Tom Ferris, Economic Consultant, explores the proposed Transatlantic trade agreement between the EU and the US
The EU and the USA are currently negotiating a new agreement—the Transatlantic Trade and Investment Partnership (TTIP). Supporters of the partnership agreement argue that it will cut red tape and reduce restrictions on investment on both sides of the Atlantic. Opponents argue that it could threaten consumer protection, social rights, health, agriculture, the environment, and data protection. The possible impact of TTIP on Ireland was examined in a recent report prepared for the Irish Government. Copenhagen Economics undertook the study.1
The Irish Government accepts that legitimate concerns have been raised. Anxious that the negotiations be transparent, the Department of Jobs, Enterprise and Innovation has responded to a number of the issues raised, such as the Investor-State Dispute Settlement Scheme, Public Services, Regulatory Cooperation, Food Standards—particularly Genetically Modified Organisms and Hormone Treated Beef—and Transparency. The responses are set-out in a briefing note prepared by the Department.2
In addition, the European Commission has published a communication outlining how more transparency will be injected into the negotiations, to ensure that the general public has accurate and full information on the EU’s intentions in the TTIP negotiations.3
Who is driving TTIP?
In his February 2013 State of the Union Address, President Obama announced that he was launching
… talks on a comprehensive Transatlantic Trade and Investment Partnership with the European Union—because trade that is fair and free across the Atlantic supports millions of good-paying American jobs.
During the Irish Presidency of the EU, the EU Trade Council decided on 14 June 2013 to formally launch negotiations on a Transatlantic Trade and Investment Partnership with the US. The EU press release states that
[t]he Council approved a mandate for the Commission to negotiate a comprehensive trade and investment agreement with the United States, the … TTIP.
In a separate press release, Minister for Jobs, Enterprise and Innovation Richard Bruton TD, pointed out that
[r]eaching agreement among EU Trade Ministers on the terms of the EU’s negotiating mandate has been a top priority for the Irish Presidency …
The European Commission is currently negotiating on behalf of the EU and its twenty-eight member states. It does so using guidelines provided by the governments of those countries.
What impact will it have on Ireland?
The Copenhagen Economics report assessed the economic impacts of the TTIP on the Irish economy. The report acknowledges that this is still only a potential agreement. It also acknowledges that the assessment relies, in part, on model simulations for the Irish economy, using the same model and liberalisation scenarios as used in the Centre for Economic Policy Research study on the EU-wide impacts of the TTIP. This data is used to quantify the macroeconomic and sectoral impacts of the TTIP on the Irish economy. Taking these caveats into account, the Report finds that the TTIP
… will have an overall very positive impact on the Irish economy if it had been implemented today.
This overall estimate is followed by a series of specific positive estimates. We pick just six of them:
- TTIP would have increased Ireland’s GDP by 1.1%, had it been implemented today;
- Real national income in Ireland is predicted to increase by €2.4bn as a result of the TTIP;
- TTIP will increase exports from Ireland to the world by around 4%, and imports by slightly above 4%;
- The increase in Ireland’s exports of 4%is estimated to correspond to somewhere between 5,000 to 10,000 additional export-related jobs in Ireland;
- Investment in Ireland is predicted to increase to a level 1.5% above what it would have been without the agreement; and
- It is predicted that output (gross value added) will increase by €1.3bn in the context of gross value added of €158bn in 2013.
The Report goes on to state that the positive output impact will be found overwhelmingly in the manufacturing sector, and that there may be negative impacts in the agriculture and food sector and for the output of the services sectors. The output figures presented in the Report are summarised in the table below.
Table: Change in Output by main sector in Ireland
The foregoing estimates show that not all sectors are likely to benefit from the proposed EU/USA agreement. Within the services sector, the Copenhagen Economics report concludes that
… we find an expansion of insurance services and a contraction in other parts of the services industry.
The report also sees the need to recommend that
... Ireland‘s beef producers should prepare for increased competition from cost efficient US beef producers in the European market.
This recommendation arises from a recognition that increased beef competition depends on the actual outcome of the TTIP negotiations with respect to relaxation of quotas for US beef into the European market, and depending on the degree of change to other regulatory barriers in the beef sector. These conclusions and recommendations provide timely advice for Irish civil servants, representing Ireland within the EU team negotiating on the TIPP, to be vigilant in arguing Ireland’s legitimate concerns.
Is TIPP a done deal?
TIPP is far from being a done deal. Rounds of talks have been taking place on a regular basis over the past two years. The ninth round of negotiations will take place in New York from 20–24 April, 2015. The negotiating teams will discuss a broad range of TTIP issues in-depth. However, it is one thing to get agreement between the two negotiating teams; it is another matter to get overall agreement at EU and USA government levels.
From an EU perspective, if the negotiation process is successfully completed, the draft TIPP texts will first have to be approved by the twenty-eight EU’s Member States in the Council, and then ratified by the European Parliament. That is easy to say, but much harder to deliver in reality. Even if agreement is achieved at overall EU level, there may still be agreement required at EU Member State level. Depending on the policy areas covered in the final TIPP agreement, the twenty-eight national parliaments of the EU’s Member States might also have to approve the deal. So there is yet still a long way to go.