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It has become increasingly apparent that national regulations constitute obstacles to a continued increase in trade. In order to reduce such obstacles to transatlantic trade, the US and EU did in 2013 initiate negotiations about an agreement called Transatlantic Trade and Investment Partnership (TTIP).
INTERNATIONAL TRADE has been growing quickly for a long period of time. In particular, this applies to the transatlantic trade between the US and EU. This trade has, to an increasing extent, come to consist of input goods, components and services of different kinds. An international specialisation has emerged since production lines have been geographically divided to an increasing extent. A large share of the trade does now take place within so-called supplier chains. It has become increasingly apparent that national regulations constitute obstacles to a continued increase in trade. In order to reduce such obstacles to transatlantic trade, the US and EU did in 2013 initiate negotiations about an agreement called Transatlantic Trade and Investment Partnership (TTIP).
EFFORTS to deal with regulatory obstacles to trade tend to focus on the regulators. Different forms of consultation and exchange of information are created. These are needed in order to create confidence in and an understanding of the procedures and norms of the opposite parties, but they are not sufficient to decrease the trade costs since the regulators are focusing on a special area, often with an emphasis on technical issues.
THE FOCUS should instead be on the overall effects of different policy areas on international production, trade and investments. Those who are affected the most by the effects of the regulatory frameworks should be integrated in this process. The starting point should be to “think along supply chains”, similarly to what is done in international companies.
PUBLIC-PRIVATE COOPERATION should be created by so-called supply chain councils. The institutional framework for the participation of companies could be the Trans-Atlantic Business Council. Together with agencies that represent other interested parties, advice can be given to the Transatlantic Economic Council, the political agency with the task of promoting the removal of obstacles to trade and investments.
AUTHOR Bernard Hoekman is Professor and Head of Global Economics at Global Governance Programme, European University Institute, Florence. E-email: firstname.lastname@example.org.