Trans-Atlantic Trade and Investment Partnership
As we consider new trade accords with our biggest commercial partners, Europe calls out for attention. Indeed, the European Union is by far America’s largest commercial partner.
Together, the United States and the European Union account for nearly half of global economic output, with each producing more than $16 trillion in GDP. Total U.S.-EU commerce—including trade in goods and services and sales by foreign affiliates—tops $6.5 trillion annually and employs 15 million Americans and Europeans.
The U.S.-EU investment relationship is also without peer. Companies headquartered in EU Member States have invested $1.6 trillion in the United States and directly employ more than 3.5 million Americans. Similarly, U.S. firms have invested $2.1 trillion in the EU—a sum representing more than half of all U.S. investment abroad. It’s also nearly 40 times as much as U.S. companies have invested in China.
The United States and the Member States of the EU share common values as strong democracies with an enduring commitment to civil liberties and the rule of law. We uphold similar social, labor, and environmental standards in our laws and regulations.
For these reasons and more, the United States and the EU have launched negotiations for a comprehensive and ambitious Trans-Atlantic Trade and Investment Partnership (TTIP). The goal is to eliminate tariffs; open up services, investment, and procurement; and promote regulatory cooperation to ensure high levels of health, safety, and environmental protection while cutting unnecessary costs.
The benefits could be immense. The sheer volume of transatlantic commerce is so large that eliminating today’s relatively modest trade barriers could bring big benefits. According to the London-based Centre for Economic Policy Research (CEPR), the TTIP would boost U.S. exports to the EU by $300 billion annually, add $125 billion to U.S. GDP each year, and increase the purchasing power of the typical American family by nearly $900—with similar benefits for Europeans.
One key goal in the negotiations is to tackle regulatory barriers to trade. Companies selling their products on both sides of the Atlantic incur high costs complying with both U.S. and European regulations, even when they are very similar.
For example, U.S. automakers run crash tests to comply with U.S. safety regulations but must do so a second time to comply with EU standards—and vice versa. Mutual recognition of these regulations would save consumers up to 7% on each car or truck and enhance the global competitiveness of U.S. and European companies.
TTIP is also an opportunity to raise global standards. With a combined GDP of more than $32 trillion, the sheer size of the transatlantic economy will incentivize other countries to look to standards set in the TTIP. Accordingly, the United States and the EU should establish a high bar in such areas as protecting intellectual property, cultivating the digital economy, and combating trade and investment protectionism.
Americans agree that increased trade with the EU would be good for the United States by a two-to-one margin (58% to 28%), according to the Pew Research Center for the People and the Press.
Indeed, refusing to pursue this agreement would exact a price as other countries enter into new trade pacts with the EU. Already, the EU has 28 free trade agreements in force with such countries as Mexico, South Africa, and South Korea. It has concluded negotiations for an additional 9 agreements with Central America, Colombia, Singapore, Ukraine, and others.
The EU is currently in negotiations with Canada, India, Japan, Malaysia, Thailand, Vietnam, and the Mercosur bloc. Without a trade agreement in place with the EU, U.S. workers and companies could be put at a disadvantage in the giant European marketplace.
Finally, the TTIP would not benefit the United States and the EU at the expense of other nations. In fact, liberalizing transatlantic trade would increase GDP in the rest of the world by as much as $130 billion, according to a CEPR study.
In addition, some analysts believe the TTIP could jump-start negotiations at the World Trade Organization just as the North American Free Trade Agreement and the creation of the Asia-Pacific Economic Cooperation forum provided a new impetus for global trade talks 20 years ago.
For too long, the United States has ignored the untapped potential of its ties to the world’s other economic colossus. For the sake of jobs and growth, it’s time to turn that around.
- The sheer volume of U.S.-EU commerce is so large that eliminating today’s relatively modest trade barriers could bring big benefits, adding a combined $300 billion to the transatlantic economy annually.
- The Trans-Atlantic Trade and Investment Partnership (TTIP) negotiations should eliminate tariffs; open up services, investment, and procurement markets; and promote regulatory cooperation to ensure high levels of health, safety, and environmental protection while cutting unnecessary costs.