PERSPECTIVE The Transatlantic Trade and Investment Partnership(TTIP) Can the Planned Agreement Deliver on Its Promises? MARKUS SCHREYER November 2014 At a glance The Transatlantic Trade and Investment Partnership (TTIP) currently being negotiated between the EU and the United States is a matter of political and public controversy. More objective discussion requires that both the opportunities and the risks be evaluated transparently and properly. It is clear that any positive growth and employment effects should not be overestimated and the risks of adverse effects on prosperity should not be underestimated. TTIP will be able to meet the challenges of economic globalisation in the twenty-first century only if it is understood as more than merely a deregulation and liberalisation project, and rather as a significant contribution to the economic, environmental and social organisation of the international trade system. Since July 2013 the EU and the United States have been negotiating the so-called Transatlantic Trade and Investment Partnership(TTIP). By eliminating tariff and non-tariff barriers(especially customs duties and various regulations, standards and norms) to the fullest extent possible the idea is to facilitate market access for goods and services and in so doing to create the biggest free trade zone between the two most important economic areas in the world. Two further key elements of the planned agreement are a comprehensive investment protection agreement, including so-called»Investor-to­State Dispute Settlement«(ISDS), to promote mutual cross-border investment, and a Regulatory Cooperation Council to enable permanent closer transatlantic cooperation on regulatory issues that may arise. TTIP is supposed to be the most comprehensive and far­reaching regional free trade agreement to date, and one that will come to exert a dominant influence on the further shaping of international trade. But how should we evaluate the opportunities and risks of TTIP? 1 TTIP: Forecast Opportunities The aim of TTIP is to bring about positive effects on growth, employment and prosperity on both sides of the Atlantic. Indeed, it is possible that the increasing international division of labour and specialisation could lower companies’ production costs and thus consumer prices, while raising productivity and thus the incomes of private households. Further positive effects on prosperity could arise from increased foreign direct investments or from the availability of a wider range of products and even entirely new ones. The most often cited studies on TTIP forecast – depending on the extent of trade liberalisation – very positive effects on growth, employment and prosperity in both the EU and the United States. For example, the study carried out by the Centre for Economic Policy Research(CEPR) for the EU comes up with an additional increase in real GDP of almost 0.5 per cent by 2027(almost 0.4 per cent for the United States). The study conducted by the ifo Institute and the Bertelsmann Foundation estimates an additional increase in real per capita GDP of almost 5 per cent for 1. On this see, for example, Werner Raza et al.: ASSESS_TTIP: Assessing the Claimed Benefits of the Transatlantic Trade and Investment Partnership(TTIP), ÖFSE Final Report, Vienna 2014; Fritz Breuss: TTIP und ihre Auswirkungen auf Österreich: Ein kritischer Literaturüberblick, WIFO Working Papers No. 468, Vienna 2014; AK Wien: Stellungnahme zum Entwurf des Erstberichts der Handels-Nachhaltigkeitsfolgenabschätzung der Transatlantic Trade and Investment Partnership(TTIP), AK Position Paper, Vienna 2014; Stephan Beck and Christoph Scherrer: Das transatlantische Handels- und Investitionsabkommen(TTIP) zwischen der EU und den USA, Hans Böckler Stiftung, Working Paper No. 303, Düsseldorf 2014.