Last week saw the Transatlantic trade talks, between the EU and US, resume. While both sides reported progress, they also noted that negotiations would be “challenging”.
The deal, called the Transatlantic Trade and Investment Partnership, could see greater business for companies on both sides of the Atlantic as well as lower trading costs. Europe’s Centre for Economic Policy Research (CEPR) assesses that the full scope of the TTIP deal would see the EU economy increase by about €120bn or 0.5% of GDP, with 28% more exports, while the US would gain GDP growth of some €95bn, or 0.4%. Sectors expected to see the most benefits include the automotive trade, which could see a 40% increase in exports, metal products (up 12%) and processed food (9%).
One aim of the TTIP is to eliminate the remaining trade tariffs – which most observers say is realistic and has broadly already been agreed. Of the more than $1.5 trillion in goods, services and income receipts flowing across the North Atlantic annually, it has been estimated that between 30 and 40% is actually intra-company – forcing companies to pay tariffs on internal shipments.
Another focus is to reduce regulatory burdens by standardising rules, so that businesses need to comply with just one standard. Not only would this increase transparency, but also cut costs. Whose standard will apply, however, is likely to be the focus of negotiations.
Other countries are expected to benefit from the deal too, as increased exports will require more trade with other nations.
As the fifth round of talks ended in Arlington, Virginia last week, US trade representative Michael Froman expressed optimism. “We’ve moved from discussing a conceptual framework to defining specific ideas for addressing the majority of the negotiating areas.”
Although there was “a lot of work ahead”, “steady progress” was being made. He added that there was now “a firm understanding of the key issues that need to be resolved”.
The talks are expected to start again in July, with sticking points likely to surround European food safety rules, which critics say could be weakened by the deal. Other aims of the TTIP include strengthening investment between the two trading blocs and more cooperation on intellectual property issues.