TTIP: Top 5 Hopes and Prospects
Why is TTIP so crucial? Heralded by many as the most important trade agreement in history, TTIP is an unprecedented opportunity for the West to out-do the rest of the world. Its proponents see it as the vehicle that can drive transatlantic trade and investment to a whole new level, leaving global rivals with no choice but to look to the West as the standard setters. Nothing less than a comprehensive deal will put our markets back into the ascendency, invigorating global trade along with it.
1) Direct Economic Impact
The economic prospects for transatlantic economies following the adoption of TTIP will be, for its proponents, significant. The removal of tariffs will bring an immediate increase in profits, and the harmonization of regulatory frameworks will mean businesses, large and small, will have greater market reach on the other side of the Atlantic, bringing more trade, investment, and ultimately, prosperity. In an independent report drawn up by The UK Centre for Economic Research (CFER) endorsed by the EU Commission, it is claimed that on the individual level
"An ambitious and comprehensive transatlantic trade and investment agreement could bring significant economic gains as a whole for the EU (€119 billion a year) and US (€95 billion a year). This translates to an extra €545 in disposable income each year for a family of 4 in the EU, on average, and €655 per family in the US".
On national and international trade the report states, "EU exports to the US would go up by 28%, equivalent to an additional €187 billion worth of exports of EU goods and services. Overall, total exports would increase 6% in the EU and 8% in the US". On the global level, "Liberalizing trade between the EU and the US would have a positive impact on worldwide trade and incomes, increasing global income by almost €100 billion".
2) Stimulus and Recovery
Following the global financial crash of 2008, the Eurozone debt crisis and the failure of trade talks at the World Trade Organization (WTO), transatlantic trade needs to be stimulated or face economic stagnation. Rather than continue on the current course of austerity and negligible growth, TTIP is seen as an important measure to put the Western economies back into primary global positions.
Katinka Barysch and Michael Heise of Yale Global argue "TTIP is the result of the WTO's troubles, not the cause of it". The Doha round of trade talks has dragged on for 12 years, and has fell short of its original ambitions. "The WTO has not significantly updated its rulebook since 1994. But business has moved on. The idea from the US and the EU to work together to overcome global gridlock is legitimate".
"In many areas, regulations and processes on both sides of the Atlantic have been drifting apart for years, and even more so since the start of the financial crisis in 2007. The two sides owe it to their business communities and consumers to try and narrow the regulatory gap. Bilateral talks are probably better suited for this than involving the other 130 WTO members".
EU Trade Spokesman John Clancy argues that those who argue for TTIP to be stopped would condemn Western economies to painfully slow progress. "Many critics of [TTIP]", he argues "are actually arguing for us to maintain the status quo, which is at the heart of the problem". The EU Commission maintains therefore, that TTIP "would be the cheapest stimulus package imaginable."
3) The Standard Setter
Another hope is that TTIP will provide the transatlantic community with global economic and political soft power and balance the rise of global rivals. Facing competition from external economic centers of power, TTIP could "be a game changer", both economically and politically according to senior research fellow at the Dutch Clingedael Institute, Peter von Ham:
"The rise of China (and other Asian countries) combined with the relative decline of the US and economic malaise of the Eurozone, is spurring the transatlantic West to use its combined economic and political preponderance to write new global trade rules reflecting its economic principles (rules-based market economy) and political values (liberal democracy). TTIP is an essential component of this new strategy."
The Atlantic Council of America's report on TTIP's benefits to the US, also argues that
"Beyond pure economics, TTIP also represents a key strategic opportunity for the EU and US. A truly ambitious game-changing agreement has the potential to send a powerful message to the rest of the world regarding transatlantic commitment to the development of global rules and standards."
TTIP would therefore, not only heighten the economic and regulatory power of the transatlantic partnership; it would renew its geopolitical position. US economist Kimberly Amadeo argues that "if the US and EU could iron out their differences, they could stand as a united front against market threats from the rest of the world."
4) A Fresh Impetus for Multilateral Trade Talks
It is widely accepted that WTO multilateral trade talks have failed to make significant headway in recent years. However in December 2013, WTO members in Bali came to an agreement on reducing global trade costs "by 10% for developed countries and 15% for developing countries", which is "the first time that all WTO member-states were able to come to an agreement since the 1994 Uruguay agreement that created the organization itself". This agreement incidentally, was agreed shortly after the announcement of TTIP.
Now, many argue that bilateral trade agreements such as TTIP may be a hindrance to the efficacy of the WTO. Yet, as Brett McGee of the Atlantic Council argues, Bali illustrates the opposite.
"When threatened by competition, the WTO actually stepped up. Negotiators went into overdrive, made important and reasonable compromises, and agreed on a package which will make trade easier, cheaper and more effective"
At a recent panel discussion at the German Council of Foreign Relations, Dr. Stormy-Annika Mildner, Managing Director or the Association of German Industry, assured attendees that TTIP would aim to give the WTO "a push" rather than hurt it. Rather than complicating regulatory rules, the agreement aims to simplify existing rules that can act as the benchmark for fresh multilateral initiatives.
Although it is likely that defense will not be included in negotiations, TTIP could provide the driving force behind a deeper and more integrated transatlantic defense market. Steve Williams suggests that TTIP would create a "favorable environment" from which greater defense cooperation could emerge.
Academic Daniel Fiott, in his article on TTIP and its impact on defense, asserts that
"Any TTIP extending to the defense sector will raise questions about the nature of the European Defense Technological and Industrial Base, and, crucially, how it impacts the North Atlantic Treaty Organization and the Common Security and Defense Policy."
Leo Michel of the Atlantic Council has reported that in line with the projected growth predicted by the UK CFER,
"If the 28 EU members simply were to keep their current average rate of defense spending—roughly 1.5 percent of GDP—the projected TTIP boost could produce an extra $2-2.5 billion annually, or $20-25 billion over a decade, for military capabilities".
He also notes that proponents "hope the TTIP will knock down various US legal and administrative obstacles to a more balanced transatlantic defense industrial trade and technology partnerships".
For its supporters, the jewel in TTIP's crown is the vastly expanded and deepened trade and especially investment that it will bring. The benefits for companies, both large and small, would be tremendous. This process can signal the resurgence of Western power through revitalized markets. As a consequence, the transatlantic economic values can carry more weight when considering global trade.
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