By John Koenig
I FULLY believe Cyprus stands to gain from the United States and the European Union concluding the Transatlantic Trade and Investment Partnership (T-TIP). Negotiations opened in July 2013, when Cypriots had just experienced the shock of the March 2013 financial crisis. But U.S. and EU policymakers have been negotiating T-TIP for nearly two years and, if we get it right, it will significantly expand trade and investment between the U.S. and the EU, stimulate economic growth, create jobs, and improve international competitiveness. These overarching goals support Cyprus’ economic recovery.
This is important because the United States and the European Union, together, account for about half of the world’s gross domestic product (GDP) and roughly one-third of its trade flows. The U.S.-EU transatlantic economic relationship is the world’s largest; we already trade $2.7bn of goods and services each day and have $4trn invested in each other’s economies. This trade and investment supports more than 13 million jobs.
But why is T-TIP important for Cyprus as the U.S. and EU prepare for the tenth round of negotiations this July? And how will T-TIP affect businesses, workers, and consumers? In other words, “Why does T-TIP matter to you?”
Let me give you just one example. Mr. Savvides is the Managing Director of Remedica, a manufacturer of generic pharmaceuticals in Limassol. His staff produces high-quality medicines, which he currently exports to several countries. But dealing with U.S. tariffs, customs regulations and safety regulations is expensive and time-consuming. For Mr. Savvides’ business and others, an agreement that reduces or eliminates tariffs, simplifies customs procedures, and reduces duplicative and conflicting regulation and red tape would make it much easier to sell their products in the United States. And for consumers, having more businesses trade across the Atlantic gives them a wider choice of products. Larger businesses like Remedica are important economically because the Cypriot pharmaceutical industry employs more than 1,500 people.
Another major beneficiary from a thorough T-TIP agreement would be the small-to-medium sized companies (SMEs) that are the backbone of the American and European economies. Over 99 per cent of Cypriot companies are SMEs, employing fewer than 250 people each. In the United States, there are 30 million SMEs, accounting for nearly two-thirds of net new private sector jobs.
As United States Trade Representative Ambassador Michael Froman put it, “Among the many beneficiaries of T-TIP, perhaps small businesses stand to gain the most. They are hugely important sources of innovation, employment, and growth, but they lack the resources of large firms to navigate what can feel like a maze of regulations and obstacles to trade.”
If SMEs can find new export markets, they can create new jobs that pay good wages. Studies show that small companies that export tend to grow faster, create more jobs, and pay higher wages than similar businesses that do not export. That is why T-TIP will be one of the first trade agreements to include a chapter on small and medium enterprises — so that SMEs on both sides of the Atlantic, including those in Cyprus, can take full advantage of the agreement to increase transatlantic trade.
But trade in goods is only part of the story. Both the United States and the countries of the European Union have also benefited tremendously from investment in each other’s economies. For instance, BMW’s plant in Spartanburg, South Carolina, employs nearly 9,000 people and, in fact, BMW is now the largest exporter of cars from the U.S. The investment provisions in a T-TIP agreement, which help ensure that foreign investors are treated fairly, should spur investment in both directions. Similarly, we are working to lift barriers on trade in services; a country like Cyprus, which relies on services for more than 80 per cent of its GDP, stands to benefit most from new access to the U.S. services market.
No agreement is perfect, and both sides will need to make compromises. But as Cyprus seeks foreign investment as the best way of kick-starting growth, it is clear that T-TIP is one of the best ways to boost U.S.-Cyprus economic ties and economic growth, through more exports, increased U.S. investments in Cyprus, and more job opportunities created by more trade.
Cyprus, and the EU as a whole, need this economic growth; Cypriots should support the opportunities for growth and jobs that T-TIP can create.
John Koenig is the U.S. Ambassador to Cyprus