Suspicion remains high among small- to medium-sized companies when it comes to a sweeping free trade and investment agreement such as the Transatlantic Trade and Investment Partnership.
But these firms could be among the biggest beneficiaries of the agreement being negotiated between the United States and the European Union, said Kurt Kuehn, chief financial officer of United Parcel Service Inc., during a keynote address at an Emory University law school conference Sept. 10.
The agreement that seeks to harmonize a wide range of export and tariff regulations is often perceived as being of advantage primarily to large multinational corporations with huge budgets to absorb the risks inherent in international trade.
Mr. Kuehn said that the agreement was necessary in view of the increased competition U.S. and European firms will face from developing countries. “There is tremendous innovation outside of the United States,” he added, reminding the attendees that “95 percent of the world’s consumers are outside the U.S.”
He also pointed to the importance of e-commerce globally and the need for more harmony in regulations to ease the transfer of goods across borders. This came from an executive who was on the front lines of UPS’s decision to stop deliveries from illegal Canadian online pharmacies.
Since he joined the company in 1977, he said that he has witnessed the delivery company’s evolution from a domestically focused operation to the carrier that transports on a daily basis 2 percent of the world’s gross domestic product among 200 and more countries.
In view of the company’s reliance on the global economy, it’s no surprise that he would say that “the TTIP is right down our alley.” He immediately acknowledged, however, that small- and medium-sized U.S. firms felt no such urgency with less than 2 percent of these firms exporting their goods and services abroad.
Hung up on “minor frustrating details” such as product categorizations, differing labeling systems and various customs practices, the smaller firms often view international trade, he said, “as not worth it.”
Despite its size, UPS has its own frustrations with the current system, he added. For instance, one of his company’s biggest obstacles is dealing with incomplete invoices that prevent goods from moving through customs.
In an effort to keep these packages from piling up in the company’s warehouses, he said that UPS has persuaded many of its customers to adopt electronic invoices that have “dramatically reduced frustration, streamlined the process and eliminated stacks of paper.”
UPS can’t fix all the problems on its own. For instance, fees for complying with standards, technical regulations and conformity assessment procedures often are set without consideration of a company’s size or revenue. A comprehensive free trade agreement would have to be passed to resolve such an issue.
Smaller firms also have problems with industry-specific barriers, which are to be resolved through the ongoing TTIP negotiations, he said.
While both the U.S. and Europe’s economies would benefit from greater efficiencies and less waste from “needless activities that don’t add value,” Mr. Kuehn said that he has detected in his travels that the negotiations have become a political issue in Europe.
In the U.S., however, the negotiations still seem to be “below the waterline,” he said. “It’s not a hot potato and I’m thankful for that. It’s much better keeping it out of the headlines.”
He commended local initiatives such as the Emory conference that was supported by the Trans-Atlantic Business Council and the Metro Atlanta Chamber along with seven local bi-national chambers as a means of building public support.