The Transatlantic Trade and Investment Partnership
The European Union and the United States are currently negotiating a crucial trade agreement that will help create hundreds of thousands of jobs and pump billions of euros into economies on both sides of the Atlantic.
The Transatlantic Trade and Investment Partnership (TTIP) will be the world’s biggest bilateral trade and investment deal, and a successful pact is expected to benefit Ireland more than any other EU Member State.
According to Eurostat figures, 24% of Irish exports and 14% of imports went to and came from the US in 2015, and a report on the Irish-EU Economic Relationship shows US direct investment stock into Ireland surged to a record $310 billion in 2014, accounting for nearly 20 per cent of total US investment flows to Europe.
TTIP talks began in 2013 when EU governments gave the European Commission a mandate to negotiate TTIP after the Irish presidency of the EU Council got both sides to agree a starting point for this important trade partnership.
As negotiations have progressed, they’ve become subject to increased public scrutiny, and a certain amount of concern. The Commission has responded by making the talks the most transparent and inclusive trade negotiations ever.
What exactly is the TTIP?
The United States is, by far, the most common destination for goods exported from Europe and trade between the US and the 28 EU Member States was worth €619 billion in 2015.
The TTIP would create further growth and new opportunities for businesses of all sizes by eliminating red tape and tariffs wherever possible to reduce costs and open up new markets.
This would make it easier for companies – including SMEs - on both sides of the Atlantic to access each other's markets. For example, US rules currently ban some European food products and certain cheeses, even though the EU has its own strict regulations on all foods.
Many products are also more expensive because they have to undergo time consuming double testing to satisfy rules for both the European and American markets.
These rules usually ensure the exact same levels of safety and quality, differing only in technical details, but they often make it costly and difficult to bring all types of goods to the market, especially for smaller companies.
Cutting bureaucracy and costs - without cutting corners – would make it easier and fairer for businesses to export, import and invest resulting in safer, cheaper goods and services for consumers.
The TTIP’s main objective is to achieve this through a comprehensive partnership that agrees on 25-30 chapters covering market access, regulatory cooperation and rules.
How will Ireland benefit?
In 2015, Ireland exported over €26 billion worth of goods to the US, equivalent to 23.4% of our total exports of goods.
However, Irish exporters pay in excess of $300 million per year in tariffs to the US Treasury and are excluded from some markets.
And tariffs aren’t the only problem. Non-tariff barriers such as customs procedures and regulatory restrictions can be even more costly.
One man who knows better than most what Ireland stands to gain from the TTIP is EU ambassador to Washington, Dubliner David O'Sullivan.
He says the TTIP will not only deepen the bonds of commerce and friendship across the Atlantic, it will also be a big boost for Ireland as an export nation.
“TTIP will be a powerful shot in the arm for Ireland as it rebuilds its economy on a more diversified, sustainable basis,” the Trinity College graduate said.
“As TTIP aims to eliminate tariffs and behind-the-border barriers, Irish exports and jobs supported by them can only increase."
Ambassador O'Sullivan pointed out that the TTIP is also a strategic alliance with the country that most shares Europe's commitment to democracy, human rights and the rule of law, as well as a high level of protection of people and of the environment in regulation.
In 2015 the Irish Department of Jobs, Enterprise and Innovation commissioned a detailed report to find out what economic opportunities and impacts a TTIP agreement would have on Ireland.
The study by consultancy experts, Copenhagen Economics, found that if implemented in the current economy, TTIP would increase Ireland’s GDP by 1.1% or €2 billion.
Real national income - a measure of actual purchasing power – would be up by €2.4 billion and investment in Ireland would increase to a level 1.5% above what it would be without an agreement.
The report also found that TTIP would increase exports from Ireland to the world by around 4% and improve Ireland’s trade balance by €2.4 billion.
According to the study a successful TTIP would also bring between 5,000 to 10,000 new export-related jobs to Ireland and improve wages for all skill groups by an average of 1.5%.
The report predicts new opportunities for many Irish industry sectors including pharmaceuticals and chemicals, Agri-food (notably dairy and processed food), insurance and machinery.
It also warns that Ireland’s beef producers may have to prepare for increased competition from cost efficient US beef producers in the European market.
A separate draft Trade Sustainability Impact Assessment interim technical report in support of the TTIP negotiations published in 2016 suggests Ireland can expect an increase in GDP of 1.4% from a successful deal.
What about SMEs?
There’s no doubt that big business in Ireland will benefit from the TTIP but our small and medium sized-enterprises (SMEs) stand to be the biggest winners.
Smaller companies are more affected by non-tariff barriers (NTBs) on exported goods than larger exporting firms, which often have entire departments dedicated to complying with the various rules and testing procedures on US imports that can even differ from state to state.
The TTIP will have an entire chapter exclusively dedicated to SMEs to make it easier for smaller businesses to export to the US.
In fact, the Copenhagen Economics TTIP Impact in Ireland study reported that a trans-Atlantic agreement would have a more significant positive impact on SMEs than on other types of business.
Enterprise Ireland already supports over 3,000 exporting Irish SMEs and can assist Irish companies looking to take advantage of new opportunities for extra export sales through its network of four offices in the USA.
The European Commission has published an in-depth survey of SME attitudes to TTIP, which highlights current difficulties experienced by SMEs exporting to the US and shows how they can benefit from an agreement.
What are the main concerns?
As the TTIP talks have progressed politicians, businesses, workers and consumers have raised a number of concerns. This has helped increase public awareness of the TTIP and European Commission negotiators are addressing these concerns in talks with their US counterparts.
One of the main contentious issues was a provision for investor-state dispute settlements (ISDS), which ensure investors are treated fairly when they invest abroad.
Around 1,400 ISDSs already exist in EU countries but occasionally they can be a source of controversy and the European Commission wants to make them more transparent.
To help do this, the Commission has approved a proposal for a new, transparent system for resolving disputes between investors and states called the Investment Court System.
The new system would replace the ISDS mechanism and the proposal stems from substantial input received from the European Parliament, Member States, national parliaments and stakeholders through public consultation.
Built around the same key elements as domestic and international courts, the Investment Court System enshrines governments' right to regulate and ensures transparency and accountability.
Under the proposal, a first instance Tribunal and an Appeal Tribunal would be established.
The ability of investors to take a case before the Tribunal would be precisely defined and limited to cases such as targeted discrimination on the base of gender, race or religion, or nationality, expropriation without compensation, or denial of justice.
In parallel to the TTIP negotiations, the Commission will also work, together with other countries, towards setting up a permanent International Investment Court.
The European Commission has published a concept paper concerning ISDS - "Investment in TTIP and beyond – the path for reform".
This sets out ideas for copper fastening a Government's right to regulate and to move from current ad hoc arbitration towards an Investment Court.
The impact of the TTIP on food safety has also been raised as a concern and this is an important issue for Ireland as we export 80% of everything we produce, meaning tens of thousands of Irish jobs depend on good foreign trade relationships and agreements like the TTIP.
The European Commission says there’ll be no weakening of the EU’s high food safety standards and Member States won’t be forced to import Genetically Modified (GM) foods that EU regulators haven’t already improved.
There’ll also be no obligation to import hormone treated beef or meat from cloned animals but both EU and US regulators will work together to make it easier to export and import foods while fully respecting EU rules on food safety.
Irish farmers are concerned about a potential contraction of Irish beef output but EU Agriculture Commissioner, Phil Hogan, has confirmed the Commission is exploring and pursuing a TTIP outcome that delivers adequate protection for our beef producers, while at the same time provides reasonable market access to US exporters.
The Commission has published a myth-busting document that addresses other concerns about the TTIP. There’s also a comprehensive questions and answers section that covers concerns and provides basic information about the TTIP on the European Commission’s website.
How transparent is TTIP?
Most negotiations involving compromise require a level of confidentially in order to reach a fair conclusion for both sides.
However, the TTIP will affect almost all EU citizens so negotiators also need to know what all the stakeholders want, and don’t want, from an agreement.
The European Commission is actively seeking input from all EU citizens interested or concerned about the TTIP and anybody can contact the negotiating team to express views or learn more about the process.
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 representing both large multi-nationals and SMEs, 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 also posted comprehensive material on all aspects of the negotiations on its website, including EU negotiating positions and objectives, as well as the official mandate for talks.
How democratic is the TTIP?
The TTIP is being fully scrutinised through several democratic processes as talks progress and the final agreement will need approval from a number of democratically elected bodies.
As well as meetings with stakeholders, which help the negotiators form positions on the various aspects of the TTIP, the European Parliament is being consulted and informed every step of the way.
Similarly, the Commission has a legal obligation to regularly consult the EU Council on all aspects of the TTIP negotiations, to ensure the common interests of all 28 Member States are represented.
Democratic control of the TTIP negotiations is particularly strong at the end of the process when the final text negotiated by the Commission has to be approved by the EU's Member States through the Council and ratified by the European Parliament.
Depending on the policy areas covered in the final agreement the 28 individual national parliaments of the EU's Member States might also have to approve the deal.
So regardless of the outcome of the talks, the TTIP can only come into force with the backing of all the EU’s democratically elected national governments, and the democratically elected European Parliament.
State of play
It’s hoped that the negotiating teams can reach an agreement on the TTIP by the end of 2016. This will require flexibility on both sides but it’s agreed that a good, comprehensive agreement is more likely to be approved and succeed than a speedy one.
There has been some concern over supposed ‘leaked’ documents published by media outlets early in 2016, but these texts only reflected negotiating positions and not any agreement.
European Commissioner for Trade, Anna Cecilia Malmström, responded to the ‘leaks’ by pointing out that no agreement would be made in areas where the two sides are too far apart in their positions.
Negotiations have been taking place for more than three years and a report from the European Commission published after the 13th round of talks in April 2016 shows both sides have tabled proposals for specific chapters in the TIPP, which reflect how they would like the final deal to read, line by line.
All the EU proposals in the regulatory and rules components have been made public, as well as its proposal on trade in services and the related market access offer.
Both sides have also exchanged tariff, services and procurement offers and work on consolidating all proposals into a single text is currently taking place.
The final agreement will most likely contain somewhere between 25 and 30 chapters and by mid-2016 there were 17 consolidated texts on the table.
The teams are aiming to have the vast majority of texts consolidated by the end of summer 2016, leaving only the most sensitive outstanding issues remaining to be discussed during the autumn.