EPRS Strategy By / February 5, 2016

New EU-US trade and investment deal: to be or not to be? MEPs to play a key role

Written by Richard Freedman in cooperation with Laura Puccio The European Union is negotiating a trade and investment deal with…

© Eisenhans/Fotolia

Written by Richard Freedman in cooperation with Laura Puccio

USA and EU flag behind people (TTIP)
© Eisenhans/Fotolia

The European Union is negotiating a trade and investment deal with the United States – the Transatlantic Trade and Investment Partnership known as TTIP. The aim is to open up the US to EU firm, help cut red tape that firms face when exporting and set new rules to make it easier and fairer to export, import and invest overseas. There are strong advocates for and against the deal across the EU Member States (see map below).

The European Parliament must give its green light to the deal once the negotiations have been completed. In the meantime, MEPs have been active setting out their position on the ongoing negotiations.

What’s at stake?

The figures are huge. The economies of the EU and the US represent about half of global gross domestic product (GDP) and a combined market of 800 million consumers. The transatlantic market for goods has increased further and reached EUR 516 billion in 2014. Industrial sectors such as machinery and appliances, chemicals and transport equipment account for around 60 % of all goods exchanged in both directions. Trade in services had also gone up in both directions and reached EUR 341 billion in 2013.

In fact research from the Centre for Economic Policy Research (CEPR), undertaken for the European Commission in 2013 estimated that, under a comprehensive agreement, EU GDP could increase by between €60 and €120 billion, and US GDP by between €49.5 and €94.9 billion, depending on how ambitious liberalisation of trade and investment turned out to be. EU exports of goods and services to the US might increase by 28%, equivalent to an additional €187 billion. Overall, total exports could be expected to increase by 6.0% in the EU and 8.0% in the US. Potential gains would stem primarily from the reduction of tariffs, elimination of non-tariff barriers (NTBs) to trade in goods and in services, and from opening up public procurement.

European Parliament role

The Commission has a duty to keep the European Parliament informed throughout the negotiations. Once negotiations are completed and the Council has given authorisation for the conclusion of the negotiation, the Council is required to ask the European Parliament for its consent for signing the agreement. If TTIP takes the form of a ‘mixed agreement’ (i.e. covers areas of both EU and Member State competences), then the final text will also have to be ratified by each Member State in accordance with their national procedures.

11 rounds so far, still a long way to go

EU governments gave the European Commission to start negotiating TTIP in June 2013. Some eleven rounds of negotiations have taken place so far. The 11th TTIP negotiating round took place in Washington D. C. and Miami between 14 and 23 October 2015. Talks covered the full range of areas under discussion, with the exception of investment protection and an Investment Court System.

Concern among some citizens on investor-state dispute settlement

EYE2016 with textCitizens in some EU Member States raise fears related to investor-state dispute settlement (ISDS) clauses in TTIP and, more generally, the impact of the future agreement on states’ regulatory freedom in the areas of the environment, consumer and labour law and data protection. ISDS is a procedural mechanism provided for in international agreements on investment. Countries sign such agreements in order to set out ground rules when foreign companies invest on their territory, for example by building factories. In July 2015, the European parliament adopted a resolution on the TTIP negotiations. On the ISDS, the EP wants to ensure that foreign investors are treated in a non-discriminatory fashion while benefiting from no greater rights than domestic investors. MEPs called to replace the ISDS system with a new system for resolving disputes between investors and states which is subject to democratic principles and scrutiny. In November 2015, the European Commission launched a paper on a new Investor-State court system in order to try and allay some of the concerns expressed by MEPs and others.

Clear need for transparency says the European Parliament!

MEPs underline the lively public debate across Europe on TTIP has shown the need for the TTIP negotiations to be concluded in a more transparent and inclusive manner taking into account the concerns voiced by European citizens and communicating the negotiation results to the general public.

The only way is up for standards

Further the European Parliament stresses while the EU and the US can go a significant step further in recognising each other’s product standards and working towards transatlantic standards – the EU will not sacrifice its (food)-safety, health, animal health, social, environmental, and data protection standards and cultural diversity; recalling that the safety of the food we eat, the protection of Europeans’ personal data and its services of general interest are non-negotiable unless the aim is to achieve a higher level of protection.

Have your say on Transatlantic Trade and Investment Partnership at The European Youth Event 2016

TTIP will be a live issue at European Youth Event in May 2016 (EYE 2016 Strasbourg, 20-21 May 2016). The arguments for and against TTIP are raging hard across the Member States and on both sides of the Atlantic. What’s clear is that the European Parliament without approval there can be no deal, so let your lawmakers know what you think and have your say during the EYE 2016!

Mentioned in this post:

The Transatlantic Trade and Investment Partnership (TTIP): The sluggish state of negotiations

EU-US negotiations on TTIP A survey of current issues

European Parliament Resolution: Negotiations for the Transatlantic Trade and Investment Partnership (TTIP)

European Commission Transatlantic Trade and Investment Partnership: TRADE IN SERVICES, INVESTMENT AND E-COMMERCE

Support for TTIP in EU Member States
Support for TTIP in EU Member States

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