A transatlantic agreement but at what cost to SMEs?

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Veblen Institute | 20 November 2015

A transatlantic agreement but at what cost to SMEs?

In the confrontation between promoters and opponents of the proposed
Transatlantic Trade and Investment Partnership (TTIP), it is difficult to hear
the voice of the SMEs (Small and Medium Enterprises). Yet because of their
importance in European economy, smaller enterprises have some of the
strongest reasons to be concerned. Ever since negotiations started, high-level
European and American institutions and the largest employers’ organisations
have been vocal about the supposed benefits of such an agreement for SMEs.
This contrasts with the much more restrained position of SME representatives
themselves.

Only 0.7% of European SMEs export to the United States and the value of
exported goods and services is less than 2% of the added value produced
by European SMEs as a whole. Yet despite the relative lack of importance of
transatlantic trade for European SMEs, TTIP could have a seriously de-stabilising
effect on them by (i) significant diverting inter European trade (which
represents the bulk of the SME exporting) to the USA (ii) encouraging the
importing of cheap American products and (iii) supporting large groups to
enter European markets in which SMEs are strong.

Over the past months, numerous European SMEs have expressed their concern,
both individually and collectively, over the potential risks to their activity
resulting from the current negotiations. To get a better understanding of the
subject, several organisations, and in particular the European Economic and
Social Committee, have recommended that the European Commission make
a detailed assessment of the impacts the TTIP would have on each country
and each sector. To date, this legitimate request remains unanswered.

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