TRANSATLANTIC TRADE AND INVESTMENT PARTNERSHIP - TTIP (ENCYCLOPEDIA)

 

Abstract

The Transatlantic Trade and Investment Partnership (TTIP) or Transatlantic Free Trade Area (TAFTA) is a trade agreement that is presently being secret negotiated between the European Union and the United States. The negotiations were launched in July 2013 and the actors involved are the 50 states of the United States and the 28 nations of the European Union, for a total of about 820 million people, officially represented by the European Commission and the United States Trade Representative (USTR). The topics covered by the Treaty are: market access for agricultural and industrial products, public procurement, investment, tariffs and non-tariff barriers, services, intellectual property rights, sustainable development, small and medium enterprises, dispute settlement, the state-owned enterprises. Parallel to the TTIP agreements, proceed also similar agreements between the US and Pacific countries, known as the Trans Pacific Partnership (TTP).

The topics: market access, regulatory issues, non-tariff barriers and global standards

In the only official document released by the EU October 9, 2014 (Directives for the negotiation on the Transatlantic Trade and Investment Partnership between the European Union and the United States of America) the goal of TTIP is “The objective of the Agreement is to increase trade and investment between the EU and the US by realising the untapped potential of a truly transatlantic market place, generating new economic opportunities for the creation of jobs and growth through increased market access and greater regulatory compatibility and setting the path for global standards”. The questions covered in the document and by negotiators are many and not expect only the reduction of tariffs and customs duties (already relatively low and currently between 3-4%). The issues being negotiated concern, in particular, non-tariff barriers and the establishment of common standards and regulations for the protection of intellectual property, greater openness to foreign investment and incentives for participation in public procurement. The Agreement shall be composed of three key components: (a market access, (b regulatory issues and Non-Tariff Barriers (NTBs), and (c rules.

a)       Market Access

Duties and other requirements regarding imports and exports

The goal will be to eliminate all duties on bilateral trade, with the shared objective of achieving a substantial elimination of tariffs upon entry into force and a phasing out of all but the most sensitive tariffs in a short time frame. In the course of negotiations, both Parties will consider options for the treatment of the most sensitive products, including tariff rate quotas. All customs duties, taxes, fees, or charges on exports and quantitative restrictions or authorisation requirements on exports to the other Party which are not justified by exceptions under the Agreement shall be abolished upon the application of the Agreement. The negotiations shall address concerns regarding remaining obstacles to trade in dual use items that affect the integrity of the single market.

Investment Protection

The aim of negotiations on investment will be to negotiate investment liberalisation and protection provisions including areas of mixed competence, such as portfolio investment, property and expropriation aspects, on the basis of the highest levels of liberalisation and highest standards of protection that both Parties have negotiated to date.

Public procurement

The Agreement will aim at enhanced mutual access to public procurement markets at all administrative levels (national, regional and local), and in the fields of public utilities, covering relevant operations of undertakings operating in this field and ensuring treatment no less favourable than that accorded to locally established suppliers.

b)       Regulatory issue and non-tariff barriers

The Agreement will aim at removing unnecessary obstacles to trade and investment, including existing NTBs, through effective and efficient mechanisms, by reaching an ambitious level of regulatory compatibility for goods and services, including through mutual recognition, harmonisation and through enhanced cooperation between regulators. Regulatory compatibility shall be without prejudice to the right to regulate in accordance with the level of health, safety, consumer, labour and environmental protection and cultural diversity that each side deems appropriate, or otherwise meeting legitimate regulatory objectives.

c)       Rules

Intellectual Property Rights

The Agreement shall cover issues related to intellectual property rights. The Agreement will reflect the high value placed by both Parties on intellectual property protection and build on the existing EU-US dialogue in this sphere.

Trade and sustainable development

The Agreement will include commitments by both Parties in terms of the labour and environmental aspects of trade and sustainable development. Consideration will be given to measures to facilitate and promote trade in environmentally friendly and low carbon goods, energy and resource-efficient goods, services and technologies, including through green public procurement and to support informed purchasing choices by consumers. The Agreement will include mechanisms to support the promotion of decent work through effective domestic implementation of International Labour Organisation (ILO) core labour standards.

Customs and Trade facilitation

The Agreement shall include provisions to facilitate trade between the Parties, while ensuring effective controls and anti-fraud measures. To this end it shall include inter alia commitments on rules, requirements, formalities and procedures of the Parties related to import, export and transit.

Sectoral Trade Agreements

The Agreement should, where appropriate, review, build on and complement existing sectoral trade agreements.

Trade and Competition

The Agreement should aim at including provisions on competition policy, including provisions on antitrust, mergers and state aids. Furthermore, the Agreement should address state monopolies, state owned enterprises and enterprises entrusted with special or exclusive rights.

Trade related energy and raw materials

Negotiations should aim at ensuring an open, transparent and predictable business environment in energy matters and at ensuring an unrestricted and sustainable access to raw materials.

Small and Medium-Sized Enterprises

The Agreement will include provisions addressing trade-related aspects of small and medium-sized enterprises.

Capital Movement and Payments

The Agreement will include provisions on the full liberalisation of current payments and capital movements, and include a standstill clause.

Treaty approval process onEuropean level

Usually the start of trade negotiations is preceded by months of preparation: consultations, evaluation of the potential effects of the agreement on economic operators and consumers in Europe, informal and formal meetings between the Commission and the country or region concerned to establish the issues of agreement. At the end of these general preparations, the Commission will request authorization to the Council of Ministers (composed by representatives of the EU governments) to start negotiations. The Council shares the goals that the Commission should try to achieve. During the negotiation process, which usually lasts several years, the Commission shall inform the Council and the European Parliament on progress. After reaching an agreement, the Council formally authorizes the signature.

The European Parliament, thanks to the Lisbon Treaty, may accept or reject the text, but can not change it.
It will therefore to the citizens representatives, to decide definitively if this result represents a valid solution for Europe and the United States.

Potential benefits

Independent research shows that TTIP could boost:

  • the EU's economy by €120 billion;
  • the US economy by €90 billion;
  • the rest of the world by €100 billion

the european commission expected that every year an average European household would gain an extra €545 and our economy would be boosted by 0.5% to up to 1% of GDP. Moreover the elimination of tariffs would result in a lower price for the product traded by members of TTIP and to a purchase of larger quantities of the same. As an added effect we would have a higher level of production, purchases of capital goods and increased investment to meet the increased demand. This would have beneficial effects on employment and income.

Objectionsto theTreaty

The main objections to the Treaty concerning the following issues: a) food safety, for the possibility of free movement of GMOs; b) water, energy and utilities, for the possible privatization; c) finance and intellectual property, for the inability to control and disposition of property; d) freedom and democracy, for the possible failure of intervention of the regional governments and the non-controlling flows of personal data.

Moreover, a further problem concerns the ISDS clause (mechanism for settlement of disputes between investors and state). The clause provides that if the rules, standards and regulations or European regulations were going to fight the interests of business investment, individual Member National could turn to courts of arbitration. The ISDS clause represents a set of rules designed to legislate on the conflicts between state and business, allowing the latter to bypass national courts, addressing the international courts.

 

References

COMMISSIONE EUROPEA (2014) Le politiche dell’Unione Europea: commercio, Commissione europea Direzione generale della Comunicazione Pubblicazioni (http://europa.eu/pol/pdf/flipbook/it/trade_it.pdf)

COMMISSIONE EUROPEA (2013) Partenariato transatlantico su commercio e investimenti. Parte normativa,  Commissione europea Direzione generale della Comunicazione Pubblicazioni, Settembre (http://trade.ec.europa.eu/doclib/docs/2013/october/tradoc_151796.pdf)

COMMISSIONE EUROPEA, Website (http://ec.europa.eu/trade/policy/in-focus/ttip/about-ttip/index_it.htm)

CONSIGLIO DELL’UNIONE EUROPEA (2014) “Direttive di negoziato sul Partenariato transatlantico per gli scambi e gli investimenti tra l'Unione europea e gli Stati Uniti d'America”, ST 11103/13, Bruxelles, 9 ottobre (http://data.consilium.europa.eu/doc/document/ST-11103-2013-DCL-1/it/pdf)

GEORGE MONBIOT (2013) This transatlantic trade deal is a full-frontal assault on democracy, The Guardian, 4 novembre (http://www.theguardian.com/commentisfree/2013/nov/04/us-trade-deal-full-frontal-assault-on-democracy)

HOUSE OF LORDS GREAT BRITAIN (2013) The Transatlantic Trade and Investment Partnership, 14th Report  of Session 2013-2014

UNITED STATES MISSION TO EUROPEAN UNION, Website (http://useu.usmission.gov/ttip.html)


Editor: Giovanni AVERSA