February 4, 2015
Proposed Transatlantic Trade and Investment Partnership
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.
...[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 current status? On March 20, 2013, the
Obama Administration notified Congress of its intent to
negotiate T-TIP. Negotiations began in July 2013, with an
eighth round of negotiations in February 2015. At the
outset, both sides aimed to conclude T-TIP in two years, but
the timeframe’s likelihood is questionable given the
complexity of outstanding issues and the Administration’s
focus on concluding the Trans-Pacific Partnership (TPP)
negotiations. In the T-TIP, both sides have exchanged
initial tariff offers, and discussions on regulations,
standards, and rules are ongoing. The European
Commission is determining its approach to investor-state
dispute settlement in T-TIP following a public consultation.
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 the economic implications of a proposed T-TIP;
how T-TIP would compare with other FTAs, such as the
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 TTIP.
Figure 1. U.S.-EU Share of Global Economy, 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
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; United Nations
Conference on Trade and Development; and Bureau for Economic
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
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Proposed Transatlantic Trade and Investment Partnership (T-TIP)
relationship, further tariff liberalization could yield
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.
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
considerable U.S.-EU trade flows. Possible T-TIP issues
include greater market access for certain sectors and
investor-state dispute settlement (binding, impartial
international arbitration of investment dispute between
investor and host country).
Global Standards Leadership could be possible if the T-TIP
results in meaningful regulatory outcomes.
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.
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.
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.
Specific Issue Areas
Rules of Origin. Rules of origin will determine which U.S.
and EU goods would benefit from T-TIP.
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.
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.
See CRS Report R43387, Transatlantic Trade and
Investment Partnership (T-TIP) Negotiations, by Shayerah
Ilias Akhtar and Vivian C. Jones.
Shayerah Ilias Akhtar, firstname.lastname@example.org, 7-9253
Vivian C. Jones, email@example.com, 7-7823
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.
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