ECIPE PRESENTATION

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ECIPE PRESENTATION 21.11.2013
Implications of the Transatlantic Trade
Investment Partnershipfor the Global Trading
System
Natalia Macyra Trade Policy Analyst, European
Centre for International Political Economy (ECIPE)
4th Turkey - Europe Forum, Istanbul 21-22
November 2012 Session Transatlantic Trade and
Investment Partnership and Its Effect on
International Economic Security and
Multidimensional Relations
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Multilateral trading system From GATT to Doha

• In 1947, GATT - post-war world governance
• Cold War - maintaining security through the
  development of prosperous and stable economies
• Changes in trade policy objective after 1989
• 1990s the technological expansion, new patterns
  in global production chains and emerging
  economies in Asia
• The increase of WTO members and trade volume
  covered by agreements in last twenty years
• Traditional production patterns replaced by trade
  in value added
• Reduction in tariffs for goods from 20-30 to 4
  (1950 - 2006)

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Shifting trade priorities

• From WTO impasse to bilateral FTAs
• Initial worries about undermining the
  multilateral system now expunged
• Bilateral, plurilateral and regional trade
  agreements being a response to the gridlock in
  the WTO negotiations
• FTAs generally negotiated much more quickly than
  WTO accession
• Yet little economic value in small FTAs (lt 0.1
  of GDP) failure of India Mercosur
• Refocusing on big trading partners,
  plurilaterals or RTAs since 2012
• New trade issues and barriers
• From manufacturing tariffs to services and NTBs
• Digital economy and regulation of Internet
• Increasing attempts of exporting rules to
  mid-sized third countries
• Regulatory harmonisation vs. regulatory
  co-operation

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Previous attempts to create transatlantic
agreement failed

• 1995New Transatlantic Agenda, Transatlantic
  Business Dialogue
• 1998New Transatlantic Marketplace
• 2007Transatlantic Economic Council (TEC)
• Before 2011, only resulted in open skies and
  weak co-operation agreements on IP, innovation,
  energy and chemicals
• The impasse in multilateral negotiation
• Bilateral or regional negotiations as ways to
  gain new market access
• Incentive to trade with major trading partner
  bigger than with smaller economies
• Ideological drift between EU/US after 9/11
• The increased growth in emerging economies in Asia

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Why TTIP now?

• Response to emerging markets and Asia
• Relative share of EU and US GDP diminishing
• Necessity to coordinate against BRICs
• Liberal, free trade order replaced by priority to
  domestic protection or foreign policy
• New era of economic statecraft
• The economics back at the heart of foreign
  policy
• Trade expansion as a core objective for Obama
  second term
• Strong links to trade in the EU Jobs and Growth
  policy
• An answer to economic and political needs
• Serving only political purposes results in a
  weaker commitments
• A reaction to the potential economic loss
• Lock-in mechanism of trade agreements as an
  anchor for domestic trade and related policy
  reform

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Economic impact of transatlantic agreement

• Global income increase by almost US130 billion
  annually
• 5 of NTB reduction between the US and EU 1
  NTB reduction for the 3rd country
• Improvements in market access for third
  countries Deep liberalization increases real
  income of 3,27
• Tariff-only reduction results in growth of 0,1
• Economic impact on partner countries

Changes in per capita income Changes in per capita income
Tariff-only scenario NTB scenario
China -0,2 China -0,4
India -2,5 India -1,7
Mexico -1,1 Mexico -7,2
Canada -0,7 Canada -9,5
Turkey 0,3 Turkey -2,5
Brazil 0,5 Brazil 2,5
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Multidimensional implications of TTIP

• Bringing comprehensive liberalization in
  transatlantic trade
• Mutual interest in trade openness in both
  countries
• Similarities in values, culture, size and
  structure of the economy
• Possibility to improve the economic situation and
  recovery from the crisis
• Complex impact on the world trading system
• Strengthening the existing rules
• Establishing a set of regulation in a new areas
• An anchor for trade and related policy reforms
• New areas for trade liberalization
• Non-tariff barriers, investments, government
  procurement, IPR
• Regulatory cooperation and standard
  harmonization, energy and environmental standards
• Internet and digital economy
• The gold standard for deep and comprehensive
  global trade and investment integrations
• Only in case of comprehensive agreement going
  behind tariff liberalization

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