Countries, firms and global value chains. The internal and external coherence of the Trans-Atlantic Trade and Investment Pact.

The global economy is increasingly structured around global value chains (GVCs) that account for a rising share of global production, international trade, investment and global GDP. Studies from a range of disciplines show that global value chains, i.e. mechanisms through which the process of specialization is organized with goods being processed, and value being added, in multiple countries, are becoming “the” way production is organized at world level and many international reports make use of them in tracing the shifting patterns of global production. The emergence of GVC has changed the context and gross trade data can be misleading on how value added is exchanged between countries. Recently many international organization have produced and utilized the OECD/WTO TiVA database, to shed light on the scale, nature and consequences of this production networks. We have learned that gross trade is not equal to trade in value added, a fact earlier based on anedoctical evidence, but now quantified (and quantifiable). A gap that marks for differences in the global supply chain activity, across countries and over time. At the same time, supply chain analysis is the basis of trade agreements in progress, like the Trans-Atlantic Trade and Investment Partnership (TTIP) in a negotiation phase between the European Union and the United States. It is assumed that this agreement, similarly to others in progress, have the largest impact if it covers as many dimensions of GVCs as possible. With the lenses of the economic and the business perspectives, this paper explores the coherence of regional production networks with regional trade memberships, by looking at external and internal coordination of the TTIP. First, after a short comparison of the positive but small estimates of the TTIP-gains from trade, the paper looks at economy-wide impact in scenarios of deeper integration. Second, the external coherence between the objectives of the multilateral trading system and those of the TTIP is examined. Third, the internal coherence of the on-going TTIP is examined, by looking at whether or not it is supposed to be inclusive of small-medium enterprises. Results show first that the internal and external coherence of GVC and the TTIP are not so clearly cut; and second, that newly harmonized global supply chain discipline is not necessarily inclusive small-medium enterprises. And this is very relevant, especially for southern Europe, characterized by firms of smaller size.