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New Opportunities for U.S. Exporters to France

Jérôme Osselaer03 June 2014

This article is the inaugural episode of “French Connection”, a brand new series which will explore English to French flows in terms of trade, finance and people, in an increasingly interconnected and digitalized world. As we are just a couple of days away from the 70th anniversary of D-Day, it seems appropriate to focus on the American trade in goods with France, and the benefits of new international regulations for U.S. exporters.

New opportunities in a deregulated market

France is the number one destination of U.S. exports to French-speaking territories, with a total of $32bn in 2013 (+21% since 2009), ahead of Quebec, Belgium and Switzerland.

The breakdown of the trade between the United States and France is typical from flows between developed countries, with a vast majority of knowledge-intensive products from similar industries, such as aeronautics, computer & electronic products, pharmaceuticals or machinery.

The commercial links between the two countries are expected to generate even more opportunities in the near future, considering the multilateral Agreement on Trade Facilitation (ATF) reached in December 2013 and the negotiations under way about a potential bilateral Transatlantic Trade and Investment Partnership (TTIP).

Benefits of the ATF for U.S. exporters

The ATF reached in Bali at the WTO's 9th Ministerial Conference aims at streamlining customs procedures and cutting red tape, in a move towards deeper international cooperation.

The overall potential trade cost reductions for high income countries, such as the USA and France, should be around 12%, driven by three major sets of measures:

1. Procedures

According to the OECD TFIs (trade facilitation indicators), the United States still has room for improvement in this area, while France outperforms.

2. Automation

The USA is best-in-class, whereas France underperforms.

3. Advance rulings

The United States is best-in-class, while France is on par with the OECD average.

Benefits of a potential TTIP for U.S. exporters

Negotiations are under way since July 2013 about a potential TTIP, in order to expand trade and investment between the USA and the EU, which are already each other’s primary partners in both areas.

The TTIP scope is ambitious and goes way beyond the ATF. Its comprehensive framework includes chapters on:

- tariffs,

- non-tariff barriers (NTBs), whether applied at the border or behind it,

- regulatory compatibility,

- customs and trade facilitation based on the ATF,

- intellectual property rights,

- transparency,

- anticorruption,

- competition policy,

- dispute settlement,

- small- and medium-sized enterprises (SMEs), which are disproportionately affected by trade barriers.

A specific chapter dedicated to SMEs seems especially necessary in a digital world which allows even the smallest companies to become “micromultinationals”.

Before going into the details, it is worth noting that given the already low level of the import tariffs (3% on average in the EU), industries with strong NTBs, such as agricultural products or chemicals, should be the main beneficiaries of an eventual agreement.

Furthermore, a significant volume of trade between the United States and the EU is of an intra-group nature within integrated industries, and the related potential impact of the TTIP is likely to be limited in these fields.

However, the implementation of the TTIP will allow U.S. exporters to:

1. become more competitive in the global marketplace

For example, the elimination of EU tariffs on industrial products, including machinery, scientific instruments, and chemicals and plastics, will enable U.S. companies to compete with suppliers from the EU’s other free trade agreement partners, and from within the EU itself.

2. benefit from a level playing field

- tariffs: for instance, in terms of agricultural products, the TTIP could eliminate a 7% imbalance on shipments of apples (currently a 7% tax from U.S. to EU vs. free from EU to U.S.), and a $1,646 differential in duties per ton on shipments of olive oil. Besides, the TTIP could also reduce customs duties on digital products and e-commerce.

- regulatory compatibility: increasing the compatibility of U.S. and EU regulations could reduce associated costs, especially in key industries such as pharmaceuticals, cosmetics, medical devices, automotive, and chemicals.

- state-owned enterprises (SOEs): the TTIP will aim at reducing trade distortions from SOEs engaged in commercial activity.

3. get broader and deeper access to existing and/or new markets

- textile and apparel products: the goal here is to obtain fully reciprocal access.

- government procurement: the objective is to improve access to these markets in areas including construction and medical devices.

- NTBs: eliminating or reducing NTBs, such as restrictive licensing, sanitary and phytosanitary (SPS) measures, and technical barriers to trade (TBTs), will offer new opportunities, while building on relevant WTO agreements.

What is good for cross-border trade is good for the translation industry. Consequently, I welcome these new regulations, which should strengthen the flows between the United States and France, while driving the growth of all the fields related to international communication, as long as they are fully implemented.

Now, I’d love to hear from you!

How do you plan to capture these new opportunities?

How much of an impact will these new regulations have on your own company?

Do you consider increasing your exports to France?

Let me know in the comments below!

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