The European Union (EU) and the United States (US) have begun negotiations to secure a trade agreement to help create hundreds of thousands of jobs and pump billions of euros into economies on both sides of the Atlantic.
The talks are aimed at securing a comprehensive Transatlantic Trade and Investment Partnership (TTIP) that will be the world’s biggest ever bilateral trade and investment deal.
The EU and the US already trade goods and services worth €2bn every day, but the TTIP would create further growth and new opportunities by eliminating red tape and tariffs wherever possible to reduce costs and open up new markets.
An agreement would also have a knock-on effect on the world economy as it would raise global demand for raw materials and components, providing other countries with a significant financial boost.
The Irish presidency of the EU Council played a significant role in getting both sides to agree a starting point for these crucial talks that provide a real opportunity to bring about economic stability, boost growth and create jobs in Ireland, across Europe and throughout the world.
Ireland and all EU member states have much to gain from a successful outcome of the TTIP negotiations.
Independent research carried out by the London-based Centre for Economic Policy Research suggests the EU’s economy could benefit by €119bn a year – that’s an extra €545 for an average EU family of four.
Achieving this boost would cost very little to taxpayers as it would come from removing tariffs, unnecessary rules and bureaucratic obstacles that currently make it difficult to trade goods and services across the Atlantic.
For example, US rules currently ban European apples and many European cheeses, even though the EU has its own strict regulations on all foods.
It’s estimated that the cost of dealing with bureaucracy can add between 10-20 per cent to the price of goods, and some products and services can’t be traded at all because of bureaucratic red tape.
Ireland stands to benefit more than most from successful TTIP talks. Since 2010, more than 14 per cent of all US investment to the EU has gone to Ireland. That’s a huge figure, given that we only make up about one per cent of the EU population.
In the last five years alone, US investment in Ireland has increased by around 25 per cent and employment in US multinationals here has grown to 115,000 people in 700 companies.
The pharmaceutical sector – one of Ireland’s biggest industries with nine of the top 10 global pharmaceutical companies located here – is a prime example of where having common standards would increase safety while cutting costs.
Irish pharmaceutical products are already thoroughly tested here so they can be sold throughout the EU, but they have to undergo costly testing again to enter the US market, even though an aspirin bought in Cork is no less safe than one bought in New York.
The TTIP aims to eliminate expensive and time-consuming double testing such as this without lowering safety standards, meaning new treatments for life-threatening conditions such as cancer can enter both markets faster and at a lower price.
The Irish services sector will also benefit from the TIPP as it will help reduce or eliminate barriers and harmonise standards leading to industry growth and cheaper services.
Harmonising EU and US technical standards will not only benefit European and American businesses and consumers, it could also provide the basis for common global standards.
The size of the transatlantic market is so big that it would be in the interest of all countries to adopt them too, so they’d only have to produce goods to one set of specifications, making trade throughout the world easier and cheaper.
The TIPP could also encourage other nations to get the stalled World Trade Organisation multilateral trade negotiations moving again and eventually lead to a new global consensus on free trade.
Reaching agreement on the TTIP won’t be easy but the global economic situation has made it a political priority on both sides of the Atlantic. There is at last a willingness to make rules and regulations compatible and to cut tariffs wherever possible.
Negotiations will be difficult and both sides will have to make compromises for the talks to succeed.
The Irish presidency of the EU helped overcome the first hurdle when it managed to secure a common EU position for the talks from the 27 member states.
That gave the green light for the TIPP negotiations to begin but there are a number of controversial topics that will need to be discussed sensitively in order to reach agreement.
▪ Audio-visual services: The French supports and subsidies its audio-visual sector and argued for this to excluded from the negotiations. The European Commission has proposed to come back to the Council for a mandate on this at a later stage after the EU has further discussed legislation on digital media so it can be part of the TTIP negotiations.
▪ Genetically Modified Organisms (GMOs): GM crops are permitted in the US but some EU Member States restrict or prohibit GMO products. EU law allows GMOs but only after strict safety assessment by the European Food Safety Authority (EFSA). The European Commission says negotiations won’t be about compromising the health of consumers for commercial gains and wants EU risk management procedures to remain unchanged.
▪ Agriculture: The European Commission says any ambitious EU-US trade agreement would have to provide for substantial opening of agriculture markets. Some EU foods are currently banned in the US while others are subject to high tariffs, such as the 139 per cent imposed on dairy products.
Europe and the United States of America have a shared history that ties them together in a unique way. Even before it became an independent nation the USA depended on settlers from European nations to populate, farm and mine its vast, open lands.
The EU’s official relationship with the USA goes back as far as 1952 when a dispatch was sent in the name of US President Harry Truman to the first President of the High Authority of the European Coal and Steel Community (ECSC), Jean Monnet, confirming official recognition of the forerunner of the European Union.
The TTIP is not the first effort to secure a substantial trade agreement between the world’s two biggest trading blocks. The New Transatlantic Agenda in 1995, the Transatlantic Economic Partnership in 1998 and a framework agreed at the Transatlantic Economic Council in 2007 all attempted to make it easier to do business across the Atlantic with limited success.
However, at an EU-US Summit meeting in November 2011 both sides agreed to create a high-level working group on jobs and growth led by US Trade Representative Ron Kirk and EU Trade Commissioner Karel De Gucht.
A final report from the group recommended the launch of talks towards a comprehensive trade and investment agreement and in February 2013 US President Barack Obama, European Commission President, José Manuel Barroso, and European Council President Herman Van Rompuy announced they were each starting the internal procedures necessary to start negotiations.
The following month the European Commission adopted the draft mandate for the TTIP talks and agreement on a common position between the 27 Member States was negotiated and achieved under the Irish presidency of the EU in June 2013.
The third round of Transatlantic Trade and Investment Partnership (TTIP) negotiations concluded on 20 December, 2013 bringing to a close the first phase of what could be the biggest trade agreement in the world.
The fourth round of negotiations is due to take place in Brussels this month, March, but both US and EU representatives will hold review meetings before they begin.
Both sides said the third round of negotiations saw good progress made in three important areas – market access, regulatory aspects and rules – and these will be the focus for the next round of talks.
The EU wants to slash customs tariffs on imported goods, allow firms from either side of the Atlantic to bid for government contracts and to open up markets for services industries.
Negotiators also had discussions on health, safety, environment, financial and data security regulations. Studies suggest up to 80 per cent of gains from any future EU-US trade deal will come from improvements in these areas.
During December’s talks, meetings and briefings were held with various stakeholders including environmental groups, business leaders, academics and consumer organisations from both America and Europe.
Both sides are now working on the wording of provisions that will make it easier to comply with each other’s existing trade rules and to draft new ones.
These provisions will include rules on food safety, animal and plant health, technical regulations, product standards, and testing and certification procedures.
Before the next round of talks officially begin, negotiators expect to have identified a roadmap of areas where the TTIP could bring real savings to consumers and businesses by avoiding having to pay twice to meet two sets of regulations.
Commenting on the talks, EU Chief Negotiator Garcia Bercero said: “I think we can be very satisfied by the end of this third round of talks. We remain on track to deliver an ambitious trade and investment deal which will boost our economies, deliver growth and, more importantly, create jobs for both Europeans and Americans at a time when they’re most needed.”
The EU also hit back at TTIP critics voicing concerns about deregulation. Mr Garcia Bercero emphasised that neither side intends to lower standards of consumer, environment, health, labour or data protection, or limit autonomy in setting regulations.
Some of the concerns centre around Investment Protection and Investor-to-State Dispute Settlement in EU agreements . However, EU Trade Spokesman, John Clancy, pointed out that investment protection wouldn’t give multi-nationals unlimited rights to challenge any legislation.
“The EU welcomes the input from civil society and shares a number of their concerns over ‘Investor-to-State Dispute Settlement’,” he said. “There are currently 1,400 investment treaties in the EU Member States including many with the US, which is exactly why TTIP offers an important opportunity to establish a revised, improved and fully transparent investment protection system with the right safeguards in place to prevent abuse by multinationals.
“In a future TTIP deal, we will aim at state-of-the-art investment provisions that fully enshrine democratic principles and guarantee the sovereign right of EU member states to regulate in their national and public interest.”
EU-US TRADE STATISTICS
▪ The US is the biggest export market for Ireland. Exports to the US averaged around €20bn from 2010 to 2012.
▪ The Irish trade in value added with the US is even higher than that at €25bn. Some 10 per cent of all value produced in the Irish economy is consumed in the US.
▪ Currently there are about 100,500 American affiliate employees working in Ireland while 130,500 Irish affiliate employees work in the US.
▪ Together the US and the EU have directly invested more than €2.8tr on both sides of the Atlantic.
▪ The US is the EU’s biggest export market for goods, buying €264bn of EU products (around 17 per cent of total EU exports) annually.
▪ The EU also exports services worth over €127bn every year to the US (2010).
▪ It’s expected that every year an average European household would gain €545 of extra disposable income as a result of a successful TIPP.
▪ The EU economy could be boosted by 0.5 per cent of GDP by the TIPP (and up to one per cent if efficiency gains are added), or €65bn annually.
▪ Total US investment in the EU is three times higher than in all of Asia, and EU investment in the US is around eight times the amount of EU investment in India and China put together.
▪ It’s estimated that the transatlantic economy supports some 15 million jobs. Four million people work for affiliates of US companies in Europe and 3.5 million work for affiliates of EU companies in the US.
▪ An ambitious and comprehensive TTIP could bring economic gains worth €119 a year for the EU and €95bn a year for the US.
▪ Liberalising trade between the EU and the US would have a positive impact on worldwide trade and income, increasing GDP in the rest of the world by almost €100bn.
▪ EU exports to the US would go up by 28 per cent, equivalent to an additional €187bn worth of exports of EU goods and services. EU and US trade with the rest of the world would also increase by over €33bn.
▪ Extra trade between the EU and the US, together with their increased trade with other partners, would represent a rise in total EU exports of six per cent and of eight per cent in US exports. This would mean an additional €220bn worth of sales of goods and services for the EU.
Information outline by the European Commission representative in Ireland