February 4, 2014

THE OBAMA LEGACY:

Why a U.S.-European Trade Deal Is a Win-Win : Changing business trends mean we're locating plants closer to markets. (JOE KAESER, Feb. 2, 2014, WSJ)

[T]he bigger reason this agreement makes sense has more to do with the transformation of manufacturing in developed economies over the past two decades. It used to be that American and European companies built their products in low-wage countries, separated by great distances from the innovators who developed the products and the markets where they were sold. But companies increasingly find that is an outmoded way of doing business. Today they are opting to build products where the innovation is happening and where they are selling them.

There are several reasons for this, not least the speed with which consumer trends are changing. The distance between today's generation of a product--and the next--is getting shorter. Often buyers' preferences are shifting even while the last generation of products are on lengthy ocean journeys. This puts a premium on being able to bring new goods to market quickly and stay one step ahead of the competition.

That is why Siemens, for example, is already building wind turbines in Kansas and Denmark, passenger railcars in California and Austria, gas turbines in North Carolina and Germany, and imaging equipment in Tennessee and the United Kingdom. It's why the EU and the U.S. are Siemens's largest markets. We can build high-value products more efficiently in Europe and the U.S. than in most other countries.

From Siemens's perspective, a trade agreement like TTIP makes the U.S. and EU members more attractive. By reducing trade barriers, improving intellectual-property protections and setting international rules of the road, TTIP has the potential to improve America and Europe's global competitiveness and strengthen their comparative advantages.
Posted by at February 4, 2014 5:29 PM
  
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