TTIP: The New Generation of Transatlantic Trade Agreements

The twelfth round of negotiations between the EU and the US on the Transatlantic Trade and Investment Partnership (TTIP) recently took place in Brussels. The two sides have been discussing its clauses since 2013. TTIP belongs to a new generation of trade agreements, which next to the removal of customs barriers, calls for a closer cooperation on regulation and includes non-economic aspects such as protection of the environment and safeguard of labor rights. The shared objective is to facilitate access to foreign markets for domestic firms, thereby boosting growth and job creation.

The TTIP foresees the elimination of tariffs, easier supply of services and the possibility for EU companies to take part in US public procurements. However, since tariffs are already very low, with the exception of a few peaks on specific items, the biggest advantage for firms will come from transnational cooperation on normative aspects. The agreement provides for stronger collaboration on issues of safety norms and product quality. These are the so-called non-tariff barriers to trade, including technical obstacles like differing health and agricultural norms to guarantee consumer safety while respecting the well-being of plants and animals. In many cases, the level of food safety ensured by existing rules is the same on the two sides of the Atlantic, but regulations differ in terms of the technical details and testing procedures required, and these can be costly barriers to overcome, when SMEs want to export their products.

In certain areas, where differences are of little significance there could be a harmonization of norms or a mutual recognition of the two regulatory systems. Conversely, where positions are different, the objective would be to establish a process of collaboration and convergence, in order to limit the protectionist use of laws and regulations defending citizens as consumers. The importance of the agreement is also testified by the growing attention paid by public opinion. In fact, cooperation in regulatory areas is the issue that has raised fears that TTIP could lead, in the name of economic motives, to the lowering of protection of the public interest. In particular, European protesters against the deal fear that the EU might yield to the supposedly stronger bargaining power of the US, and especially in the agri-business sector this could lead to a reduction of European safety standards, opening the gates to American chlorine-treated chickens and growth-hormone-fed beef.

The European Commission has often repeated the defense of consumers is not in question and that this principle is an explicit part of the negotiating mandate, as restated in the recommendations to the Commission approved by the European Parliament in July 2015. Many aspects are still controversial and the trade negotiations, which should have ended in 2015, could be adversely affected by the 2016 US presidential campaign. Still, signing the partnership would be a major achievement: the deal would benefit both EU and US firms and contribute to counterbalance the economic shift towards Asian and emerging economies.