Transatlantic Trade and Investment Partnership (TTIP) Overview

What is TTIP?

TTIP is the Transatlantic Trade and Investment Partnership, a trade agreement that is currently being negotiated between the United States and the European Union. If successful, it will be the largest free trade agreement (FTA) in history, covering more than 40 percent of global GDP.

What countries are involved with TTIP?

The European Union, which currently consists of 28 member states, and the United States. United States negotiations are being led by the U.S. Trade Representative's (USTR) office. The EU Trade Commissioner represents the European Union. Current negotiations grew out of the original United States-European Union High Level Working Group (HLWG) on Jobs and Growth, which set a framework for subsequent rounds of negotiations between the two parties.

TTIP is being hailed as one of the largest trade agreements in history. What kind of numbers are we talking about?

According to the HLWG, TTIP will substantially affect global trade. Combined, the EU and the United States account for approximately 40 percent of world GDP and 30 percent of world trade. Bilateral trade in goods and services between the two entities totals $2.7 billion daily. Additionally, $3.7 trillion has been invested in manufacturing facilities, real estate and other assets on both sides of the Atlantic.

What exactly would TTIP do?

Like many FTAs, TTIP would eliminate all trade tariffs and reduce non-tariff barriers. Tariffs between the U.S. and EU are already low at an average of 4 percent so addressing non-tariff barriers is a key focus of the negotiations. TTIP also is intended to expand market access for trade in services and introduce a simplified regulatory regime to reduce costs and harmonize systems. Intellectual property laws would also be aligned. A number of industries stand to benefit from the abolishment or reduction of non-tariff barriers to market access. 

What does TTIP mean to American agriculture?

Every $1 billion in agricultural exports supports 9,000 jobs in agriculture, for transportation workers, food processors, packers, longshoremen, and sales and marketing representatives. The TTIP is expected to yield $600 billion in economic activity, if an agreement is reached and passed by the participating countries. Clearly, this could be of enormous value to U.S. job creation and agriculture.

The major issues for U.S. agriculture stakeholders are the non-tariff barriers, regulatory in nature, that hinder the sale of U.S. agricultural products in the EU. For example, the EU currently restricts the importation of genetically engineered (GE) food produced in the U.S. due to the region's precautionary principle. The precautionary principle is a concept which the EU applies in cases where the risks of commercialization of such food are incompatible with the high level of protection sought by the EU because the scientific data is deemed to be insufficient or inconclusive or if there is a scientific evaluation which shows potentially dangerous effects of the food's consumption. 

Another concern is the use and protection of geographical indicators (GIs). The EU asserts that certain names used for foods belong to countries or regions in the EU (i.e., "parmesan cheese" or "Bordeaux wine.") If copyright protection is overly stringent, it could cause businesses to re-brand and thus could be damaging to commerce. 

U.S. agriculture stakeholders have strongly encouraged a comprehensive agreement and have urged negotiators to focus on predictability and facilitating trade. 

What are the pros and cons of TTIP?

The TTIP will impact industries and regions differently. For example, those that currently benefit from trade barriers that allow for state support of domestic industries stand to lose, while multinational companies are largely expected to benefit as a result of reduced barriers to trade that impact various industries differently.

A common criticism of FTAs in general is that they circumvent international trade bodies such as the World Trade Organization, allowing complete bilateral action and adjudication to occur. Regardless of this criticism, many countries are aggressively pursuing FTAs to open markets and increase trade. The U.S. has fewer FTAs than most of our key trading partners, including the EU, China and Mexico. TTIP is an effort to correct that deficiency.

Where in the process is TTIP right now?

The first round of negotiations took place in Washington, D.C., from July 8-12, 2013. The talks covered market access for agricultural and industrial goods, government procurement, investment, energy and raw materials, regulatory issues, sanitary and phytosanitary measures, services, intellectual property rights, sustainable development, small- and medium-sized enterprises, dispute settlement, competition, customs/trade facilitation, and state-owned enterprises. The initial talks laid the ground work for the next round which will take place in Brussels starting October 7, 2013. During this second round, negotiators will begin discussing specific sector issues in greater depth and how to resolve key issues.

Industries and individual firms interested in shaping these negotiations can have an impact by working with key players at USTR and the Department of Commerce and by educating Congress on its specific interests through direct contact with the key congressional committees involved in international trade issues. 

Faegre Baker Daniels' Trade Policy Practice in Washington, D.C.

Attorneys and consultants in our Washington, D.C. office work with clients on international trade issues impacting their business. We represent clients before the United States Congress and key executive branch agencies, including the United States Trade Representative and the Departments of Commerce and State. We advise clients on issues in pending trade negotiations, trade-related legislation impacting their international or domestic business, and other trade policy matters.

Our trade policy practice professionals work closely with clients to understand their specific concerns and to develop strategies for achieving their objectives. Our professionals have years of experience in representing clients in the increasingly important area of international trade.

For more information on how our trade policy consulting professionals can help you, please contact Bob Kabel in Washington, D.C.

This article was also published in Director of Finance on October 29, 2013.