Civitas
+44 (0)20 7799 6677

Transatlantic Trade and Investment Partnership

PDF Version

Introduction
Still under negotiation, the Transatlantic Trade and Investment Partnership (TTIP) is a comprehensive agreement between the EU and the US which aims to reduce the cost of trading goods and services by removing tariffs and non-tariff barriers such as regulatory measures. Given that mutual tariffs are already low, the main objective is creating common product standards and removing regulation if it is believed to be unnecessary. This would reduce costs for both EU and US firms.

History
TTIP negotiations started in July 2013 following a report by an EU working group emphasising the need for a free trade area between the two major economies. Eleven rounds of negotiations have taken place since this recommendation was picked up by US President Barack Obama and former EU Commission President José Manuel Barroso.

The EU’s initial enthusiasm was reduced by Edward Snowden’s revelations about the NSA’s surveillance programme soon after negotiations started. As the talks have progressed and more sensitive issues were discussed, the stances of both the EU and the US have become more defensive. These controversial issues include the import and cultivation of genetically modified organisms, privacy and data protection, food safety standards, private health care and labour standards. In addition, public resistance against TTIP has been increasing in both Europe and the US, limiting the room for negotiation. The twelfth round of negotiations is set to take place on 22 February 2016.

How might the TTIP work?

Even though the negotiations are ongoing, it has been confirmed that the final agreement will consist of three parts. The first part focuses on improving mutual market access and includes topics such as public procurement and customs duties. The objective of the second part – regulatory cooperation – is to reduce costs by cutting red tape, to set up institutions to ensure cooperation between EU and US regulators, and to harmonise regulations in areas including energy, finance, chemicals, pharmaceuticals, cars, clothing and food. For example, US and EU regulators have different requirements for testing drugs and the different tests are expensive for businesses, so TTIP aims to reduce those costs by introducing common standards, so only one set of tests is required to sell a product in both markets. The third part concerns the creation of new rules that promote trade and investment and discusses issues such as energy, sustainable development, dispute settlement and intellectual property. Opponents fear that the harmonisation of regulations will lower environmental, labour, food and public health standards, despite affirmations from both Obama and Commission President Jean-Claude Juncker that this will not be the case.

A significant issue, especially in Europe, has been the inclusion of an investor-state dispute settlement (ISDS) mechanism that would allow companies to sue governments if they claim they have been treated unfairly and their profits have been damaged as a result. It is argued that, as the EU and US both have protections for businesses, the inclusion of ISDS just serves big business interests, potentially giving multinationals considerable leverage over public policy, at the expense of the democratic rights of governments. For instance, there are fears that private firms running NHS services might sue the UK government if it chose to return the services to the public sector. The Commission, in response to concerns, introduced a proposal for an investment court system, to replace the current ISDS proposal, which would make the dispute settlement process more transparent and protect governments’ rights to regulate.

The secrecy of the negotiations has also been widely criticised, as national governments and MEPs are not included in the process and can only accept or reject TTIP as a whole once the negotiations are finished. In response to this criticism, the Commission has published the negotiating texts online.

The TTIP is an EU agreement, so once it is agreed by the European Commission it must be ratified by the Council of the European Union and approved by the European Parliament.  It may also be debated in national parliaments.