EU-US Transatlantic Trade and Investment Partnership, a detailed Appraisal of the European Commission’s Impact Assessment, written for the Ex-Ante Impact Assessment Unit of the Directorate for Impact Assessment and European Added Value, within the Directorate-General for Parliamentary Research Services (DG EPRS), by Prof. Jacques Pelkmans (CEPS and College of Europe), Dr. Arjan Lejour (CPB), Dr. Lorna Schrefler (CEPS), Federica Mustilli (CEPS) and Jacopo Timini (CEPS).
The paper examines the appropriateness and validity of the methodology behind the European Commission’s Impact Assessment (IA) of the Transatlantic Trade and Investment Partnership (TTIP), focusing in particular on the underlying economic model, a computable general equilibrium (CGE). The methodology applied by CEPR for this economic modelling is analysed in depth, together with the assumptions used to make the TTIP amenable to an economic appraisal. The research paper also compares the IA on the TTIP with selected previous empirical economic assessments of EU trade agreements and with a set of alternative studies on the TTIP itself. In reading our findings, two central caveats should be kept in mind that affect any analysis of the CGE model included in the European Commission’s Impact Assessment. First, the TTIP is a rather unusual bilateral trade agreement; and second, the TTIP is so wide-ranging that an alternative approach, such as the so-called ‘partial’ (equilibrium) approach – already a second-best solution – would be totally inappropriate to the case under examination.