Transcript Implications of the Transatlantic Trade & Investment

ECIPE PRESENTATION » 21.11.2013
Implications of the Transatlantic Trade & Investment Partnership
for the Global Trading System
Natalia Macyra
Trade Policy Analyst, European Centre for International Political Economy (ECIPE)
4th ‘Turkey - Europe Forum’, Istanbul 21-22 November 2012
Session: Transatlantic Trade and Investment Partnership and Its Effect on International
Economic Security and Multidimensional Relations
» Multilateral trading system: From GATT to Doha
‣ In 1947, GATT - post-war world governance
‣ Cold War - maintaining security through the development of prosperous and stable
economies
‣ Changes in trade policy objective after 1989
‣ 1990s the technological expansion, new patterns in global production chains and emerging
economies in Asia
‣ The increase of WTO members and trade volume covered by agreements in last twenty
years
‣ Traditional production patterns replaced by trade in value added
‣ Reduction in tariffs for goods from 20-30% to 4% (1950 - 2006)
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» Shifting trade priorities
‣ From WTO impasse to bilateral FTAs
» Initial worries about ”undermining the multilateral system” now expunged
» Bilateral, plurilateral and regional trade agreements being a response to the gridlock in the WTO
negotiations
» FTAs generally negotiated much more quickly than WTO accession
» Yet little economic value in small FTAs (< 0.1% of GDP); failure of India & Mercosur
» Refocusing on ’big’ trading partners, plurilaterals or RTAs since 2012
‣ New trade issues and barriers
» From manufacturing tariffs to services and NTBs
» Digital economy and regulation of Internet
» Increasing attempts of exporting rules to mid-sized third countries
» Regulatory harmonisation vs. regulatory co-operation
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» Previous attempts to create transatlantic agreement failed
‣ 1995—’New Transatlantic Agenda’, Transatlantic Business Dialogue
‣ 1998—New Transatlantic Marketplace
‣ 2007—Transatlantic Economic Council (TEC)
‣ Before 2011, only resulted in “open skies” and weak co-operation agreements on IP,
innovation, energy and chemicals
‣ The impasse in multilateral negotiation
» Bilateral or regional negotiations as ways to gain new market access
» Incentive to trade with major trading partner bigger than with smaller economies
‣ Ideological drift between EU/US after 9/11
‣ The increased growth in emerging economies in Asia
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» Why TTIP now?
‣ Response to emerging markets and Asia
» Relative share of EU and US GDP diminishing
» Necessity to coordinate against BRICs
» Liberal, free trade order replaced by priority to domestic protection or foreign policy
‣ New era of economic statecraft
» The economics back at ‘the heart of foreign policy‘
» Trade expansion as a core objective for Obama second term
» Strong links to trade in the EU ‘Jobs and Growth’ policy
‣ An answer to economic and political needs
» Serving only political purposes results in a weaker commitments
» A reaction to the potential economic loss
» ‘Lock-in mechanism ‘ of trade agreements as an anchor for domestic trade and related policy reform
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» Economic impact of transatlantic agreement
‣ Global income increase by almost US$130 billion annually
‣ 5% of NTB reduction between the US and EU = 1% NTB reduction for the 3rd country
‣ Improvements in market access for third countries Deep liberalization increases real
income of 3,27%
‣ Tariff-only reduction results in growth of 0,1%
‣ Economic impact on partner countries:
Changes in per capita income
Tariff-only scenario:
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NTB scenario:
China -0,2%
China -0,4%
India -2,5%
India -1,7%
Mexico -1,1%
Mexico -7,2%
Canada -0,7%
Canada -9,5%
Turkey – 0,3%
Turkey -2,5%
Brazil +0,5%
Brazil +2,5%
» Multidimensional implications of TTIP
‣ Bringing comprehensive liberalization in transatlantic trade
» Mutual interest in trade openness in both countries
» Similarities in values, culture, size and structure of the economy
» Possibility to improve the economic situation and recovery from the crisis
‣ Complex impact on the world trading system
» Strengthening the existing rules
» Establishing a set of regulation in a new areas
» An anchor for trade and related policy reforms
‣ New areas for trade liberalization
» Non-tariff barriers, investments, government procurement, IPR
» Regulatory cooperation and standard harmonization, energy and environmental standards
» Internet and digital economy
‣ The ‘gold standard’ for deep and comprehensive global trade and investment
integrations
» Only in case of comprehensive agreement going behind tariff liberalization
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