What is the Transatlantic Trade and Investment Partnership

The Transatlantic Trade and Investment Partnership (TTIP) will be the largest free trade agreement in the world. The deal aims to increase trade between the EU and the US through the opening of various markets that are currently closed or restricted by tariffs or regulations. This includes everything from chemicals, pharmaceuticals, and energy to food, drinks and clothing.


Together, the US and EU trade for EUR22 trillion annually. This is almost half the total in the world. If knock-on effects are taken into account, the opening of trade could increase global GDP by as much as 0.6% per year. The effects will be even greater if permanent trade barriers such as taxes and customs are removed.

Businesses in the EU and US pay tariffs for their products to be sold on each other’s market. TTIP will eliminate these. TTIP would also reduce the costs of duplication when businesses are required to meet US and EU standards that are often similar but different.

It has been debatable how much revenue the deal would bring to certain economies. According to estimates, a TTIP agreement could grow the EU’s economy by up to EUR120 billion (0.5% GDP) and that of the US by EUR95 billion (0.4% GDP). Both sides emphasize the importance of opening up new markets to their domestic manufacturers. The EU would gain access to 300m American customers and vice versa.

What is the potential of the free trade agreement between the USA and the EU? The full potential of a free trade agreement between the USA and the EU will only be revealed after the deal has been concluded.

What’s at stake?

Two of the biggest obstacles to TTIP are the sensitive business areas that border on public policy.

Public Services and Procurement

In both Europe and America, public authorities are the largest consumers. In the EU, they spend about EUR2 trillion per year. This is equivalent to around 19% of GDP in the EU. US Federal spending on procurement is about US$500 billion a year. Both sides want equal access to the market.

There are concerns in the UK that the NHS could be put at risk by US competition. Both UK Ministers and the European Commission have guaranteed that TTIP will not affect NHS services.

Energy Markets and Renewable Sectors

It is estimated that this market exceeds EUR950 billion annually. TTIP is expected to increase competition and liquidity in the energy sector, which will benefit both EU and US consumers. The TTIP talks on renewable energy sources are focusing on shale gas. This could help US companies, who are already a few generations ahead of their EU competitors.

Global Standards

The most ambitious goal of TTIP would be to establish global standards for manufacturing products. Both the EU and the US stand to gain from progress made towards these objectives.

The adoption of common standards and authorization procedures will be beneficial to certain sectors, such as pharmaceuticals and chemicals. EU firms and the EU pharmaceutical sector are expected to gain advantages over their US competitors. However, these advantages can be easily offset by the public expenditures on health and processes that relate to the intellectual rights of specialized medicines.

The US and EU differ in their standards for food safety. Critics claim that EU regulations are stricter on GM crops and pesticides, as well as food additives. Critics say TTIP will allow cheaper but lower-quality foods to enter the EU market.

Protests against the TTIP in different EU countries have not been without controversy. EPA/Wolfgang Kumm

Democracy & Transparency

TTIP talks have been criticized for their lack of transparency. Discussions are held behind closed doors and in the strictest secrecy.

TTIP contains provisions to introduce “investor-state disputes settlement.” It would give companies the right to sue foreign governments over unfair treatment that is harmful to their profit. Critics claim that this undermines the democracy of large companies by giving them power to influence government policies.

TTIP, as a massive trade agreement, is still awaiting many details. The negotiations began in 2013, but at least the US is determined to complete the remaining rounds before the current presidency. The European Council and European Parliament both have to agree on the result of the negotiations in the EU. Separately, the deal must be ratified in each of the 28 EU member countries’ national parliaments.


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