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February 25, 2013

Free trade with Europe could spell opportunity

Photo | Pablo Robles For George Giles, vice president of sales at Metfin in Suffield, a free trade deal with Europe would open new opportunity to compete for sales overseas without the drag of tariffs and red tape.
By Greg Bordonaro

When President Barack Obama used his State of the Union address to announce plans to seek a free trade agreement with Europe, it was music to the ears of Anne Evans.

Evans, the Connecticut district director for the federal Department of Commerce's International Trade Administration, is the state's chief export cheerleader and thinks a free trade agreement with the EU would be a boon to Connecticut companies, particularly advanced manufacturers.

Europe is already Connecticut's top trade partner, but if import tariffs and other trade barriers were eliminated, it would likely spur even more Connecticut businesses to seek out customers overseas.

“A free trade deal with Europe would mean so much to the northeast and particularly Connecticut,” Evans said. “It's what we all want.”

The details of what would be involved in an U.S.-EU free trade agreement have not yet been hashed out and will likely create a lot of political wrangling in Congress before a deal is reached.

The Associated Press reports the goals of the agreement would include removing import tariffs, which average 4 percent, and getting rid of other barriers to trade such as the approval processes that businesses have to go through in order to sell products in Europe.

Although import tariffs aren't as high in the EU as they are in other regions of the world, they still make it harder for Connecticut firms to compete, Evans said. That's because Connecticut companies doing business in the EU face the stiffest competition from European firms that don't have to pay the extra fees.

Fuel cells made in Connecticut and sold to Germany, for example, face a 6 percent tariff, while zinc rods and wire face a 5 percent tariff in Germany.

Just as important, Evans said is the need to standardize regulations between the U.S. and Europe because red tape can add significant costs to trade.

George Giles, the vice president of sales and marketing at Metfin, a Suffield-based manufacturer of shot blasting equipment, said his firm would like to do more business with EU countries, but finds it difficult to compete with European firms that offer similar products.

Tariffs and other importing related fees make Metfin's products less competitive in Europe, but if those extra costs were eliminated, Giles said it could open up major opportunities.

“It could be a game changer,” Giles said. “It would eliminate a barrier that makes my product more costly.”

Giles said he is close to signing a deal with a company in Spain, in which Metfin would supply the Spanish firm with peening technology, which uses shot blasting equipment to harden a metal surface to prevent cracking and erosion.

The European Union is Connecticut's top export market, with France and Germany serving as the state's largest trade partners. Of the $16.2 billion in exports shipped out of Connecticut in 2011, France and Germany accounted for nearly 20 percent of the deal volume. Connecticut companies sent $1.9 billion in goods to France and $1.4 billion to Germany in 2011.

Much of the trade between Europe and Connecticut is focused on advanced manufactured goods, particularly related to aerospace and defense. That makes sense with the major aerospace manufacturers in Connecticut like Pratt & Whitney and Sikorsky, and the many suppliers that support them.

In 2011, Connecticut firms exported $6.1 billion in aircraft engines and parts, which accounted for 37.2 percent of all the state's exports.

Just last week, Evans joined U.S. Sen. Richard Blumenthal and nine Connecticut manufacturers on a three-day trade mission to Toulouse, France, which is considered the aerospace hub of Europe.

Taking the trip to Connecticut's top export market were firms like AdChem Manufacturing Technologies, AeroCision, Alpha Q Inc., Capewell Components, and Pegasus Manufacturing, who met with senior procurement officials at Airbus, Goodrich Aerostructures, Aircelle, Liebherr, and DGA Techniques Aéronautiques.

Jointly, the nine companies employ over 6,000 people in Connecticut and largely supply precision component parts to the aerospace industry.

Evans said a couple of the companies were asked to bid on parts and assemblies, although no deals were signed.

Evans said she also spoke with a commercial officer in France about the possibility of a free trade pact, and they both agreed the key is standardizing regulations to make it easier for goods to flow freely to and from overseas.

“The issue is how long will it take to be agreed and implemented,” Evans said.

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