Commentary: Why Logistics and Politics Need to Mix — for the Economy’s Sake

It is widely perceived that the EU and the US are at critical cross-roads in their pursuits to eradicate crippling debt. In recent times, parties on both sides of the Atlantic have reached their most vulnerable and need to work together if they are to succeed in their efforts to regain economic stability. Global trade can play its part in achieving this goal but will need a governmental helping hand along the way in order to make its contribution.

The transatlantic trade link between the US and EU is the largest and most sophisticated on the planet and is growing stronger by the year: Statistics from the Office of the United States Trade Representative (USTR) have shown a 42 percent increase in US exports to the EU and a 40 percent increase in US imports from the EU between the years 2000-2010. The latest figures available for 2011 only record from January to September as opposed to January to December of the previous years. However, if the average rate of trading throughout Jan-Sept continued into October through to December, then the figures would have increased another 11percent on US exports and 13 percent on US imports from the EU over a single year. The overall value of exported goods from the US to the EU was set to reach $267billion by the end of 2011, with imports reaching an estimated $363billion.

This all sounds excellent and seems as though the US and the EU have a booming bilateral trade relationship. In fact they do; but it can be better. They need to work together to create new initiatives that will continue to improve the trade link between the two.

In light of this year’s potentially changing political landscape and the economic crisis that the US and European countries seem to have adopted, it would make ecological sense for governmental departments on both sides of the Atlantic to fine-tune some of the current regulatory barriers which are preventing an already booming industry from reaching its full potential.

The EU has legislation in place which restricts, or in some cases totally blocks US exports of food goods such as meat and poultry, rice and wheat with no clear reasoning behind the decisions as there has been no formal testing to show the potential risks that these foreign goods possess to security or consumers.

Just imagine what could be achieved should the governmental powers decide to waive the non-tariff barriers holding back the trading of some of the most lucrative products on the planet. Both sides of the Atlantic could increase their foreign market presence quickly and efficiently. That solution could only help both economies. The billions of dollars/euros exchanging hands could be almost doubled, promoting economic prosperity in all participating nations. Our road/rail freight industries would benefit as we transport the goods to and from the dozens of other countries that would prosper from the transatlantic trade relationship.

Hundreds of thousands of new jobs would become available to meet the increased workload. These wages would create more tax revenue to help the economy even further.

An extract from the European Commission website reiterates this point in more detail:

“In 2009, a study was carried out for the European Commission which identified the most important Non-Tariff Measures (NTMs) that affect trade between the EU and the US, and estimated their economic impact. The main findings of the study were that the removal of half of the existing NTMs and regulatory divergences would translate into an increase in GDP of €163 billion until 2018 on both sides of the Atlantic.”

These non-tariff barriers need to be addressed in order to improve our industry and to aid the reshaping of our economic landscape. With changes already in the Greek government and changes possible in countries like Italy, Spain, Ireland and Portugal , not to mention the USA’s very own presidential elections on the horizon, maybe a change of personnel could mean a change of regulation regarding non-tariff barriers.

About the author

Adam Veitch writes on behalf of First European Logistics Ltd. (www.1st-european.com), a UK based freight forwarding company from Burnley, Lancashire.

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