Proposed Transatlantic Trade and Investment Partnership (T-TIP)

Proposed Transatlantic Trade and Investment Partnership (T-TIP)

October 16, 2014
Proposed Transatlantic Trade and Investment Partnership (T-TIP)
Overview
What is the role of Congress? Congress establishes U.S.
trade negotiating objectives and would consider legislation
What is it? The Transatlantic Trade and Investment
to implement a final T-TIP agreement. Possible
Partnership (T-TIP) is a proposed “comprehensive and
congressional consideration of renewal of Trade Promotion
high-standard” free trade agreement (FTA) between the
Authority (TPA), which expired in 2007, could affect the T-
United States and European Union (EU). Both sides seek to
TIP negotiations. As part of oversight, Congress could
liberalize transatlantic trade and investment and set globally
examine how T-TIP would compare with other FTAs, such
relevant rules and disciplines that could boost economic
as the Trans-Pacific Partnership (TPP) and EU-Canada
growth, support multilateral trade liberalization through the
Comprehensive Economic and Trade Agreement (CETA),
World Trade Organization (WTO), and address third-
and whether T-TIP should include other countries, such as
country trade policy challenges.
Canada and Mexico.
What is the current status? On March 20, 2013, the
Obama Administration notified Congress of its intent to
Trade and Economic Context
negotiate T-TIP. Negotiations began in July 2013, and
seven rounds of negotiations have been held to date, with
The United States and EU share a mutually beneficial and
the most recent one completed in October 2014. Both sides
globally significant economic relationship (Figure 1).
aim to conclude the negotiations in two years, but the
While they are each other’s largest overall trade and foreign
likelihood is uncertain given the complexity of the issues.
direct investment (FDI) partners, a range of trade and
Both sides have exchanged initial tariff offers, and
investment barriers constrain the economic relationship.
discussions on regulations, standards, and rules are
Concerns about slow economic growth and increased
ongoing. Textual discussions on investment are suspended
competition from emerging markets have renewed interest
pending the outcome of the EU’s public consultation on
in addressing remaining bilateral trade and investment
investor-state dispute settlement.
barriers through T-TIP.
Figure 1. U.S.-EU Share of Global Economy
“.. [an] opportunity to not only expand trade and
investment across the Atlantic, but also contribute to
the development of global rules that can strengthen
the multilateral trading system.”
U.S. and EU leaders on T-TIP, February 2013
How would it differ from other U.S. FTAs? T-TIP
involves the world’s two largest advanced economies.
Negotiators seek new or expanded commitments in areas
such as regulatory compatibility, state-owned enterprises
(SOEs), and localization barriers to trade in the digital
environment. In addition, negotiators aim to use T-TIP to
develop globally relevant trade disciplines.
What are supporting views? Supporters see an
opportunity to boost transatlantic economic growth and jobs
by addressing costly trade barriers; strengthen the U.S.-EU
bilateral relationship; and support broader and deeper trade
liberalization, including through potential common

approaches for the development of rules in the WTO or
Source: World Bank; World Trade Organization; and United
with third-country markets.
Nations Committee on Trade and Development.
What are opposing views? Opponents are concerned about
Key Negotiating Issues
adverse effects on import sensitive sectors; the impact on
U.S.-EU relations should negotiations stall; a focus on
Market Access. The United States and EU aim to eliminate
regional and bilateral FTAs detracting from multilateral
or reduce trade and investment barriers on goods, services,
trade liberalization; and potential infringement on U.S. and
and agriculture. Average U.S. and EU tariffs are already
EU sovereignty, including the ability to regulate for health,
low, but given the magnitude of the transatlantic economic
labor, and environmental interests.
relationship, further tariff liberalization could yield

significant gains.
www.crs.gov | 7-5700

Proposed Transatlantic Trade and Investment Partnership (T-TIP)
Regulations and Standards. A major component of T-TIP
Energy and Raw Materials. Discussions may focus on
is achieving greater cooperation, convergence, and
removing restrictions on trade and investment in energy and
transparency in regulations and standards-setting processes
raw materials, as well as regulatory frameworks. Exports of
to reduce bilateral nontariff barriers to trade. Key sectors of
liquefied natural gas (LNG) may be of particular interest.
interest include automobiles, chemicals, cosmetics,
engineering, information and communications technology,
Government Procurement. Government procurement
medical devices, pesticides, pharmaceuticals, and textiles.
disciplines aim to ensure transparent, nondiscriminatory
treatment toward domestic and foreign firms when
government actors make purchasing decisions. T-TIP
Transatlantic Cooperation
negotiations could involve discussions on greater market
Possible U.S.-EU regulatory and standard-setting approaches:
access and enhanced rules for procurement markets,
Cooperative Frameworks, such as through the
including at the sub-central government level.
Transatlantic Economic Council (TEC) and potential T-TIP
mechanisms, provide an opportunity to discuss technical
IPR. T-TIP negotiations are expected to include the
differences, as wel as processes for greater transparency,
protection and enforcement of IPR, which are legal rights in
accountability, and stakeholder participation across sectors.
various form (e.g., copyrights, trademarks, and patents) to
Mutual Recognition Agreements (MRAs) are agreements
protect innovation and promote creative output. Treatment
by regulators to accept products and services from each
of GIs may be controversial, while cooperation on trade
other’s jurisdiction under specified conditions. For example, the
secrets could lead to globally relevant rules on cyber theft.
United States and EU recognize each other’s safety inspections
for civilian aircraft under a 2011 bilateral MRA.
Investment. U.S.-EU investment flows outsize the already
Harmonization of the same standards or rules across
sizeable U.S.-EU trade flows. Possible T-TIP issues include
jurisdictions is being discussed in the T-TIP context, particularly
greater market access for certain sectors and investor-state
as a possibility for the development of new regulations and
dispute settlement.
standards for future technologies.
Global Standards Leadership could be possible if the T-TIP
Labor and Environment. Labor and environmental
results in meaningful regulatory outcomes.
provisions attempt to address concerns over the protection
of worker rights and the environment. The United States
and EU, which maintain high levels of domestic protection
Rules. The United States and EU seek to establish rules
in these areas, may debate the scope and enforceability of
governing international trade, such as for regulation, SOEs,
such obligations in T-TIP.
intellectual property rights (IPR), investment, trade
Localization. “Forced” localization measures, such as local
facilitation, and localization barriers to trade. Some rules
content requirements to process data in-country, are
could exceed existing U.S. FTAs or WTO commitments.
designed to support domestic firms at the expense of
Specific Issue Areas
foreign counterparts. T-TIP could address localization
barriers bilaterally and with third countries.
Agriculture. Agriculture is an important part of U.S. trade.
Rules of Origin. Rules of origin will determine which U.S.
T-TIP negotiations seek to address tariff reduction and
and EU goods would benefit from T-TIP.
elimination; market access for genetically modified
organism (GMO) products; sanitary and phytosanitary
Services. Services are important to the U.S.-EU trade
standards (SPS); and treatment of regional agricultural
relationship. U.S. FTAs typically cover trade in services
products as geographical indications (GIs).
through market access provisions and rules. There is debate
about whether financial services regulation and “cultural
Customs and Trade Facilitation. The efficient flow of
exceptions” for the audiovisual services sector will be
legally traded goods across borders supports access to
discussed. Other possible issues include the movement of
foreign markets and global supply chains. T-TIP
service providers across borders.
negotiations aim to address burdensome customs
SOEs. State-owned enterprises, in which the government
procedures to support U.S.-EU trade, while balancing
has significant control or influence, often receive subsidies,
security concerns.
preferential financing, and/or other special privileges, and
can place foreign firms at a competitive disadvantage. T-
Digital Trade. The Internet is an important delivery
TIP aims to craft globally relevant SOE disciplines.
platform for trade. Open e-commerce trade, data flows, and
privacy could be a major part of T-TIP negotiations,
For additional information, see CRS Report R43387,
attracting greater interest due to debate about U.S.
Transatlantic Trade and Investment Partnership (TTIP)
government surveillance activity and new EU directives to
Negotiations, by Shayerah Ilias Akhtar and Vivian C.
reform its data and privacy laws.
Jones.
Dispute Settlement. Provisions on dispute settlement
Shayerah Ilias Akhtar, siliasakhtar@crs.loc.gov, 7-9253
establish the mechanism for enforcing FTA commitments.
Vivian C. Jones, vcjones@crs.loc.gov, 7-7823
T-TIP negotiations may examine what disciplines would be
IF00005
covered under a dispute settlement mechanism and
approaches for dispute resolution.
www.crs.gov | 7-5700

Document Outline

Overview

Trade and Economic Context

Key Negotiating Issues

Specific Issue Areas