By July 14, 2013 Read More →
EU: First Round of TTIP Talks Conclude

EU: First Round of TTIP Talks Conclude

Negotiations on the Transatlantic Trade and Investment Partnership (TTIP) officially started last Monday, July 8th. 150 negotiators from the EU and the US gathered in Washington for one week to discuss how cooperation should best progress in the various areas which the agreement is expected to encompass. These include, among others, energy, investments and financial services, agricultural goods, intellectual property rights and state-owned enterprises. The negotiators also met with a large number of stakeholders to gain a first-hand understanding of how the TTIP is perceived and how people believe it will affect them and their commercial interests.

As tariffs between the EU and the US are already extremely low, it is expected that much of the TTIP will focus non-tariff barriers to trade or NTBTs. As The Economist reports, these can be quite substantial:

The Centre for Economic Policy Research (CEPR), a think-tank in London, reckons that current NTBs are far more burdensome than tariffs. Chemical exporters to America face a tariff rate of 1.2%, for example, and non-tariff barriers equivalent to a 19.1% duty. European NTBs add what amounts to an additional 25.5% duty on top of the 8% tariff already levied on American car imports.

NTBTs include measures such as consumer safety standards, (import) quotas, shipping and transport restrictions and the preference for domestic products in government procurement contracts.

However, it will be difficult for both sides to reach a compromise on some of these issues. With regard to consumer safety, agriculture and food standards will pose a particular challenge. Overall, Europeans remain strongly opposed to GMOs, which are commonplace in the US – both as human consumables and as components of animal feed. Yet while the EU has stated that “[b]asic laws, like those relating to GMOs or which are there to protect human life and health, animal health and welfare, or environment and consumer interests will not be part of the negotiations,” there are indications that the EU may in fact be more willing to compromise on these issues than most believe. In a particularly insightful article, Glyn Moody of TechDirt uncovers and exposes some of the parallels in wording between a leaked EU position paper and previous statements made by Monsanto and the US government regarding GM foodstuffs.

If both sides do manage to overcome their particular sensibilities and conclude a truly comprehensive agreement, the outcome could be impressive – perhaps even leading to an increase in output of more than the 0.5 percent claimed by the European Commission as The Economist explains:

An ambitious trade deal would therefore produce big benefits. CEPR suggests an agreement that eliminates all remaining tariffs and cuts NTB costs by 25% would lift annual EU output by roughly 0.9% and American GDP by 0.8% (see chart). Annual exports for each economy could rise by nearly 2% of GDP. A less ambitious deal that left some tariffs in place and cut NTB costs by 10% would yield gains around half that size. One that only slashed tariffs would bring gains less than a fifth of those for a comprehensive deal.

The TTIP is seen as a potentially indispensable measure to leverage Western influence and power as emerging economies gain in status and slowly move from the periphery to the centre of the world economy. Javier Solana summarizes the consequences of this for Europe:

Today, three European countries are among the world’s seven largest economies. Ten years from now, only two will remain. By 2030, only Germany will still be on the list, and by 2050, none will remain. Indeed, by then, the United States will be the only representative of the West in the top seven.

What this means is that the European states are too small to compete separately in the world of the twenty-first century. It’s as simple as that. By 2030, according to the World Bank, there will be two billion more people, mainly Asians, in the middle class. The pressure on the planet’s resources, commodities, water, and food will be huge, making a global rebalancing practically inevitable. And in a world marked by interdependence and constant change, Europe will find that unity is strength.

The next round of talks on the TTIP will take place at the beginning of October in Brussels.

Read More:

Opening shots – The Economist

Benjamin Fox – Trade officials ‘optimistic’ following EU-US talks –

Glyn Moody – Leaked EU Policy Papers Show TAFTA/TTIP’s Huge Challenges — And Some Subtle Signals – TechDirt

Irwin M. Stelzer – USTR Hopes TTIP+TPP = Faster Growth – The Weekly Standard

Javier Solana – The European-American Dream – Project Syndicate

Margot James MP – Europe’s challenge for the next ten years is to remain competitive as income and trade patterns shift – EUROPP

USTR Holds Series of Stakeholder Engagement Events at First Round of Transatlantic Trade and Investment Partnership Negotiations – Office of the United States Trade Representative

EU and US conclude first round of TTIP negotiations in Washington – European Commission Press Release

Note for the Attention of the Trade Policy Committee – European Commission / DG Trade

(Flickr image courtesy of temaki)

About the Author:

Sebastian Andrei is NABATAEANS’ editor for EU - Middle East Trade and Political Relations. He completed his undergraduate studies at the University of Vienna, where he majored in journalism with minors in political science as well as business and economics. Sebastian is responsible for reporting on the European Union’s external trade relations. He also writes about economic development and investment opportunities in Europe as well as about policy changes which affect the EU common market.

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