What is the Transatlantic Trade and Investment Partnership (TTIP)?
To further intensify the transatlantic economic relationship, in February 2013, the U.S. and the EU agreed to launch negotiations for a comprehensive transatlantic trade and investment partnership (TTIP). Designed to further liberalize all sectors of the transatlantic economy—including manufactured goods, agricultural products, services and investment—the TTIP is intended to eliminate border tariffs and as many investment restrictions as possible, and foster more compatible regulatory requirements.
Accounting for nearly half of global GDP and almost one-third of world trade, the economic partnership between the EU and the U.S.—the two most developed economic blocs in the world—has been the driver for growth and jobs on both sides of the Atlantic for decades.
A phenomenal $2.7 billion worth of trade flows between the EU and the U.S. on a daily basis, and more than $3.7 trillion is already invested across the Atlantic, creating powerful links between companies and researchers, creating business and employment opportunities on an unprecedented scale.
Conventional barriers to trade in goods, such as tariffs and tariff-rate quotas, are at the top of the negotiating list for the new Partnership. Although these are already fairly low, ranging between 3.5 percent and 5 percent, the massive transatlantic trade flows mean that even the smallest reduction will have considerable impact.
Costly non-tariff barriers, including regulatory issues and red tape, are even more important. Currently, producers often have to comply with two sets of rules and go through two procedures on either side of the Atlantic, both aimed at the same result: for instance, raising safety standards and limiting the environmental impact of cars. Such barriers are estimated to result in the equivalent of a tariff of between 10 percent and 20 percent on traded products.
Negotiations are expected to be launched as soon as the summer of 2013, once the respective legislative requirements of the EU and the U.S. have been met, with the aim of concluding them on as ambitious a timetable as possible.
The ideal TTIP agreement would not only remove the main trading obstacles of the past, but also look toward the future: preventing of regulatory barriers; establishing mechanisms that enable a further deepening of economic integration over time; enhancing cooperation for the development of rules and principles on global issues of common concern.
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