Banco Bilbao Vizcaya Argentaria : José Manuel González-Páramo: “TTIP should be the global reference framework for boosting international trade”

Round table 'TTIP, the lever for growth that Europe needs' at Faes Campus

BBVA executive director José Manuel González-Páramo believes that the Transatlantic Trade and Investment Partnership between the European Union and the United States (TTIP) should be the global reference framework for boosting international trade, thus reinforcing the collaboration between the two blocks. During his speech at the round table 'TTIP, the lever for growth that Europe needs' held today at Faes Campus he said that this agreement should also contribute to the elimination of trade barriers in the rest of the Atlantic area and in the emerging economies with closer ties with the U.S. and the EU.

José Manuel González-Páramo began his speech with a quick review of the situation of world trade. The BBVA executive director said that global trade has lost strength due to cyclical factors such as the recession in Europe, and structural factors such as the increase in trade restrictions and fewer trade agreements. This, he added, is slowing down the dynamism of the global value chains.

Since last January, José Manuel González-Páramo is the European chairman of the TransAtlantic Business Dialogue (TABD), the organization (of which BBVA is one of its oldest members) that aims to soon achieve a Free Trade Agreement between the EU and the U.S. (TTIP) to facilitate trade in goods and services on both sides of the Atlantic.

As for this agreement, the BBVA executive director stressed that its development is based on three fundamental pillars: improving access to the U.S. and EU markets, reducing barriers while respecting the singularities of each area, and putting in place new rules to help companies, making it easier to export, import and invest.

José Manuel González-Páramo underlined that SMEs are one of the main goals of this agreement, as it could help them gain access to the energy and commodities market, as well as providing protection for investment and intellectual property, while reducing costs in customs formalities.

The executive director of BBVA also reminded those present of the growing importance of economic flows between the United States and Europe. He explained that both regions have a highly complementary specialization in exports and imports, and for this reason the additional reduction of trade barriers would have a favorable impact on the growth of trade flows.

In this regard he stressed that Europe maintains its importance in the trade in goods despite Asia's dynamism, and that Europe has higher shares in the trade in services, while there is a very close link in direct foreign investment between both areas.

Outlook and challenges of TTIP

The BBVA executive director also explained that the recent authorization given to the U.S. government to negotiate trade agreements with no subsequent amendments by the legislative power (TPA) will contribute to the reaching of agreements, although not in all the matters being discussed.

In this regard he said that there are still a number of pending challenges that TTIP has to address. First, what will be the role of Asia, in particular of China, in the development of global trade and of the various agreements being negotiated.

Second, agricultural tariffs and food trade are two issues that still have to addressed, as well as the elimination of barriers to investment. Third, TTIP must also address the possible inclusion of new rules for financial services.

As regards financial regulation, José Manuel González-Páramo explained that the approaches of both trade blocks have been different, since while the United States has taken a comprehensive approach through the Dodd-Frank Act, Europe has been adopting various directives and regulations.

In this regard, he stressed that the inconsistencies in the regulation implemented in the different countries undermine the reform's efficiency and, in his opinion, greater coordination, cooperation and consistency is needed. "The inclusion of financial services in TTIP is the easiest way to achieve regulatory consistency", stated the BBVA executive director.

However, in the absence of a financial agreement, explained José Manuel González-Páramo, convergence should be ensured, preserving financial stability and guaranteeing a competitive and fair playing field, as well as mutual recognition based on the idea that equivalence is the key to facilitate coordination.

"The last major challenge is that of public opinion. As an enormously ambitious agreement for the future of the Atlantic countries, it is open to criticism", concluded José Manuel González-Páramo.

He explained that in some cases there are justified disagreements that are contributing to the improvement of TTIP. In others, however, "we are witnessing the exploitation of baseless myths, which attempt to mobilize the 'anti platforms'", he added. Faced with this situation, stressed the executive director of BBVA, what is needed is transparency and a clear explanation of the huge benefits that a successful conclusion of the negotiations will bring for consumers and SMEs.

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