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The EU-US Transatlantic Trade and Investment Partnership
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The European Union and the United States are currently negotiating to secure an agreement that will 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 €2 billion 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.

The EU’s position is to conduct the talks as openly as possible, given their sensitive nature. The Commission has a legal obligation to consult the Council on all aspects of the TTIP negotiations.

The European Parliament is similarly consulted and informed and a series of initiatives to encourage the flow and exchange of information between negotiators and stakeholders has also been put in place.

Events take place during and after each round of talks with several hundred representatives of civil society attending, including members of trade unions, business groups, non-governmental organisations (NGOs) and consumer protection organisations.

An Advisory Group made up of 14 representatives from very diverse sectors – economics, trade unions, consumers, environment, health etc - has also been put in place.

These representatives advise the EU's chief negotiator while the talks continue and have access to a broad range of documents. The Commission has posted on its website comprehensive material on all aspects of the negotiations, including EU negotiating positions and objectives.

Democratic control of the TTIP negotiations is particularly strong at the end of the process when the text negotiated by the Commission has to be approved by the EU's Member States in the Council and ratified by the European Parliament.

Depending on the policy areas covered in the final agreement the 28 national parliaments of the EU's Member States might also have to approve the deal. 

EU's trade balance with the United States 

Benefits

Food productsIreland and all EU Member States have much to gain from a successful outcome of the TTIP negotiations. In 2013 the US was Ireland’s single-largest export market for goods, consuming over a fifth of our goods exports.

The total value of Irish food and drink exports alone to the US in 2013 was $700 million. The US is also Ireland’s largest trading partner in international-traded services, which amounted to more than €30 billion in 2012.

Ireland exports 80% of everything it produces, meaning tens of thousands of Irish jobs depend on good foreign trade relationships and agreements like the TTIP.

US firms are playing a major role in Ireland’s economic progress and have invested an estimated €189 billion here since 1990. That’s more than the combined total of US investments to Brazil, Russia, India and China.

Since 2010 more that 14% of all US investment to the EU has gone to Ireland. It’s a huge figure when you consider that Ireland makes up only about one per cent of the EU population.

In the past five years alone, US investment in Ireland has increased by around 25% and employment in US multinationals here has grown to about 115,000 people in 700 companies.

There’s no doubt improved EU-US trade relationships has huge potential to benefit Ireland, and indeed all 28 EU Member States.

Independent research carried out by the London-based Centre for Economic Policy Research (CEPR) suggests the EU's economy could benefit by €119 billion 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.

And European airlines aren’t allowed operate domestic flights in the US. That means if a plane flies from Dublin to Los Angeles and half the passengers get off in New York, the plane must fly half empty to LA because it’s not allowed to take on any new passengers in New York.

It’s estimated that the cost of dealing with bureaucracy can add between 10-20% 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% 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 ten 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 like 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 (WTO) multilateral trade negotiations moving again and eventually lead to a new global consensus on free trade. 

The TIPP will benefit SMEs as much as, if not more than, bigger multinationals. The EU and US teams have published a document detailing how smaller firms could benefit from the agreement, and how the two sides plan to help them do so.

Graph showing EU trade in goods with the US, China, Russia, Japan and Canada in 2012

Difficulties

Figures holding jigsaw cutouts of EU and US flagsReaching 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 all 28 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% imposed on dairy products. As with all aspects of the discussions, regulatory alignment and mutual recognition will only be possible if current safety and environmental standards are guaranteed. For example, hormone-treated beef is not allowed in the EU, and the planned trade agreement will not change that.
  • Investor-State Dispute Settlement (ISDS) mechanism: During the first phase of negotiations in 2013 TTIP negotiators faced pressure over ISDS, which covers investment protection and investor-to-state dispute settlements. In response, EU Trade Commissioner Karel De Gucht began a public consultation on the investment provisions to get the views of stakeholders and offer reassurances that any agreement on ISDS would be designed to improve provisions already in place to protect investments by EU-based companies in the US, and vice versa. The negotiating team has pointed out that around 1,400 ISDSs already exist today in EU countries.

History

US and EU flagsEurope 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.

Making progress

US President Barack Obama, Commission President José Manuel Barroso and Council President Herman Van at the launch of the negotiations on the TTIP at the G8 Summit in Lough Ernein June

The European Commission launched a special Advisory Group of experts in January 2014 that incudes representatives from environmental, health, consumer and workers' groups as well as different business sectors to provide EU negotiators with high quality advice during the TTIP talks.

The group held its first formal meeting on Tuesday 25 February 2014 beginning a series of regular gatherings where negotiators and the representatives discuss progress and positions.

Open dialogues between EU negotiators and interested stakeholders are also taking place regularly as part of the Commission’s commitment to provide Civil Society with a forum to exchange views on the TTIP.

The fifth round of talks on the TTIP took place in Virginia, USA, on May 19-23. Shortly before discussions began the European Commission published documents outlining negotiating positions in five important areas.

The documents include proposals for the possibilities of enhancing compatibility between US and EU rules and regulations over the five areas, which are as follows:

  1. Chemicals
    Negotiators feel neither harmonisation nor mutual recognition are feasible as current EU and US regulations on chemicals differ significantly. However, the EU sees scope for working together in some areas that could make systems more efficient and cut the cost for businesses.
  2. Cosmetics
    Progress will be sought on both sides recognising each other’s lists of permitted or banned substances and Good Manufacturing Practices. It’s also proposed to work together on developing alternatives to animal testing, on harmonising methods for testing products and on aligning requirements for labelling.
  3. Motor vehicles
    It’s proposed to achieve compatibility on different EU and US technical requirements without lowering standards on either side. It’s hoped that both sides can work together more closely to draw up common regulations in future, especially on new technologies.
  4. Pharmaceuticals
    Regulators on both sides of the Atlantic already work closely together but several areas are proposed for further joint work. These include recognising each other's Good Manufacturing Practices, improving inspections of manufacturing plants to avoid duplication and harmonising requirements for approving products similar to already-licensed biological medicines, such as vaccines.
    It’s also proposed to work towards streamlining systems for authorising generic drugs.
  5. Textiles and clothing
    Negotiators are looking to strengthen existing EU-US cooperation in three main areas including labelling, product safety and consumer protection.

The EU and US teams will continue negotiations throughout 2014. Any final deal will have to be approved by the US Government while in Europe approval will be needed from both the European Council and the European Parliament.

Meanwhile in Ireland, the Department of Jobs, Enterprise and Innovation has engaged international expertise to examine the economic and other impacts of the TTIP and potential opportunities for Ireland.

The focus of the study, being undertaken by Copenhagen Economics, will be to identify how any agreement will affect Ireland’s economy. Consultants will meet with stakeholders and the result of their work will be used to help determine Ireland’s input into the EU’s negotiating position.

The Oireachtas Joint Committee on European Union Affairs was briefed in June on the progress and challenges facing EU negotiators in the TTIP talks.

Minister for Jobs, Enterprise and Innovation, Richard Bruton TD, addressed the Committee and outlined in detail the current state of play in the negotiations.

The Committee was told that Ireland stands to gain disproportionately from an agreement because of existing strong economic ties between Ireland and the US.

The Committee also heard that sensitive trade sectors such as food would be negotiated in later rounds but would not lead to a dilution of existing EU policy, which for instance bans 'GM' food and growth hormones.

Open public tendering systems on both sides of the Atlantic was also mentioned and the Committee was told they could bring significant opportunities for many Irish SMEs. 

EU-US TRADE STATISTICS

  • The US is the biggest goods export market for Ireland. Exports to the US grew year on year by almost 1.3 per cent in 2013 to some €18.4 billion.
  • The Irish trade in value added with the US is even higher than that at €25 billion. Some 10% 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 €2.8 trillion on both sides of the Atlantic.
  • The US is the EU's biggest export market for goods, buying €264 billion of EU products (around 17% of total EU exports) annually.
  • The EU also exports services worth over €127 billion 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% of GDP by the TIPP (and up to 1% if efficiency gains are added), or €65 billion 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 €95 billion 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 €100 billion.
  • EU exports to the US would go up by 28%, equivalent to an additional €187 billion worth of exports of EU goods and services. EU and US trade with the rest of the world would also increase by over €33 billion.
  • 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 6% and of 8% in US exports. This would mean an additional €220 billion worth of sales of goods and services for the EU.

Further information

Questions and answers on the TTIP




Last update: 30/05/2014  |Top