America and Europe have a long history of trade partnerships with one another – in fact, 237 years worth. On July 12, the first round of negotiations finished for the Transatlantic Trade and Investment Partnership, or, TTIP.Reactions to TTIP thus far are somewhat mixed; some are thrilled at the prospective economic boost which the agreement could produce while others are wary of putting all of their nation’s economic eggs in one US/Euro basket before the parameters are ironed out. Regardless, TTIP is most certainly an ambitious project that, if implemented, would drastically alter both American and European approaches to trade and investment.
TTIP: The Facts and What’s New
Currently, the US is 19th on the Enabling Free Trade Index, meaning that, in regard to policies and services that facilitate the trade of goods across borders, the US just manages to land a spot ont he list of countries who score high on their openness to trade; barely scrimping ahead of France who finishes in the 20th spot. When NAFTA (North American Free Trade Agreement) was initially enacted in 1994, it sought to open the door to free trade between the USA, Canada, and Mexico. Tariffs (taxes on imports and exports) were eliminated on agricultural goods, and since 2009 the US has a trade surplus of $28.3 billion with the other NAFTA countries.
Though NAFTA is not without its criticisms, TTIP will yet seek a similar arrangement between the United States and the 28-nation European Union. Hopes for the agreement between the leaders of the respective countries are high: “The U.S.-E.U. relationship is the largest in the world — it makes up almost half of global G.D.P. This potentially groundbreaking partnership would deepen those ties,” said President Obama during TTIP’s mid-June announcement.So, what’s in store for the latest trade and investment agreement? Plenty – starting with the assertion that TTIP will create more than 13 million American and EU jobs. TTIP will also further open EU markets to the US, increasing on the $458 billion goods and private services America exported to its largest market (the EU) in 2012.A strengthening of a “rules-based” investment between America and the EU remains a vague aspect of the proposal. What these “rules” are exactly and how they are to be expanded upon and made stronger have yet to be explained in detail, but what has been made clear is that TTIP will:
- Eliminate all tariffs on trade.
- Tackle any issues (non-tariff barriers) that generally impede the flow of goods.
- Obtain improved market access.
- Significantly reduce the cost of differences in regulations and standards by promoting greater compatibility, transparency, and cooperation, while maintaining high levels of health, safety, and environmental protection.
- Develop rules, principles, and new modes of cooperation on issues of global concern.
- Promote the global competitiveness of small and medium-sized enterprises.
The Process Begins
Shortly after TTIP was announced, political nit picking swiftly entered the conversation. France, expressed serious concern regarding its film industry being a part of the deal. Though premature, the French have provided all involved just a glimpse of the iceberg that will be the extraordinary difficulties of establishing a trade and investment agreement that will affect all 28 members of the European Union and the United States. The difficulties were acknowledged by Karel De Gucht, President of the American Council on Germany, “All of this will require open minds, but if we are successful it will be valuable, not only for the United States and Europe but for the multilateral system as a whole, because the solutions we develop to these complex problems can help fill many gaps in the multilateral rulebook later on.”Fortunately, what is set to become the world’s largest free trade agreement is not causing a controversy as far as America is concerned. Both Democrats and Republicans are likely to be in favor of a trade deal with Europeand haven’t stirred up any pressure for the White House with opt-outs like France already has.
NYC and the TTIP
The finer details of TTIP have not yet been determined, as first-round negotiations have only just concluded, but with the intentions of TTIP already laid out it is easy to translate how this new agreement will affect NYC. New York City is a major US hub for international trade with over twenty-five state imports and exports apiece. France, the United Kingdom, and Germany are all in the top ten of NYC’s import list, and the UK and Germany are in the top ten of NYC’s export list. It is easy to infer, that, with less restrictions and an elimination of all tariffs, these European countries will easily move up both the import and export list, with other European countries such as Belgium and the Netherlands to follow.That the same influx of importing and exporting of NYC’s goods and services will increase substantially in European nations as well.
In addition to cutting tariffs, TTIP will attempt to ease off some of the difficult customs barriers that are currently in place. With new, streamlined technical regulations for standards and certification, the cost put on businesses for this process will decrease, and so will the time it takes for the processing of goods and services that are allowed to be imported or exported – time does equal money, after all. This is good news for both businesses, and their consumers. If costs for imports and exports go down across the board, businesses will be able to hire more employees and provide a larger array of goods and services to their customers. Specifically, in New York, in which of the state’s top twenty-five exports are diamonds, oil, metals, coal, vehicles, and medical vaccines.
The Rationale
With a global economy that is rapidly gaining its momentum and drive from the East, with a special emphasis on China, western countries are hoping to re-establish the dominance they once had. It’s obvious that politicians from both sides of the Atlantic are hoping to gain some serious political brownie points for both their support of TTIP and any positive future outcomes, such as the benefits US-based companies such as Amazon and Google would gain from looser restrictions on European borders. There is no doubt that major trade cities, such as New York, will be closely following the TTIP negotiations.