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The Transatlantic Trade and Investment Partnership (TTIP)

Published Friday, December 4, 2015

A briefing on the background, negotiation process and controversial points of the proposed EU-US free trade agreement, the Transatlantic Trade and Investment Partnership (TTIP).

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The Transatlantic Trade and Investment Partnership (TTIP) is a controversial trade agreement currently being negotiated between the EU and the US. These economies account for nearly half of global GDP and almost a third of world trade.

Negotiations were launched at the G8 summit at Lough Erne in June 2013. The first negotiating round took place in July 2013. Eleven negotiating rounds have taken place so far. Initial hopes that negotiations would be concluded within 18 – 24 months (ie between the end of 2014 and the middle of 2015) proved optimistic.

Average tariffs on trade between the EU and US are relatively low. Much of the negotiation therefore centres around non-tariff barriers to trade, such as harmonising product regulation and standards and on measures to protect the rights of investors.

The economic benefits of TTIP are contested. A study for the Department of Business, Innovation and Skills estimated that the gains to the UK would be £4 billion to £10 billion annually (0.14% to 0.35% of GDP) by 2027. Critics of TTIP argue that these estimates overstate the gains, and that alignment of regulatory standards in areas such as consumer safety, environmental protection and public health could have social costs.

Probably the most controversial element of TTIP is Investor State Dispute Settlement (ISDS). These provisions allow investors to bring proceedings against foreign governments that are party to the treaty. These cases are heard in tribunals outside the domestic legal system. The concern is that the ISDS provisions might affect governments’ ability to determine public policy if they are concerned they might be sued by corporations. In the UK, the main area of concern has been the NHS – in particular, whether any future measures to reduce the private sector’s involvement might be challenged under these provisions. The UK Government and the European Commission have sought to allay these concerns – including through a new proposal for an Investment Court System, published in November 2015 – but critics remain to be convinced. Besides ISDS, there are a number of other areas of concern with TTIP including the extent to which standards can be harmonised between the EU and US (food standards, for example) and public procurement.

TTIP has been the subject of a number of Parliamentary debates and Committee reports, including a May 2014 report by the House of Lords European Union Committee and a March 2015 report by the House of Commons Business, Innovation and Skills Committee. While trade and foreign direct investment are the responsibility of the EU, TTIP is widely expected to be a “mixed competence” agreement meaning it will require ratification by all 28 EU member states. In September 2014, Vince Cable, the then Secretary of State for Business, Innovation and Skills said: “The UK Parliament … will have a full opportunity to scrutinise the deal before it is finalised.”

Commons Briefing papers SN06688

Author: Dominic Webb

Topics: Economic policy, EU external relations, Europe, International economic relations, International trade, World economy

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