By Thomas Spiller - 12th April 2013
An ambitious TTIP could benefit the EU economy to the tune of €119bn yearly and €95bn in the US
A free trade agreement between Washington and Brussels has vast potential for the EU, the US and beyond, writes Thomas Spiller.
The announcement by transatlantic leaders in February that negotiations would be sought for a transatlantic trade and investment partnership (TTIP) heralded a new era for relations between Europe and the United States. AmCham EU applauds the leadership and foresight by decision makers on both sides of the Atlantic. The conclusion of such an agreement is a logical way for both the EU and the US to increase trade and spur growth. Leaders have set themselves an ambitious task and the negotiations will not be easy, but AmCham EU remains convinced that a comprehensive EU-US agreement is key to boosting our economies to create opportunity for our citizens.
On a very superficial level, applied tariffs between the EU and the US remain low – four per cent on average. However, the vast amount of trade across the Atlantic represents billions of euros in collected tariffs, contradicting assumptions that the low tariff level is inconsequential. According to figures from the European commission, eliminating tariffs between the EU and the US could boost business production by €107bn in the EU and up to €71bn in the US. If agreements on non-tariff measures (NTMs) such as regulatory differences and trade restrictions are also included, it could increase the EU GDP annually by as much as €122bn by 2018.
However, it is not only the EU and the US who would gain; global income could increase by almost €100bn. The ambition of the EU and the US is to have an impact beyond the bilateral transatlantic commercial artery and to contribute to the progressive strengthening of the multilateral trading system via global rules.
This agreement is set to create economic wellbeing for business and citizens alike. The commission has estimated that an ambitious TTIP could benefit the EU economy to the tune of €119bn yearly and €95bn in the US. Further research by the commission indicated that the increased trade between the EU and the US could offer real returns to every household – expected to be about €545 per year per family in Europe. In tough economic times, this added boost could create much needed economic opportunity for both American and European citizens.
Though the benefits of concluding the TTIP are clear, the road ahead will be bumpy. This agreement would go far beyond a traditional free trade agreement and will need to address a whole range of non-tariff barriers, including standards, regulatory issues and government procurement. On the EU’s side, negotiations will require the involvement of a large number of the commission’s directorates and take into account the varied interests of the member states and the European parliament. Because the US is a federalised country, the involvement of the states will be necessary, bringing even more voices to the table.
The TTIP holds vast potential for jobs and growth in the EU, the US and beyond. The post-crisis recovery is fragile and this agreement could go far in creating sustainable growth for citizens in the EU and US. However, these benefits will only be realised if both the EU and the US forge a new path in trade negotiations. AmCham EU looks forward to engaging in the public debate to ensure a successful conclusion of this intrepid endeavour.
Thomas Spiller is chair of AmCham EU's communications and marketing group