A Partnership of competitors
The negotiations for the trade and investment partnership between the EU and the USA are of massive importance. It offers quantifiable benefits but could prove deeply controversial.
The Transatlantic Trade and Investment Partnership (TTIP) is the largest trade agreement between the European Union and the United States. It is not only an ambitious partnership about investment and trade but also it focuses on the establishment of laws, principles and methods for future cooperation.
The first round of these negotiations took place in July 2013 in Washington. The second round will take place in October 2013, in Brussels, although at one point, the negotiations were on the verge of being postponed or even cancelled due to the disclosure of U.S. spy and surveillance actions against the European Institutions and other member state administrations. In an unprecedented effort to get stakeholders involved the Commission made public some of the initial position papers prepared for the July meeting.
If the Transatlantic Trade and Investment Partnership is finally passed it would turn the EU-USA into the world's largest free trade area: taking both parties together, the partnership would comprise up to 50 per cent of the Gross Domestic Product in the world and 30 percent of global trade. This agreement would involve profits for both parties. It has been estimated an increase of 0.5 % of GDP in the case of the EU, and 0.4% for the USA.
Negotiations aim to achieve ambitious outcomes in three broad areas. Given the complexity and difficulty of the issues the treaty could not be approved before 2015.
The first area is that of market access. The agreement aims to remove all duties on transatlantic trade both in industrial and agricultural products. At the same time, both sides will seek to open their services markets in new sectors, such as in that of transport. The same ambitions apply to the liberalisation and protection of investments, and to the business that derives from public procurement, in Europe the companies responding to public procurement represent 25% of GDP and 31 million jobs. The Transatlantic Trade and Investment Partnership seeks to grant access to public procurements contracts regardless of the company's country of origin.
The Partnerships’ second area is that of regulatory issues and non-tariff barriers. In practice, the most significant trade barrier is often not such direct influences as customs duties, but so-called “behind-the-border” obstacles to trade, such as differing safety or environmental standards. These are the so called "Regulatory Issues and Non-Tariff Barriers". The process of mutual acceptance of standards and procedures is complex and difficult, as, for example, in health and hygiene standards for food products. Therefore the Transatlantic Trade and Investment Partnership is proposed as a 'living agreement' that will allow for progressive regulatory convergence over time.
Third is the sphere of rules, principles, and new modes of cooperation needed to address shared global trade challenges and opportunities. Globalisation has brought new challenges to international relationships, beyond bilateral trade. The Transatlantic Trade and Investment Partnership also needs to respond to this new multilateralism. In the case of Intellectual Property Rights the negotiation will not seek full harmonisation but it will specify the possible divergences. Second, the agreement wants to reinforce the policies that connect Trade and Sustainable Development, trying to eliminate measures with negative social or environmental impact.
The USA and the EU have long been at the same time partners and competitors. The fact that their reciprocal trade amounts to € 2 billion daily does not dissolve fierce commercial conflicts and disputes: competition in the aircraft industry, for example, or the European rejection of GMOs. Both sides have much to gain commercially. It seems clear, however, that an equally strong impulse for the proposed convergence of the EU and the USA is their shared fear of being overtaken by the emerging new economic powers.
The negotiations will be long and certainly not always easy. USA business leaders will be apprehensive about the limits placed on 'free enterprise' within the EU's declared model of the social market economy. Within the EU there have been plausible and vivid warnings that the Transatlantic Trade and Investment Partnership threatens to stampede over social protections such as labour rights, environmental responsibility, the principle of precaution in terms of health and safety in the case of GMOs, and the rights of governments over corporations. Awareness of this potential backlash perhaps lies behind the EU's promise of a high degree of transparency. In the EU, at least, civil society will certainly respond to the Commission's call to active participation.