Transatlantic Trade and Investment Partnership
The Transatlantic Trade and Investment Partnership (TTIP; also known as the Transatlantic Free Trade Area, abbreviated as TAFTA) is a proposed free-trade agreement between the European Union and the United States. The deal is estimated to boost the EU's economy by €120 billion, the US economy by €90 billion and the rest of the world by €100 billion. Talks began in July 2013 and reached the third round of negotiations by the end of that year. This free trade agreement may be finalized by the end of 2014.
A previous proposed treaty was Multilateral Agreement on Investment.
- 1 Economies
- 2 Background
- 3 Mandate
- 4 Timeline and ratification
- 5 Proposed benefits
- 6 Criticism
- 7 Effect on third countries
- 8 See also
- 9 References
- 10 External links
The two together represent 60% of global GDP, 33% of world trade in goods and 42% of world trade in services. The growth of the EU's economic power has led to a number of trade conflicts between the two powers; although both are dependent upon the other's economic market and disputes affect only 2% of trade. A free trade area between the two would represent potentially the largest regional free-trade agreement in history, covering 46% of world GDP. See below for details of trade flows;
|Direction of trade||Goods||Services||Investment||Total|
|EU to US||€260 billion||€139.0 billion||€112.6 billion||€511.6 billion|
|US to EU||€127.9 billion||€180 billion||€144.5 billion||€452.4 billion|
US investment in the EU is 3 times greater than US investment in the whole of Asia and EU investment in the US is eight times that of EU investment in India and China combined. Intra-company transfers are estimated to constitute a third of all transatlantic trade. The US and EU are the largest trading partners of most other countries in the world and account for a third of world trade flows. Given the already low tariff barriers (under 3%), to make the deal a success the aim is to remove non-tariff barriers.
Economic barriers between the EU and the US are relatively low, not just due to long-standing membership in the World Trade Organisation but recent agreements such as the EU–US Open Skies Agreement and work by the Transatlantic Economic Council. The European Commission claims that passage of a trans-Atlantic trade pact could boost overall trade between the respective blocs by as much as 50%. However, economic relations are tense and there are frequent trade disputes between the two economies, many of which end up before the World Trade Organization. Economic gains of TTIP were predicted in the joint report issued by the White House and the European Commission.
Some form of Transatlantic Free Trade Area had been proposed in the 1990s and later in 2006 by German Chancellor Angela Merkel in reaction to the collapse of the Doha world trade talks. However, protectionism on both sides may be a barrier to any future agreement. It was first initiated in 1990, when, shortly after the end of the Cold War, with the world no longer divided into two blocs, the European Community (12 countries) and the US signed a "Transatlantic Declaration". This called for the continued existence of the North Atlantic Treaty Organization, as well as for yearly summits, biennial meetings between ministers of State, and more frequent encounters between political figures and senior officials. Subsequent initiatives taken by the European deciders and the US government included: in 1995, the creation of a pressure group of business people, the TransAtlantic Business Dialogue (TABD) by public authorities on both sides of the Atlantic; in 1998, the creation of an advisory committee, the Transatlantic Economic Partnership; in 2007, the creation of the Transatlantic Economic Council, in which representatives from firms operating on both sides of the Atlantic meet to advise the European Commission and the US government – and finally, in 2011, the creation of a group of "high-level" experts whose conclusions, submitted on February 11, 2013, recommended the launching of negotiations for a wide-ranging free-trade agreement. On February 12, 2013, President Barack Obama called in his annual State of the Union address for such an agreement. The following day, EU Commission President Jose Manuel Barroso announced that talks would take place to negotiate the agreement.
The TTIP is divided into 15 specific working groups, each covering different areas. The scope of TTIP is vast but according to the leaked mandate the most prominent points are:
- The first aim is to eliminate, as far as possible, all customs duties between the EU and the US. This is already practically achieved, except in the agricultural sector where they remain steep.
- The second aim is to reduce, or even to eliminate, what the specialized jargon refers to as non-tariff trade barriers. This refers to the constitutional and legal norms, rules and regulations liable to limit the scope of economic competition, defined here as a supreme, inalienable fundamental freedom. These norms can be of any type: ethical, democratic, legal, social, health or environment-oriented, financial, economic, technical,… Several of the mandate's articles (art. 14, 18, 19, 21, 25, 29, 31, 32, 33) express a wish of protecting existing European social, health and environmental norms. There are specific references to the International Labour Organization (ILO), the international conventions on the environment, and the UNESCO convention on cultural diversity. An article states that audiovisual services are not included in the agreement.
- The third objective is to enable private firms a right of litigation against the laws and regulations of the various States, whenever these firms feel that these laws and regulations represent unnecessary obstacles to trade, access to public markets, investment and service-providing activities. This litigation will no longer be enacted through national jurisdictions, but through private arbitration structures called « dispute settlement mechanisms ». Articles 23 (investments), 32 (labour and environmental norms) and 45 (for the whole agreement), require the creation of this mechanism.
The most important points of dispute are the EU's policy to limit the imports of genetically modified food, as well as EU's relatively more loose regulation of the financial sector, as opposed to more stringent domestic laws applying to US banks.
Timeline and ratification
Negotiations are held in week-long cycles alternating between Brussels and Washington. The negotiators hope to conclude their work in 2015.
The 28 governments will then have to approve the negotiated agreement in the UE Council of Ministers. At this point, the European Parliament will be asked for its decision. It is empowered to approve or reject it. A controversy has arisen on the issue of whether the national Parliaments should also ratify this agreement. In France, Article 53 of the Constitution states that trade treaties can only be ratified by a law. In the US, the Congress will have to ratify the text.
If realized, the TTIP aims to liberalize one-third of global trade and generate millions of new jobs. "With tariffs between the United States and the EU already low, the United Kingdom's Centre for Economic Policy Research estimates that 80 percent of the potential economic gains from the TTIP agreement depend on reducing the conflicts of duplication between EU and US rules on those and other regulatory issues, ranging from food safety to automobile parts." A successful strategy, according to Thomas Bollyky at the Council on Foreign Relations and Anu Bradford of Columbia Law School, will focus on sectors where transatlantic goals of trade and regulation overlap: pharmaceuticals, agricultural products, and financial services. This will ensure that the United States and Europe remain "standard makers, rather than standard takers," in the global economy, subsequently ensuring that producers worldwide continue to gravitate toward joint US-EU standards.
An economic assessment prepared by the Centre for Economic Policy Research in March 2013, estimates that a comprehensive agreement will result in annual GDP growth in the EU of 68-119 billion euros by 2027 and annual GDP growth of 50-95 billion euros in the US. The same report estimates that a limited agreement, focused only on tariffs, will result in annual GDP growth in the EU of 24 billion euros by 2027 and annual growth of 9 billion euros in the US. The maximum GDP growth estimates would translate into additional annual disposable income of 545 euros for a family of four in the EU and 655 euros for a family of four in the US.
The CEO of Siemens, which has 70% of its workforce in Europe and the US, has indicated that the TTIP would strengthen the global competitiveness of the US and EU by reducing trade barriers, improving intellectual property protections, and setting international "rules of the road".
The project has been much criticized, first and foremost in anti-globalist circles, who favor the concept of a regulating and re-distributing State and reject the liberalization and deregulation supported by the WTO aims and agreements. There is also a great deal of hostility from the anti-liberal left and the ecologists.
In a The Guardian article of 15 July 2013, Dean Baker of the Center for Economic and Policy Research in the US observed that with conventional trade barriers between the US and the EU already low, the deal would focus on non-conventional barriers such as freeing up regulations regarding fracking, GMOs and finance and tightening laws on copyright, he goes on to assert that with less ambitious projections the economic benefits per household are mediocre "If we apply the projected income gain of 0.21% to the projected median personal income in 2027, it comes to a bit more than $50 a year. That's a little less than 15 cents a day. Don't spend it all in one place."
National Sovereignty and Investor State Dispute Settlements (ISDS)
ISDS means an investor can bring a case directly against the country hosting its investment, without the intervention of the government of the investor’s country of origin. In December 2013, a coalition of over 200 environmentalists, labor unions and consumer advocacy organizations on both sides of the Atlantic sent a letter to the USTR and European Commission demanding the investor-state dispute settlement be dropped from the trade talks and stating: "Investor-state dispute settlement is a one-way street by which corporations can challenge government policies, but neither governments nor individuals are granted any comparable rights to hold corporations accountable." In December 2013, Britain's The Guardian newspaper claimed that ISDS is a "mechanism [that] could threaten almost any means by which governments might seek to defend their citizens or protect the natural world" 
Member of European Parliament Yannick Jadot described the negotiations as happening "in an absolutely undemocratic way". Despite being appointed to oversee the trade negotiations as a parliamentary rapporteur, he said he felt "excluded", going on to say "even when we have one document, we are forbidden to release this document to the public, so citizens are totally excluded from the negotiations which deal with health issues, environmental issues, social rights and public services".
Changes to custom duties
On the issue of lowering of customs duties on agricultural products, the analysis of agroeconomist Jacques Berthelot is widely shared: it would be a catastrophe for European agriculture and European consumers. According to him, such a decision "would accelerate the process by which agricultural holdings become ever more concentrated, maintain the sector's minimal competitivity, drastically reduce the number or agricultural workers, seriously increase both unemployment and the depopulation of isolated countrysides, contribute to the deterioration of the environment and biodiversity, and put an end to the aim of creating close-range commerce between producers and consumers."
Non-tariff trade barriers
On the question of non-tariff trade barriers, the project's opponents are convinced that what is being planned is nothing less than the utter dismantling of the legal and regulatory framework of the 28 member States of the European Union, whenever a norm can be held to represent an obstacle to free enterprise. The norms targeted can deal with food safety, health care, or environmental, social, cultural or technical issues. What is most feared is an alignment on American norms, which, in the great majority of cases, are far less stringent and protective than in Europe.
The project's opponents feel the guarantees listed in the mandate have no credibility, as policies within the European Union all tend, in the name of free, undistorted competition, to dismantle social norms and public services. The judgments of the EU Court of Justice have established the primacy of competitivity over social rights. The various references to the ILO, or to environmental and UNESCO conventions, offer no guarantees since the US have never ratified them.
Regarding health and technical norms, those who oppose this negotiation point out that the risk-evaluation process is radically different on either side of the Atlantic: in the US, as long as a product or process has not been scientifically proven to be harmful or to have adverse effects, it can be used. It is well known that American firms consider protests against genetically modified organisms, beef treated with growth hormones, chlorinated chickens and ractopamine-fed pork to be without the least scientific basis.
Moreover, the opponents of this negotiation note that if audiovisual services are, for the time being, set aside from the negotiation, every other aspect of culture (theater, opera, museums, archives, libraries, cultural heritage) is to be included.
Response to criticism
Karel De Gucht responded to criticism in a Guardian article in December 2013, saying "The commission has regularly consulted a broad range of civil society organisations in writing and in person, and our most recent meeting had 350 participants from trade unions, NGOs and business".
Effect on third countries
Some proposals for a transatlantic free trade area include on the American side, the other members of North American Free Trade Area (Canada and Mexico) and on the European side, the members of the European Free Trade Association (Iceland, Norway, Switzerland and Liechtenstein). Mexico already has a free trade agreement with EFTA and the EU while Canada has one with EFTA and is negotiating one with the EU. These agreements may need to be harmonised with the EU-US agreement and could potentially form a wider free trade area.
Canadian media observers have speculated that the launch of US-EU talks puts pressure on Canada to conclude its own three-year long FTA negotiations with the EU by the close of 2013. Countries with customs agreements with the EU, such as Turkey, could face the prospect of opening their markets to American goods, without access for their own goods without a separate agreement with the USA.
- Anti-Counterfeiting Trade Agreement (ACTA)
- Combating Online Infringement and Counterfeits Act (COICA)
- Copyright infringement
- Digital rights
- Generic drugs
- Protect IP Act (PIPA)
- Stop Online Piracy Act (SOPA)
- Trans-Pacific Partnership
- Trans-Pacific Partnership Intellectual Property Provisions
- Transatlantic Free Trade Area
- United States–European Union relations
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- EU negotiations site
- European Commission, DG Trade - In focus Transatlantic Trade and Investment Partnership (TTIP)
- USTR Transatlantic Trade and Investment Partnership
- The Transatlantic Colossus: Global Contributions to Broaden the Debate on the EU-US Free Trade Agreement A collaborative publication with over 20 articles on the global implications of the TAFTA | TTIP