TCS Daily


Size Isn't Everything

By Christian D. de Fouloy - August 14, 2003 12:00 AM

Seven years ago in Chicago, the first ever U.S. and European Partenariat for small and medium-sized enterprises (SMEs) was held. The objective was to provide a unique "matchmaking" opportunity for businesses that otherwise might not have the resources required to establish transatlantic relationships. The event was a great success. Out of 2,500 meetings with SMEs from 15 different states, 250 business arrangements between U.S. and EU companies were entered into. Since then, other similar events have taken place.

               

The Transatlantic Small Business Initiative (TASBI) was called for in a joint recommendation American and European industry representatives made to the U.S. government and the European Commission at the November 1996 CEO conference of the Transatlantic Business Dialogue (TABD) in Chicago. At that time, American and European SMEs expressed their interest in building stable business relationships that would blend their complementary technological, financial and managerial resources to enable them jointly to compete more effectively in global markets. Examples of the types of viable, transatlantic linkages industry sought to achieve through TASBI are strategic partnerships and alliances, technology transfers or licenses, distributorships, franchises, joint ventures and direct investments.

 

Now we're seven years down the road and in conjunction with the recent U.S.-European Union Summit which was held on June 25 in Washington, the decision has been made to redesign the TABD in order to create a more conducive environment to advance transatlantic economic relations. Basically, the redesign of the TABD includes the following features:

 

-         Focusing TABD recommendations to governments in two or three areas of critical interest. To bolster international business confidence, TABD business leaders will pick two or three issues of most benefit to the transatlantic market, pursue a work plan for each and outline goals for the coming year.

-         High-level government action from the U.S. and the EU. The U.S. Secretary of Commerce and the EU Commissioners for Enterprise and Trade have pledged to review the proposed work plans and commit to implement appropriate recommendations. A senior deputy from each side will coordinate the process throughout the year, ensuring participation of appropriate agencies, policy officials and regulators in the process.

-         Replacement of annual two-day TABD conference with an annual meeting on the margins of the U.S.-EU Summit. European and American CEOs and government decision-makers will use this meeting to review progress and identify future work.

-         Expert-level working groups to discuss sector-specific issues. Throughout the year, these groups will meet, bringing in high-level government and business leaders when necessary. Results will be fed into CEO-level discussions as appropriate and may be addressed in relevant government dialogues such as the talk on EU-U.S. Guidelines on Regulatory Cooperation and Transparency.

 

Surprisingly, the TABD redesign doesn't make any reference at all to the Transatlantic Small Business Initiative. Yet, SMEs constitute the overwhelming majority of all companies on both sides of the Atlantic (18 million SMEs in the U.S. vs. 22 million in the EU). Their active involvement in the TABD is therefore essential as well as their participation in the development of "bridges over the Atlantic" to facilitate cooperation and to increase trade and investment flows between European and American SMEs. After all, this was why the TASBI was launched by the TABD. The objective was twofold:

                       

  1. Partnering events that stimulate SME's from both sides of the Atlantic to form business alliances and partnerships,
  2. Development of an EU/U.S. information and cooperation system to provide SMEs with information on topics relating to doing business in the EU and the U.S.

 

All parties agree that the TABD and TASBI are the appropriate fora for exploring solutions to specific trade and investment barriers. New initiatives must be taken in that context in the areas which will prove crucial in the future such as the information society, intellectual property rights, electronic commerce, data protection, media investments.

 

TASBI plays an important role in creating a cooperative environment for SMEs, which represent the largest source of employment creation on both sides of the Atlantic. There is no question that TASBI is the natural extension of the TABD to cater for the special needs of smaller enterprises.

 

The health of the transatlantic relationship is of central importance to the U.S. and European business communities. As a result, reducing regulatory and other obstacles to transatlantic trade and investment will strengthen the international competitiveness of US and European companies and contribute to the stability of the world economy, enhance global growth and job creation and raise living standards worldwide.

 

In the TABD statement to the 2003 EU-U.S. Summit, the word "small" is only mentioned once in the following sentence: "As CEOs from a broad cross section of large and small companies...we urge both governments to re-double their efforts to bolster the transatlantic relationship." No mention is made of TASBI. Yet, the TABD has established SME input as a priority issue.

 

As we proceed with the redesign of the TABD, it may also be appropriate to move forward with TASBI. The line separating "domestic" from "international" firms is disappearing and small businesses are responding to this new reality. Small businesses must be encouraged to think globally and expand abroad. This doesn't mean expensive subsidies. It means supporting free and fair trade, open markets and global competition. These ought to ensure that small firms have access both to cost-effective inputs that enable them to stay competitive and to expanding markets that enable them to grow.

 

TASBI's stakeholders should include private and public organizations on both sides of the Atlantic that have a vested interest in developing transatlantic partnerships on behalf of their members. TASBI needs to be rejuvenated. As the economy globalizes so does the world of small and medium-size businesses and the requirements of a SME-friendly global trade must be met by WTO results. The prospect of a stable global economy requires a coordinated transatlantic partnership for a successful conclusion of the WTO negotiation. TASBI indeed has a role to play. 

 

Christian D. de Fouloy is Senior Research Fellow at the European Enterprise Institute.
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