TRANSATLANTIC ENTREPRENEUR PARTNERSHIP

How TTIP is Breaking Down Borders

BY DIETRICH VON KLAEDEN

Innovative business ideas are crucial to ensuring economic growth on both sides of the Atlantic , especially at a time of increased competition from emerging markets and sluggish growth in the EU . With its innovative ability and risk-taking corporate culture , the US market has spawned numerous outstanding business ideas such as Airbnb , Uber , and Twitter . In turn , Europe offers London ’ s booming fintech startup scene , the Scandinavian unicorns Spotify and TransferWise , as well as the creative hub of Berlin , which is home to Zalando ( incubated by Rocket Internet ) and SoundCloud .

A Transatlantic Problem

In spite of these successes , numerous barriers remain to hinder the emergence of a truly free transatlantic market and constitute important impediments to greater transatlantic trade and investment flows .

The planned Transatlantic Trade and Investment Partnership ( TTIP ) promises to unleash this economic potential across the Atlantic ; a development that is especially important for startups , as TTIP is the first international trade agreement in the EU to have a specific chapter on SMEs .

Today , the EU and the US economies together account for about half the entire world GDP , nearly a third of world trade flows , and a third of worldwide patent applications . The biggest bilateral trade agreement ever negotiated will boost this economic strength and ease doing business by reducing remaining differences through improved market access , regulatory cooperation , and new rules to facilitate trade and investment .

How will TTIP help startups ?

Given their limited financial and human resources , SMEs have a difficult time dealing with the current administrative , legal , and regulatory trade barriers . A major aim of TTIP lies in the elimination of these trade barriers , which cause disproportional strain on small businesses .

Startups will gain exponentially from a transatlantic agreement that harmonizes trade processes .

Although the transatlantic economic relationship is already the most integrated one in the world — as exemplified by the low average transatlantic tariffs ( under 3 %)— it remains particularly challenging for young firms to conduct business or generate profit . Complying with divergent rules on exportation can be costly and often deters small firms from entering the foreign market . Abolishing the remaining transatlantic tariff barriers would equal preconditions and considerably improve or even create market access for startups .

By streamlining customs procedures , products would enter markets cheaper and more efficiently , as expenses and time spent on double certification measures as well as unnecessary administrative delays would be reduced . Increasing regulatory cooperation and mutual recognition of equivalent safety protections would thereby allow entrepreneurs to focus precious resources on business operation , product development , and innovation . Consumers on both sides of the Atlantic would profit from a greater range of new and innovative products , delivered much faster .

Moreover , TTIP would facilitate access to resources for startups – financial as well as human . Firstly , startups are to gain more potential venture capital through incentivized capital flows . The prevailing complexity of European legislation and the long administrative processes often serve to discourage US investors from entering the European market . Secondly , through a planned expansion of short-term visas , increased workforce mobility would ideally lead to an exchange of skilled labor .

A Digital , Global Market

It is time for the regulatory environment to adapt to the digital connectivity already taking place between the US and EU markets . Geographic distance has long ceased to exist in the digital marketplace . Entrepreneurs are continuously looking to expand their costumer and market base across the Atlantic . With TTIP , the legal framework conditions to promote this exchange would be created , which is an overdue step for the digital industry and crucial to the future of the world ’ s two biggest economies .

Thinking beyond borders is intrinsic to entrepreneurs . With TTIP , the configuration of globalization is taking place , starting with the creation of an integrated transatlantic market . This can only be in the best interest of all startups .