The Transatlantic Trade and Investment Partnership – A Unique Opportunity?

creutzmann version 3 The political discussion about a Transatlantic Trade and Investment Partnership (TTIP) is getting more and more concrete: A November 2011 EU-US summit created a High Level Working Group on Jobs and Growth, which announced its final report on February 11, 2013. The next day, President Obama announced serious talks on the creation of a TTIP in his State of the Union speech. Concurrently, the European Commission submitted a negotiating mandate bill, which must be approved by the Secretary of Commerce by June 14. This provided an excellent opportunity for Jürgen Creutzmann, a Member of the European Parliament (MEP) dedicated to promoting the conclusion of a TTIP between the two economic areas, to speak on this topic and explain the European argument in favor of a TTIP.

Tourists and business travelers alike fill in their customs declarations and pass customs officials, usually without opening their luggage. For the most part, they have no idea that trading barriers still exist between the European Union and United States. Tariffs average around two or three percent; however there are significant sectorial distinctions: For vehicles and textiles tariffs rise up to 350 % in the US and 75 % in the EU. Creutzmann emphasized that non-tariff barriers are much more important and “need to be addressed if we want to make significant progress.” Admittedly, they are not easy to quantify, but overall they are said to be equivalent to conventional tariff burdens up to 20 %.

The MEP succinctly illustrated the dimension of the problem by numbers: Taken together, the EU and the US contribute half of global GDP and bilateral trade between both entities account almost a third of world trade. Trade in goods and services reaches a size of two billion Euros each day. Bilateral direct investment is worth 2.8 trillion Euro each year. As such, the effects of a Free Trade Agreement would be immense: Forecasts expect trade liberalization to cause an increase of one half to two percent  for both sides. The number of additional jobs is estimated around two million. The EU Commission expects the transatlantic trade to increase by more than half compared to current numbers. Furthermore, the treaty would set a global example and generate positive spill-over effects.

Creutzmann further underlined that the economic benefit of an Agreement would, for the most part, be due to the reduction of non-tariff barriers – specifically by harmonizing regulations, standards and norms. For example, there are different safety emission standards for vehicles, which results in expensive tests and admission procedures that are carried out twice. The same applies for pharmaceuticals.

The MEP also mentioned foreseeable barriers to achieve an agreement. He named agriculture as the “biggest stumbling block” for transatlantic trade. The EU and the US have already had several conflicts areas such as: hormone-treated beef, ractopamine-fed pork, chlorine rinsed chicken, genetically manipulated foods, and well-protected designations of origin, such as Champagne or Parma-Ham. Another barrier that he addressed was public procurement. In the EU, government contracts can also be awarded to non-European suppliers, but at the same time the U.S. government is obligated “to buy domestic goods and services whenever possible.”

Given these barriers, Creutzmann warned not to leave the field in a gridlock and promoted “a readiness to make bold decisions, concessions, and to overcome old differences.” He reminded his audience of failed efforts to liberalize the transatlantic trade in past decades and underlined that now it is “high time to close ranks and form an economic bloc promoting liberal and democratic values.”