It was back in February of this year that President Barack Obama first gave his support to a US-EU Free Trade Agreement. Similar to the North American Free Trade Agreement (NAFTA) already in place with the US and other countries in the Americas. Talks began last month amid much expectation from both sides. Indeed, such is the gravitas that a possible agreement is held, it has been christened with an acronym to match: the TTIP or the Transatlantic Trade and Investment Partnership.
There is no reason to shirk away here. The possibility of such a free trade agreement between both regions would be extremely beneficial not least for chemicals markets. Cefic estimates that chemical trade between the two was approximately Euro 48 billion in 2012. Any enshrinement of an agreement will only boost these figures higher particularly as it would mean the elimination of current tariff duties and regulations imposed by either side, which currently cost the industry Euro 1.5 billion per year. This is not to mention the refocus on Antwerp, Rotterdam and Amsterdam as the European logistical hub which would boost the jobs and infrastructure investment. The same goes for the US Gulf, however this is already in the throes of the shale gas revolution so investment in infrastructure is already sky high. It will though intrinsically link the two areas in terms of shipping markets.
Such a boost at the macro level will no doubt filter down into Specialised Products markets. As outlined above it will already benefit producers in terms of pricing and ease of transportation but it also promises to be a big boost for owners participating in this market. Shale Gas is already a big story but the benefits for shipping are not yet entirely clear but the TTIP will place a huge onus on owners to meet any increased demand between the two regions. Indeed, the fresh opportunities it may create could give a much needed boost to a tradelane that has suffered from a prolonged period of inactivity in recent times.
All of this sounds very impressive and exciting but what is the key driver behind this? A simple answer could be one of opportunity. But what type of opportunity?
The cynical answer would be that this is blatant protectionism in order to safeguard trade and economic growth against the ever powerful and relentless China. Despite a recent stall in growth, the outlook for China remains strong. There may be some truth in this, particularly from a US perspective. Maybe this is the type of opportunity to protect one’s interests?
Or is it an opportunity to break down trade barriers and forge a long standing, robust and overall beneficial economic partnership to all involved? The US and the UK have always had a ‘special relationship’ but is it the turn of the EU to become the US’s economic best friend?
We will not know for at least two years or more but either way it is an interesting development for the chemical industry, shipping and Specialised Products! Watch this space!