October 16, 2014
Proposed Transatlantic Trade and Investment Partnership (T-TIP)
What is it? The Transatlantic Trade and Investment
Partnership (T-TIP) is a proposed “comprehensive and
high-standard” free trade agreement (FTA) between the
United States and European Union (EU). Both sides seek to
liberalize transatlantic trade and investment and set globally
relevant rules and disciplines that could boost economic
growth, support multilateral trade liberalization through the
World Trade Organization (WTO), and address thirdcountry trade policy challenges.
What is the current status? On March 20, 2013, the
Obama Administration notified Congress of its intent to
negotiate T-TIP. Negotiations began in July 2013, and
seven rounds of negotiations have been held to date, with
the most recent one completed in October 2014. Both sides
aim to conclude the negotiations in two years, but the
likelihood is uncertain given the complexity of the issues.
Both sides have exchanged initial tariff offers, and
discussions on regulations, standards, and rules are
ongoing. Textual discussions on investment are suspended
pending the outcome of the EU’s public consultation on
investor-state dispute settlement.
“... [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
What is the role of Congress? Congress establishes U.S.
trade negotiating objectives and would consider legislation
to implement a final T-TIP agreement. Possible
congressional consideration of renewal of Trade Promotion
Authority (TPA), which expired in 2007, could affect the TTIP negotiations. As part of oversight, Congress could
examine how T-TIP would compare with other FTAs, such
as the Trans-Pacific Partnership (TPP) and EU-Canada
Comprehensive Economic and Trade Agreement (CETA),
and whether T-TIP should include other countries, such as
Canada and Mexico.
Trade and Economic Context
The United States and EU share a mutually beneficial and
globally significant economic relationship (Figure 1).
While they are each other’s largest overall trade and foreign
direct investment (FDI) partners, a range of trade and
investment barriers constrain the economic relationship.
Concerns about slow economic growth and increased
competition from emerging markets have renewed interest
in addressing remaining bilateral trade and investment
barriers through T-TIP.
Figure 1. U.S.-EU Share of Global Economy
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
with third-country markets.
What are opposing views? Opponents are concerned about
adverse effects on import sensitive sectors; the impact on
U.S.-EU relations should negotiations stall; a focus on
regional and bilateral FTAs detracting from multilateral
trade liberalization; and potential infringement on U.S. and
EU sovereignty, including the ability to regulate for health,
labor, and environmental interests.
Source: World Bank; World Trade Organization; and United
Nations Committee on Trade and Development.
Key Negotiating Issues
Market Access. The United States and EU aim to eliminate
or reduce trade and investment barriers on goods, services,
and agriculture. Average U.S. and EU tariffs are already
low, but given the magnitude of the transatlantic economic
relationship, further tariff liberalization could yield
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Proposed Transatlantic Trade and Investment Partnership (T-TIP)
Regulations and Standards. A major component of T-TIP
is achieving greater cooperation, convergence, and
transparency in regulations and standards-setting processes
to reduce bilateral nontariff barriers to trade. Key sectors of
interest include automobiles, chemicals, cosmetics,
engineering, information and communications technology,
medical devices, pesticides, pharmaceuticals, and textiles.
Possible U.S.-EU regulatory and standard-setting approaches:
Cooperative Frameworks, such as through the
Transatlantic Economic Council (TEC) and potential T-TIP
mechanisms, provide an opportunity to discuss technical
differences, as well as processes for greater transparency,
accountability, and stakeholder participation across sectors.
Mutual Recognition Agreements (MRAs) are agreements
by regulators to accept products and services from each
other’s jurisdiction under specified conditions. For example, the
United States and EU recognize each other’s safety inspections
for civilian aircraft under a 2011 bilateral MRA.
Harmonization of the same standards or rules across
jurisdictions is being discussed in the T-TIP context, particularly
as a possibility for the development of new regulations and
standards for future technologies.
Global Standards Leadership could be possible if the T-TIP
results in meaningful regulatory outcomes.
Rules. The United States and EU seek to establish rules
governing international trade, such as for regulation, SOEs,
intellectual property rights (IPR), investment, trade
facilitation, and localization barriers to trade. Some rules
could exceed existing U.S. FTAs or WTO commitments.
Specific Issue Areas
Agriculture. Agriculture is an important part of U.S. trade.
T-TIP negotiations seek to address tariff reduction and
elimination; market access for genetically modified
organism (GMO) products; sanitary and phytosanitary
standards (SPS); and treatment of regional agricultural
products as geographical indications (GIs).
Customs and Trade Facilitation. The efficient flow of
legally traded goods across borders supports access to
foreign markets and global supply chains. T-TIP
negotiations aim to address burdensome customs
procedures to support U.S.-EU trade, while balancing
Digital Trade. The Internet is an important delivery
platform for trade. Open e-commerce trade, data flows, and
privacy could be a major part of T-TIP negotiations,
attracting greater interest due to debate about U.S.
government surveillance activity and new EU directives to
reform its data and privacy laws.
Dispute Settlement. Provisions on dispute settlement
establish the mechanism for enforcing FTA commitments.
T-TIP negotiations may examine what disciplines would be
covered under a dispute settlement mechanism and
approaches for dispute resolution.
Energy and Raw Materials. Discussions may focus on
removing restrictions on trade and investment in energy and
raw materials, as well as regulatory frameworks. Exports of
liquefied natural gas (LNG) may be of particular interest.
Government Procurement. Government procurement
disciplines aim to ensure transparent, nondiscriminatory
treatment toward domestic and foreign firms when
government actors make purchasing decisions. T-TIP
negotiations could involve discussions on greater market
access and enhanced rules for procurement markets,
including at the sub-central government level.
IPR. T-TIP negotiations are expected to include the
protection and enforcement of IPR, which are legal rights in
various form (e.g., copyrights, trademarks, and patents) to
protect innovation and promote creative output. Treatment
of GIs may be controversial, while cooperation on trade
secrets could lead to globally relevant rules on cyber theft.
Investment. U.S.-EU investment flows outsize the already
sizeable U.S.-EU trade flows. Possible T-TIP issues include
greater market access for certain sectors and investor-state
Labor and Environment. Labor and environmental
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
in these areas, may debate the scope and enforceability of
such obligations in T-TIP.
Localization. “Forced” localization measures, such as local
content requirements to process data in-country, are
designed to support domestic firms at the expense of
foreign counterparts. T-TIP could address localization
barriers bilaterally and with third countries.
Rules of Origin. Rules of origin will determine which U.S.
and EU goods would benefit from T-TIP.
Services. Services are important to the U.S.-EU trade
relationship. U.S. FTAs typically cover trade in services
through market access provisions and rules. There is debate
about whether financial services regulation and “cultural
exceptions” for the audiovisual services sector will be
discussed. Other possible issues include the movement of
service providers across borders.
SOEs. State-owned enterprises, in which the government
has significant control or influence, often receive subsidies,
preferential financing, and/or other special privileges, and
can place foreign firms at a competitive disadvantage. TTIP aims to craft globally relevant SOE disciplines.
For additional information, see CRS Report R43387,
Transatlantic Trade and Investment Partnership (TTIP)
Negotiations, by Shayerah Ilias Akhtar and Vivian C.
Shayerah Ilias Akhtar, email@example.com, 7-9253
Vivian C. Jones, firstname.lastname@example.org, 7-7823
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