. In order to answer the question we need to return to the topic of my intervention: why would Transatlantic Trade and Investment Partnership be beneficial for Finland, Europe, the U.S. and essentially the whole world?
I will give you three simple reasons:
1. In times of economic hardships the agreement would benefit all consumers by fostering growth and bringing in investments
2. It would benefit especially SME's who would see their exports grow
3. This deal offers The EU and USA an opportunity to be a standard-setter rather than a standard-taker
Firstly, let me start with growth and investments. The European Commission ordered an independent report from the London-based Centre for Economic Policy Research (CEPR). The study found that an ambitious deal would increase the European exports to U.S by 28 percent and add an annual economic gain of 119 billion euros to whole EU – meaning an extra earning of 545 euros to all European families of four.
It is evident that estimates are estimates but at the same time the direction is clear. During times when many European countries are seeing growth figures that start with zero point something - the direction is rather tempting. Please, let me rephrase myself, TTIP it is not simply tempting as an opportunity but a chance we just cannot afford to miss.
Finland is a trade nation. Therefore it is natural that removing barriers from trade benefits us greatly. This is something you learn first year at business school so you do not need a politician to tell you this. More trade means more well-being.
The best news is that TTIP would benefit the European and American consumers. This is because a deal would mean lower consumer prices, broader selection of goods, more investments, increased export figures and an instant boost to our economies.
To demonstrate that this is a real scenario I would like to refer to the EU-South Korea free Trade Agreement that was completed in 2011. Since then the areas of good that were liberalized saw an increase of 32 percent in European exports.
Secondly, I would like to point out the benefits that TTIP offers to SMEs. There are 20 million SMEs in Europe and 28 million in the United States. That means that 99 percent of European and American companies are SMEs. Statistically speaking that is also where the jobs come from. 85 percent of European new jobs between 2002 and 2010 came from SMEs.
Trade barriers tend to cast a relatively heavier burden on small than large companies. Smaller firms also have fewer resources than big companies to overcome these challenges. Therefore TTIP offers intentionally greater opportunities to SME's than large companies.
TTIP would help small and medium sized companies by multiple ways, for example by removing tariffs, lessening regulatory burden,strengthening IPR protection, promoting duty-free treatment of digital products, facilitating the value chains even when the small company does not trade itself, opening new areas to competition such as services, public procurement and so on. Closer regulatory cooperation between the U.S. and the EU has also the potential to generate significant cost savings and efficiencies
Thirdly, TTIP is an opportunity for us to lay down the rules and standards for the future in global trade. If we do not do this – someone else sure will. If the world largest economies can settle on common rules it makes sense for the third countries to start using the same standards in order to avoid additional costs in production. This would increase efficiency.
Buy the way this is not uncommon at all. The European and American aviation sector and industries have already done this. And please note that this is an area where almost every nut and bolt is regulated by the law. Have you noticed that the quality in safety has been lowered? The example offers an encouraging example for the TTIP negotiations.
While there are many clear benefits in TTIP it is honest to admit that many fears still remain. I encounter them in time to time in the press and on the market squares. Regretfully they are often based on false or no information. There are three kinds of concerns I encounter most often. Please let me explain why they are not a reason to lose a good night sleep.
Statement no 1. - TTIP and especially ISDS will narrow the national right to regulate and compromise democracy
Statement no 2. – TTIP will only benefit large multinational companies
Statement no 3. – the high European standards in environmental protection, employer rights, or consumer safety will be lowered
Let me try to answer to these concerns:
You can be sure that no-one has any intention to compromise democracy. As you know, in addition to the Commission and the national governments, also the European Parliament and national parliaments are very much involved in the TTIP process. This is already a guarantee for those, who are afraid of democracy.
ISDS has been, I feel, a bit demonized in the discussions. Actually, did you know that Finland has 66 bilateral investment treaties, and all of these have an investment settlement dispute mechanism? Finnish businesses have profited from these treaties in different countries. Also, for Finland as a country that both wants to attract foreign investment and produces investment goods, it is highly important that we provide a stable investment environment.
On the second concern on TTIP benefiting only large multinational companies, I would like to say that if you read the (now public) negotiation mandate, you will see that we will put special emphasis on small and medium-sized enterprises. This makes sense: in the EU and the US, over 99 % of all businesses are small and medium-sized companies. In the EU, two thirds of all jobs are in SMEs. In the US, the figure is over 50 %.
And, I refer to the negotiation mandate also when it comes to the third point, the concerns on lowering our European standards. You will see that no-one has any intention or will to lower the current levels of protection for the environment, labor or consumers. To the contrary, we want to build upon the existing agreements and, if we succeed with TTIP, we can improve environmental, health and safety standards around the world.
We are reaching a new phase after transitions in power on both sides of the Atlantic on TTIP. The benefits include lower consumer prices, boost to our economies, more investments, a better position for SMEs especially and an opportunity to set the rules high for global trade in decades.
While fears and concerns on TTPP exist, the worries are eased off when right information is offered.
As I mentioned at the very beginning, we expect to get to full speed soon, so that the negotiations could be concluded in year 2015. Therefore I am very much looking forward to the next presentation and the discussion, in order to find out how - as the invitation to this seminar says - we could work together with you and this important sector in order to speed the negotiations.
Thank you for your attention.