Transatlantic Trade and Investment Partnership (T-TIP)

Transatlantic Trade and Investment Partnership (T-TIP)

Updated November 30, 2017
Transatlantic Trade and Investment Partnership (T-TIP)
Background
would be eliminated immediately upon T-TIP’s entry into
force (rather than phased out over a period of time).
T-TIP is a potential “comprehensive and high-standard”
Remaining tariffs to be negotiated include those on among
free trade agreement (FTA) under negotiation since 2013
the most sensitive products, such as in agriculture.
between the United States and European Union (EU), each
other’s largest overall trade and investment partner. T-TIP
Regulations and Standards. Negotiations have progressed
aims to liberalize U.S.-EU trade and investment; address
on regulatory transparency and cooperation to enhance
barriers to trade in goods, services, and agriculture; and set
compatibility of U.S.-EU regulatory systems. Sector-
globally relevant rules and disciplines to support economic
specific regulatory cooperation discussions have advanced
growth and multilateral trade liberalization. The 15th and
for some sectors (autos, pharmaceutical, medical devices),
latest negotiating round was in October 2016. Negotiations
but are more limited for others (chemicals, cosmetics,
presently are on pause as both sides evaluate T-TIP’s status.
engineering, information and communications technology,
pesticides, textiles). Some question if T-TIP can bridge U.S.
Role of Congress. Congress has a constitutional
and EU differences in science-based regulatory approaches
responsibility to regulate foreign commerce. It establishes
given, broadly speaking, the U.S. risk-based approach and
overall U.S. trade negotiating objectives, updated in 2015 in
the EU’s application of the “precautionary principle.”
Trade Promotion Authority (TPA) (P.L. 114-26), and would
need to pass implementing legislation for a final T-TIP to
Possible T-TIP Regulatory Approaches
take effect. The negotiations and a potential agreement’s
Cooperative Frameworks to discuss technical differences, as
implementation and enforcement present oversight issues.
well as processes for increased transparency, accountability, and
Figure 1. U.S. and EU-28 Economic Snapshot, 2016
stakeholder participation across sectors.
Mutual Recognition Agreements (MRAs) by regulators to
accept products and services from each other’s jurisdiction
under certain conditions. For example, a 2011 U.S.-EU MRA
recognizes each side’s safety inspections for civilian aircraft, and
2017 changes to a 1998 MRA allow U.S. and EU regulators to
rely upon each other’s inspections of pharmaceutical
manufacturing facilities to avoid duplication of inspections.
Harmonization of standards or rules across jurisdictions,
particularly for future technologies.
Global Standards Leadership is a possibility if T-TIP results in
meaningful regulatory outcomes based on common standards.
Rules. The two sides have been negotiating trade rules,
some of which could exceed existing U.S. FTA or WTO
obligations. Talks reportedly have advanced in areas such
as customs and trade facilitation, state-to-state dispute
settlement, and labor and the environment. Sticking points
remain in other hotly contested areas, such as geographical

indications (GIs), digital trade, and investor protections.
Sources: (a) World Bank; (b) U.S. Bureau of Economic Analysis.
Specific Issue Areas
Debate. Supporters see T-TIP as a way to boost economic
growth and jobs, strengthen the U.S.-EU relationship,
Agriculture. T-TIP aims to eliminate and reduce tariff and
advance strategic interests, and enhance trade liberalization
nontariff agricultural trade barriers. Sensitive issues remain
through developing globally relevant rules. Critics express
on market access for genetically modified organism (GMO)
concern about T-TIP’s potential adverse effects on import
products, sanitary and phytosanitary standards (SPS), and
sensitive sectors, detraction from multilateral trade
treatment of regional agricultural products as GIs.
liberalization, and impact on regulatory sovereignty.
Customs and Trade Facilitation. Efficient cross-border
Key Negotiating Issues
flow of legitimate goods supports access to foreign markets
and global value chains. T-TIP aims to address burdensome
Market Access. Average U.S. and EU tariffs are low, but
customs procedures while balancing security concerns.
further tariff liberalization could yield significant gains
Digital Trade. Cross-border data flows are key in U.S.-EU
given the transatlantic economy’s size. The United States
trade. Progress on digital trade has been complicated as the
and EU have agreed tentatively to eliminate duties on 97%
EU engages on parallel issues in its internal market through
of tariff lines, and to increase the number of tariffs that
its Digital Single Market (DSM) initiative, as well as by
https://crsreports.congress.gov

Transatlantic Trade and Investment Partnership (T-TIP)
debate over U.S. government surveillance and the EU-U.S.
T-TIP Outlook
Privacy Shield (rules on personal data transfers by firms).
By the end of 2016, the United States and EU had
Dispute Settlement. Government-to-government dispute
consolidated negotiating texts in many areas, but sensitive
settlement provisions would establish the mechanism for
issues remained unresolved, leading to debate over whether
each side to enforce obligations under T-TIP.
political momentum existed to overcome differences.
Energy and Raw Materials. Market access and regulatory
In the EU, more complexity has been added due to the UK
frameworks for energy and raw materials are a focus, but
withdrawal process (“Brexit”). National elections in France
the sides have not agreed on whether to address these issues
and Germany —where public opposition to T-TIP runs high
in a standalone T-TIP chapter or as part of other chapters.
due to concerns over GMOs, ISDS, and data privacy—have
also added uncertainty, and Germany’s governing coalition
Public Procurement. T-TIP aims to expand market access,
still remains an issue. Some in the EU Parliament and
including at the sub-central level, and enhance rules for
European Commission (EC) are reportedly calling for a
transparent, nondiscriminatory treatment of foreign firms in
tougher EU approach against the Trump Administration’s
government purchasing decisions. These are politically
“America First” policies, and are also concerned about
sensitive issues where U.S. and EU approaches differ.
ongoing antidumping and countervailing duty cases against
IPR. T-TIP could include rules to protect and enforce
Bombardier that could result in the imposition of duties.
intellectual property rights (IPR)—legal rights to
On the U.S. side, T-TIP’s outlook is also uncertain. Support
copyrights, trademarks, and patents, designed to promote
for T-TIP remains high among some Members of Congress,
innovation—as well as cooperation on digital environment
yet trade remains a controversial issue. The Trump
challenges such as cyber theft of trade secrets.
Administration is reportedly evaluating the status of T-TIP.
Geographical indications (GIs) remain controversial:
U.S. Trade Representative (USTR) Lighthizer recently
France, Italy, and other EU members favor enhanced GI
commented on the importance and size of the U.S.-EU
protections, while the United States generally prefers
trade relationship. He added, “improving the rules, there is
protection through trademark law.
something we should do, whether we start that agreement
Investment. T-TIP could include investment market access
up ... when and if is something that we’re looking at right
and investor protections (e.g., nondiscriminatory treatment).
now, I know they’re looking also. But in the meantime,
Investor-state dispute settlement (ISDS) raises debate about
we’re coordinating quite closely with them.” At an October
investor protections, government regulatory ability, and
2017 meeting, Secretary of Commerce Wilbur Ross and EC
other issues. Some in industry view ISDS as providing
Vice President Jyrki Katainen reportedly discussed
balanced investor protections and oppose the EU’s proposal
addressing certain U.S.-EU trade barriers and regulatory
to replace ISDS with an Investment Court System (ICS),
differences on a sectoral basis. Among particular sectors of
while some in civil society hold that the ICS fails to resolve
interest were medical devices, autos, and pharmaceuticals.
their issues with ISDS. The Administration reportedly
favors an “opt
Should T-TIP negotiations terminate, Congress may wish to
-in” approach to ISDS in the North American
examine other ways to enhance U.S.-EU trade relations. If
Free Trade Agreement (NAFTA) renegotiations, in which
negotiations resume, potential issues include the following:
businesses could bring cases for direct expropriation only.
It is possible that this approach could also become the U.S
 the priority placed on T-TIP, given the U.S.
position in T-TIP negotiations should they continue.
renegotiation of NAFTA and ongoing EU trade
Labor and Environment. The United States and EU
negotiations with other countries (e.g., Japan, Mexico);
maintain high levels of domestic protection in worker rights
 whether the concerns leading to President Trump’s
and the environment. T-TIP could set rules to protect labor
withdrawal from the Trans-Pacific Partnership (TPP)
and environmental interests in the trade context.
may extend to T-TIP, or if T-TIP, as an FTA between
Localization. “Forced” localization measures, such as
two advanced economies, would have broader appeal;
requirements to process data in-country, may favor
 the extent to which the EU-Canada Comprehensive
domestic firms at foreign firms’ expense. T-TIP may
Economic and Trade Agreement (CETA), provisionally
address such barriers, balancing privacy and other concerns.
entered into force in September 2017, may serve as a
Rules of Origin. Rules of origin would determine which
basis for future EU negotiations on T-TIP, since some
U.S. and EU goods would benefit from T-TIP.
CETA provisions, such as on GIs and the ICS, have
been controversial among U.S. stakeholders; and
Services. T-TIP could include greater market access and
enhanced rules for services. EU and U.S. financial services
 whether Brexit will complicate T-TIP, given the UK’s
firms favor including regulatory cooperation about that
liberalizing role in the EU, or prospects for a post-Brexit
sector in T-TIP. Other issues are “cultural exceptions,”
U.S.-UK bilateral FTA, which some Members of
temporary movement of service providers across borders,
Congress support, could place pressure on T-TIP.
and maritime services.
State-owned Enterprises (SOEs). T-TIP aims to craft
Shayerah Ilias Akhtar, Specialist in International Trade
globally relevant disciplines on SOEs, entities subject to
and Finance
significant government control or influence. The subsidies,
Vivian C. Jones, Specialist in International Trade and
preferential financing, or other privileges that SOEs can
Finance
receive may disadvantage foreign firms competitively.
IF10120
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Transatlantic Trade and Investment Partnership (T-TIP)

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