1995/12: TTIP: USA – EU

Overview

The transatlantic trade and investment partnership (TTIP) is a free trade agreement currently being negotiated between the European Union and the United States. The aim of the agreement is to create growth and jobs on both sides of the Atlantic by removing trade barriers. Removing trade barriers would boost ad facilitate the buying and selling of goods and services, as well as investment in each of the economies.

 

The agreement has three main elements:

  1. Market access: removing customs duties on goods and restrictions on services, gaining better access to public markets, and making it easier to invest
  2. Improved regulatory coherence and cooperation by dismantling unnecessary regulatory barriers such as bureaucratic duplication of effort 
  3. Improved cooperation when it comes to setting international standards

Customs Duties

Customs duties at the US border are relatively low, but given the massive trade flows – some €2 bn daily – even small reductions in customs duties can have enormous economic leverage. Furthermore, in the US there are customs duties for areas in which EU firms are particularly competitive, such as textiles, ceramics and processed agricultural products.

Standards and Regulations

The trade agreement could have its biggest effect on growth in the area of standards and regulations. In the EU and the US regulatory bodies usually have the same aims: they want to protect people from risks to health, ensure safety at work, protect the environment, and guarantee the financial stability of firms. Yet, in spite of these common goals, on either side of the Atlantic we often have different regulatory structures and traditions.

 

The result is different regulations that sometimes make it much more difficult for firms to enter the other market. According to estimates, these bureaucratic hurdles alone are equivalent to customs duties of 10-20 percent. This particularly affects small and medium-sized companies (SMEs), which are unable to bear the extra costs.


The EU is only discussing standards and regulations with the US on one strict condition: that we neither give up nor dilute the levels of protection we have in Europe. That goes for health and the environment as well as for consumer protection. Hormone-treated beef is not allowed in the EU, for example, and the planned trade agreement will not change that. Regulatory alignment and mutual recognition will only be possible if real convergence on the required safety and environmental standards is guaranteed.

Other issues:

Apart from customs duties and standards, we will also use the negotiations to push for better access to public procurement markets, such as by making regulations on them more transparent. For example, it would be very important for many EU firms to be able to take part in calls for tender in the US. Protection of investments also plays an important role in the negotiations. Here, TTIP represents an important chance to create equality of opportunity.

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