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Consequences of the Transatlantic Trade and Investment Partnership Arguments and Counterarguments
March 2015
2
This report was requested by the office of Tamas Meszerics (Member of the European
Parliament) via The Greens/EFA group of the European Parliament.
Author:
Whitby Kft, Hungary
http://whitby.hu
Responsible office:
Tamas MESZERICS
Member of the European Parliament
ASP 5 F 252
rue Wiertz 60
B-1047 Brussels
Publication:
Editorial closing date: 10/03/2015
Photo on the cover: TRADES by Pryere on Flickr, CC Attribution/Non-commercial license 2.0
Printed in the European Parliament
The opinions expressed in this document are the sole responsibility of the author and do not
necessarily represent the official position of the European Parliament.
Reproduction and translation, except for commercial purposes, are authorised, provided the
source is acknowledged and provided the publisher is given prior notice and supplied with an
electronic copy of the publication.
3
Executive Summary
This study gives a brief overview of the projected effects of the proposed Transatlantic
Trade and Investment Partnership between the European Union and the United States, and the
debate which has evolved around it.
First, we give an overview of what is supposed to be the “hard facts” in the core of the
debate, that is, the current state of the EU-US trade and the prospects of negotiating a large scale
regional free trade agreement. There are a few key points to be made:
TTIP is unique in many ways. Transatlantic trade is already relatively free, which
is partly proven by the fact that the EU and US are one of each other's most
important partner (if not the most important partner) in terms of trade and FDI.
Also, there are not much tariffs left to be abolished.
That being said, everyone agrees that if TTIP is going to have significant effect,
which will stem from abolishing what the trade jargon calls “non-tariff barriers”
or “non-tariff measures” (NTMs) - regulations, basically.
Most quantitative studies are predicting effects on national income and wages for
participating countries well below 1% in real terms over a long run of 15 years.
These are understood as one-time level increases, not changes to yearly growth
rates. This is true even with the most ambitious scenarios, where most NTMs are
assumed to be abolished.
These studies are mostly very optimistic in their assumptions on the nature of
NTMs, but are also very similar in their modelling techniques and the data they
use. Studies based on different assumptions show a much worse picture – namely,
significant decrease in all relevant socioeconomic indicators.
We provide an insight into the methodological debate over the quantitative impact
assessments of TTIP.
Second, we look at the arguments around which the public debate crystallizes. Without
taking a stand in the questions, we replicate the main issues raised by TTIP:
Arguments over its general effectiveness: why do we want to have TTIP? It is,
of course, the economic growth. But will there be growth? What does that growth
depend on? If there is growth, is it enough?
Over the costs, benefits and possible means of regulatory convergence:
regulatory convergence means that doing business is made easier. But at what
cost? Do we have to abandon such important EU values such as the precautionary
principle? Do we have to adopt American standards? Are those lower than ours?
Are labour rights doomed under TTIP? Do we have to privatize public services
and open up procurement markets?
Issues that have a potential effect on the environment: does TTIP mean the
enforcement of shale gas on Europe?
Democracy and transparency: is a coup d’état going on against European
democracy by big corporations, or is it just that elected leaders try to come up
with the best agreement they can?
The geopolitical context of TTIP and its effect on the prospects of the world
trade system: does TTIP re-invigorate world trade, or euthanize it? Does it
divide, or does it promote convergence? What should countries hope for which
are not participating, but will nevertheless experience its effects?
The core issues in terms of agriculture and food security: do we have to eat
chlorinated chicken, genetically modified corn, hormone treated beef from now
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on, and endure that American companies abuse of Europe’s oldest geographical
brands?
The controversial topic of investor protection under the new trade regime:
are we privatizing justice under the guide of TTIP and Investment-State Dispute
Settlement?
Third, we look at how TTIP might affect each EU members by collecting country-
specific data from the existing impact studies (where available) and data on the their trade with
the US (how important it is in terms of GDP and in which industries it manifests) – this latter
info then can be contrasted with the industry-specific predictions on EU-US trade.
In the appendix we give the list of “non-trade measures” as presented in one of the
studies, and highlight does which are particularly controversial in the light of the TTIP debate.
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Table of Contents
Executive Summary ...................................................................................................................... 1
1. Assessment on the large quantitative studies on TTIP and the corresponding criticism –
What is to be expected from TTIP? ............................................................................................. 7
1.1. Chapter introduction ................................................................................................................. 7
1.2. Overview of the US-EU trade .................................................................................................. 8
1.3. Main results in comparison ...................................................................................................... 9
1.4. Detailed results from the quantitative studies ........................................................................ 10
1.4.1. Ecorys (2009) ................................................................................................................. 10
1.4.2. CEPII (2013) .................................................................................................................. 12
1.4.3. CEPR (2013) .................................................................................................................. 13
1.4.4. Bertelsmann/Ifo (2013)................................................................................................... 16
1.4.5. Capaldo (2014) ............................................................................................................... 19
1.5. Criticism of the quantitative studies ....................................................................................... 20
1.5.1. Oversold results .............................................................................................................. 20
1.5.2. Conceptual errors, biased opinions ................................................................................. 21
1.5.3. Bad economics ................................................................................................................ 23
2. Argument Catalog ................................................................................................................... 24
2.1. Effectiveness of TTIP in general ............................................................................................ 24
2.2. Regulatory convergence ......................................................................................................... 25
2.2.1. Regulatory convergence – general remarks.................................................................... 25
2.2.2. Labour rights .................................................................................................................. 26
2.2.3. Privatization of public services....................................................................................... 27
2.2.4. Access to procurement markets ...................................................................................... 27
2.2.5. Regulatory convergence – examples from particular industries .................................... 28
2.3. Environment ........................................................................................................................... 28
2.4. Democracy and transparency ................................................................................................. 30
2.5. Geopolitics, multilateralism vs bilateralism ........................................................................... 30
2.6. Effects on third countries ....................................................................................................... 32
2.7. Agriculture and food security ................................................................................................. 33
2.8. Investment protection ............................................................................................................. 36
3. Country by country assessment ............................................................................................. 39
3.1. TTIP’s possible effects on Austria ......................................................................................... 39
3.2. TTIP’s possible effects on Belgium ....................................................................................... 40
3.3. TTIP’s possible effects on Bulgaria ....................................................................................... 41
3.4. TTIP’s possible effects on Croatia ......................................................................................... 41
3.5. TTIP’s possible effects on Cyprus ......................................................................................... 42
3.6. TTIP’s possible effects on the Czech Republic ..................................................................... 43
6
3.7. TTIP’s possible effects on Denmark ...................................................................................... 44
3.8. TTIP’s possible effects on Estonia ......................................................................................... 44
3.9. TTIP’s possible effects on Finland......................................................................................... 45
3.10. TTIP’s possible effects on France ........................................................................................ 46
3.11. TTIP’s possible effects on Germany .................................................................................... 47
3.12. TTIP’s possible effects on Greece ....................................................................................... 48
3.13. TTIP’s possible effects on Hungary ..................................................................................... 48
3.14. TTIP’s possible effects on Ireland ....................................................................................... 49
3.15. TTIP’s possible effects on Italy ........................................................................................... 50
3.16. TTIP’s possible effects on Latvia ......................................................................................... 51
3.17. TTIP’s possible effects on Lithuania ................................................................................... 51
3.18. TTIP’s possible effects on Luxembourg .............................................................................. 52
3.19. TTIP’s possible effects on Malta ......................................................................................... 53
3.20. TTIP’s possible effects on the Netherlands .......................................................................... 53
3.21. TTIP’s possible effects on Poland ........................................................................................ 54
3.22. TTIP’s possible effects on Portugal ..................................................................................... 55
3.23. TTIP’s possible effects on Romania .................................................................................... 56
3.24. TTIP’s possible effects on Slovakia ..................................................................................... 56
3.25. TTIP’s possible effects on Slovenia ..................................................................................... 57
3.26. TTIP’s possible effects on Spain .......................................................................................... 58
3.27. TTIP’s possible effects on Sweden ...................................................................................... 58
3.28. TTIP’s possible effects on United Kingdom ........................................................................ 59
References .................................................................................................................................... 61
Appendix ...................................................................................................................................... 65
7
1. Assessment on the large quantitative studies on TTIP and the
corresponding criticism – What is to be expected from TTIP?
1.1. Chapter introduction
This chapter provides a comparison of the main quantitative assessments of the
hypothesized effects of the proposed Trans-Atlantic free trade area. There are five main studies
we are aware of and several meta-studies which try to argue against both the theoretical and the
empirical validity (and relevance) of the impact assessment studies - we also cover the
arguments provided by these.
The earliest impact assessment study we are aware of was undertaken by the Rotterdam
based research and consultancy firm Ecorys. The document is entitled “Non-Tariff Measure in
EU-US Trade and Investment - An Economic Analysis” (Ecorys, 2009). The study gives model
estimations on the effects of a then hypothetical EU-US free trade agreement, which they base
on trade data, expert opinion and firm surveys. The next study was made four years later at the
Centre for Economic Policy Research at London, and was sponsored by the Directorate General
for Trade of the European Commission (Francois et al, 2013). This study heavily builds on its
precursor using the same modelling technique and assumptions, the main differences being its
increased forecast horizon and more recent baseline data. The predicted economic consequences
also fall in line with those from the Ecorys study. The France based research centre CEPII
published their study in the same year; they started from similar assumptions and arrived at very
similar conclusions. The most important commonality of these studies besides their similarities
in modelling techniques is, unsurprisingly the lack of significant variation in the quantitative
impact on trade and national income, which are both generally predicted to be modest at best.
The only supportive study which substantially moved away from this methodological
canon was the paper by Felberaymr et al. published as a CESifo working paper the next year
(Fabelmayr et al., 2014), later turned into a policy paper of Bertelsman Stiftung. Using a similar
modelling technique but different assumptions on how the economy would adapt to the policy
changes under TTIP the authors provide scenarios of which some show an impact which exceeds
the previous impact estimates multiple times.
The series of supportive studies stop here. Raza et al. provide a thorough meta-analysis of
the previous work pointing out serious issues in terms of theoretical credibility and data use
(Reza et al. 2014) - we replicate the main arguments of their work in this chapter. Jeronim
Capaldo also overviews the precursor studies and gives his very own impact analysis making use
of a wholly different methodology, resulting in completely different results - results which show
that TTIP would hurt the EU economies substantially (Capaldo, 2014). In a very recent paper
Martin Myant and Ronan O’Brien also provide arguments against the widely accepted and
referenced model estimates while also point out that the main discourse of reducing non-trade
barriers misses the whole point of the question (Myant and O’Brien, 2015).
The remaining part of the chapter is organized as follows. First, we sum up the main
quantitative findings of the five impact studies. Then we compare them in terms of methodology
and their use of data. The final part of the chapter summarizes the critical arguments made
against these research practices.
From now on in this chapter we will reference the aforementioned studies for the sake of
simplicity as Ecorys (for Ecorys, 2009), CEPR (for Francois et al. 2013), CEPII (for Fontagné et
al. 2013), Ifo (for Felbermayr et al. 2014a and Felbermayer et al. 2014b) and Capaldo (for
Capaldo, 2014), respectively.
8
1.2. Overview of the US-EU trade
• Tariffs across the countries are already low
• EU and US are main trading partners, in particular in Chemicals and
Machinery and transport equipment
• They are also the most important source and destination for FDI of each
other as well.
If there is one empirical fact all studies agree upon, that would be the fact that the
proposed trade agreement is in many regards unprecedented. The reasons for this are 1) that the
EU-US trade is already very extensive, the two areas being the main trade partners for each
other, the same being true for foreign direct investment as well 2) that usual trade barriers
(customs duties, quotas) in most sectors are already relative low, close to actual free trade 3) if
TTIP is to have any significant effect, irrespectively of it being a positive or a negative one, that
would stem from the alleviation of the so called non-trade barriers, or non-trade measures.
As the CEPR study correctly points out, US is the most important export market for the
EU (17% of total exports in 2011), and the third most important source of imports (with its 11%
after China and Russia). The US only exports more to Canada than the EU, and only imports
more from China (17% of exports, 11% of imports). As seen in Figure 1, most trade activity
takes place in the chemicals industry and the machinery and transport equipment industry. The
US is the single most important FDI source and destination for the EU (€1201 billion and €1195
billion in 2010, respectively).
Tariffs are already relatively low between the two countries, for most industries ranging
between 1-3%. Notable exceptions are processed foods, motor vehicles and agricultural products
on which the EU levies heavy tariffs (rates are 14.6, 8, 3.7, respectively), while the US tends to
penalize imports of processed foods and agricultural products (3.3% and 3.7%). The Ecorys
study lists the industries with the most serious non-tariff barriers and finds that they are the
industries of chemicals, cosmetics, biotechnology and the aerospace industry for exporting to the
EU, while in the chemicals, cosmetics, biotechnology and the aerospace industries is it the
hardest to export to the US. The studies pose that alleviating these barriers are the key to TTIP’s
success as traditional trade barriers are already quite low.
Figure 1 EU–US trade in goods (taken from CEPR, source: Eurostat)
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1.3. Main results in comparison
• Most models use similar methodology and data, and find very modest
positive economic effects of TTIP
• The one study which is different in methodology finds considerable negative
impact.
Table 1-2 Comparison of findings
Ecorys (2009)
1 CEPII (2013) CEPR (2013)
Bertelsmann/ifo
(2013) Capaldo (2014)
Basic Assumptions
CGE GTAP MIRAGE GTAP Simulation of
gravity model
UN Global
Policy Model
Data GTAP 7 GTAP GTAP 8 not specified
Non-tariff measures
(NTM) Ecorys
CEPII
& Ecorys Ecorys ifo
Use predicted
export growth
from previous
studies
Forecast period 2008-2018 2015-2025 2017-2027 10-20 years 2015-2025
No. of Scenarios 7 5 5 3 1
Tariffs reduction 100% of goods
75% of services 100% 98-100% 100%
No tariffs in the
model, use
predicted export
growth from
other studies
NTM reduction in
reference scenario 25% 25% 25%
Reduction
corresponding
to trade creation
effect
Use predicted
export growth
from other
studies
Main Findings
(different scenarios, percentage changes compared to baseline scenario within forecasting period)
EU GDP 0.32-0.72 0.0-0.5 0.02-0.48 0.52-1.313
-0.5-
-0.07
4
US GDP 0.13-0.28 0.0-0.5 0.01-0.39 0.35-4.823 0.36
EU bilateral exports not specified 49.0 2 0.69-28.0 5.7-68.8
3
Taken from
other studies
EU total exports 0.91-2.07 7.6 2
0.16-5.91
(extra-EU only) not specified
Taken from
other studies
EU real wages 0.34-0.78 N/A 0.29-0.51 not specified -4848-
-1654
Unemployment rate
in
EU-OECD countries
(avge. %-points)
unchanged
(assumption)
unchanged
(assumption)
unchanged
(assumption)
-0.42
(deep
liberalization)
-583000 jobs
(EU total)
1 Findings for ambitious and limited scenarios only 2 Reference scenario only 3 Derived from BMWT/ifo (2013), aggregated to EU-27 level 4 Given country by country, these are the minimum and maximum values
Sources: Raza, Werner et al. (2014), Capaldo (2014)
Table 1 contains both the methodological comparison of the main studies and the
differences in core. Out of the five studies in question four employ a computable general
equilibrium (CGE) modelling framework. Out of the 4 CGE studies 3 involve using the same
database (GTAP) and engage in the modelling strategy of quantifying the NTM-s as listed in
Ecorys. In contrast, the Ifo studies make the assumption that the TTIP will have similar effects as
previous big trade deals (such as NAFTA) and extrapolate the empirics of those to the TTIP
case. The Capaldo study uses a different model, the UN Global Policy Model, a large-scale
10
econometric model which tries to take into account several policy constraints coming from
previous behaviour of states.1
Table 2 shows the results of the four studies at first glance. The results are unsurprising in
one regard: the three studies which are the most closely related present very similar quantitative
results. This shows that long run positive effects are modest. Two studies don’t fall in line with
the others: the Ifo studies are much more optimistic regarding the TTIP’s effects on the Atlantic
economy, while the Capaldo results are exactly the opposite. He finds quite significant negative
effects.
1.4. Detailed results from the quantitative studies
1.4.1. Ecorys (2009)
• The study finds one-time GDP and wage growth under 1% under all
scenarios on long run (over 15 years)
• This is not affecting growth rates, this is affecting levels.
Table 3 Summary of macroeconomic effects (Ecorys)
Ambitious Scenario
(full liberalisation)
– Short Run
Ambitious Scenario
(full liberalisation)
– Long Run
Limited Scenario
(partial liberalisation)
– Short Run
Limited Scenario
(partial liberalisation)
– Long Run
Real income
[billion €]
US 19.0 40.8 7.8 18.3
EU 45.9 121.5 19.4 53.6
Real income
[% change]
US 0.13 0.28 0.05 0.13
EU 0.27 0.72 0.11 0.32
Real household income
[% change]
US 0.16 0.31 0.07 0.14
EU 0.32 0.79 0.14 0.35
Real wages - unskilled
workers [% change]
US 0.24 0.35 0.11 0.16
EU 0.40 0.82 0.17 0.36
Real wages - skilled
workers [% change]
US 0.26 0.38 0.11 0.17
EU 0.36 0.78 0.16 0.34
Value of Exports
[% change]
US 6.12 6.06 2.72 2.68
EU 1.69 2.07 0.74 0.91
Value of Imports
[% change]
US 3.97 3.93 1.76 1.74
EU 1.63 2.00 0.72 0.88
Terms of trade
[% change]
US -0.15 -0.23 -0.06 -0.10
EU 0.11 0.07 0.05 0.03
1 Criticism of the CGE approach found in Grassini 2007, Lance and von Amin 2006, McKitrick 1998
11
• Most effects take place through the growing output of the Processed foods,
the Chemicals and the Motor vehicles industries.
Table 4 Estimated sectoral effects under different scenarios (Ecorys)
Outcome 1A 1B 2A 2B 3A 3B 4A 4B 5A
Processed foods (food &
beverages) 5.0 0.9 0.0 5.4 0.8 0.9 0.4 5.4
Chemicals, cosmetics,
pharmaceuticals 7.1 2.2 0.4 6.2 1.1 2.2 1.0 6.2
Electrical machinery
(electronics, OICE) 1.6 -5.5 0.4 -4.6 0.8 -5.5 -2.1 -4.6
Motor vehicles
(automotives) 12.0 5.7 2.3 10.7 4.3 5.7 2.3 10.7
Other transport
equipment (aerospace) 0.2 -0.9 1.1 4.2 2.2 -0.9 -0.4 4.2
Metals and metal
products 0.7 -0.5 0.0 2.7 0.5 -0.5 -0.2 2.7
Wood & paper products 1.1 0.0 -0.2 1.6 0.0 0.0 0.0 1.6
Finance 1.2 0.4 0.1 2.6 1.6 0.4 0.2 2.6
Insurance -0.1 1.2 0.7 5.9 4.3 1.2 0.6 5.9
Business services & ICT 0.5 0.5 0.0 0.6 0.0 0.5 0.2 0.6
Communications 1.0 0.2 -0.2 0.3 -0.1 0.2 0.1 0.3
Personal, recreational &
cultural services 0.3 -0.1 -0.1 -0.8 0.5 -0.1 0.0 0.2
Construction 0.0 0.8 0.0 0.2 0.0 0.8 0.4 -0.8
Total 121.5 30.8
1: Summary of changes in national income following NTM alignment (billions €, ambitious scenario – Long Run)
2: Summary of sector level percentage changes in output following NTM alignment (ambitious scenario – Long Run)
3: Summary of sector level percentage changes in exports following NTM alignment (ambitious scenario – Long Run)
4: Percentage change in output at the sectoral level for the EU
5: Percentage change in exports at the sectoral level for the EU
A: Economy-wide NTM reductions (i.e. reductions of NTMs in all sectors simultaneously)
B: Sector-specific NTM reductions (i.e. reductions of NTMs only in the specific sector)
Note: Air/Water transportation left out due to inconsistencies across calculation
12
1.4.2. CEPII (2013)
• Effects on EU again under 1%, slight decline for agriculture.
• Real income effects are again under one time 1% increase.
• German manufacturing industry benefits the most and UK agriculture is hit
the hardest
Table 5 Macroeconomic effects of TTIP (CEPII)
Total (GDP)
Value added
Agriculture Industry Services
USA 0.3 1.9 0.5 0.2
EU27 0.3 -0.8 0.6 0.5
Of which:
Germany 0.4 -1.6 0.9 0.4
UK 0.4 -2.3 0.4 0.5
France 0.2 -0.7 0.5 0.3
Enlargement 0.2 0.0 0.4 0.3
Note: volume, percentage deviation from baseline in 2025.
Table 6 Real income and export changes under different scenarios (CEPII)
Ref
Alternative scenarios
1 2 3 4
Tariffs
only
Targeted
NTM cuts
Harmonization
spillovers
Alternative
NTMs
Export:
USA 10.1 2.1 10.4 14.5 5.4
EU27 2.3 0.4 1.9 3.4 1.3
Of which:
Germany 2.1 0.3 1.7 3.0 1.2
UK 4.2 0.6 3.6 5.5 2.4
France 2.6 0.5 2.2 3.8 1.5
Enlargement 1.3 0.3 0.8 2.5 0.7
Real income:
USA 0.3 0.0 0.3 0.5 0.2
EU27 0.3 0.0 0.2 0.5 0.1
Of which: Germany 0.3 0.0 0.3 0.5 0.2
UK 0.3 0.0 0.2 0.4 0.1
France 0.2 0.0 0.2 0.4 0.1
Enlargement 0.2 0.0 0.1 0.5 0.1
Note: volume, percentage deviation from baseline in 2025.
13
• US-EU trade flows go up significantly, while there is considerable trade
diversion from the rest of the world
Table 7 Effects on bilateral trade flows (CEPII)
Exporter Importer Total Agriculture Industry Services
Transatlantic trade
USA EU27 52.5 168.5 66.4 14.0
EU27 USA 49.0 149.5 61.8 24.0
Other trade flows
USA RoW -1.4 -1.9 -1.3 -1.6
EU27 RoW -1.4 -0.4 -1.4 -1.4
RoW USA -2.5 -0.8 -2.8 -0.7
RoW EU27 0.2 -1.5 0.1 0.6
EU27 EU27 -1.2 -2.6 -2.3 2.8
RoW RoW 0.1 0.0 0.2 0.2
Note: trade in volume, percentage deviation from baseline in 2025.
• Total trade grows on average.
Table 8 Effects on total trade flows (CEPII)
Imports
Exports
Total Agriculture Industry Services
USA 7.5 10.1 12.6 12.2 3.2
EU27 (excluding intra EU) 7.4 7.6 7.0 8.9 4.5
EU27 (including intra EU) 2.2 2.3 0.6 1.9 3.6
Of which:
Germany 2.5 2.1 -2.6 2.0 2.9
UK 3.0 4.2 0.5 3.9 4.8
France 2.5 2.6 -0.3 2.6 3.1
Enlargement 1.2 1.3 4.2 0.8 3.3
Note: trade in volume, percentage deviation from baseline in 2025.
1.4.3. CEPR (2013)
• CEPR also finds one-time household income growth under 1% after 15
years.
Table 9 Summary of macroeconomic effects (CEPR)
Limited
agreement:
tariffs only
Limited
agreement:
services only
Limited
agreement:
procurement only
Comprehensive
agreement:
less ambitious
Comprehensive
agreement:
ambitious
Change
in GDP
EU 23,753 5,298 6,367 68,274 119,212
US 9,447 7,356 1,875 49,543 94,904
Bilateral
exports FOB
EU to US 43,84 4,591 6,997 107,811 186,965
US to EU 53,777 2,859 3,411 100,909 159,098
Total
exports FOB
extra-EU 43,74 5,777 7,136 125,232 219,97
US 57,33 5,488 5,942 142,071 239,543
Notes: Estimates to be interpreted as changes relative to a projected 2027 global economy. All amounts are shown in million
euros.
14
• With the most comprehensive agreement accepted, EU households will earn
545 euros more each year.
Table 10 Changes in household disposable income (CEPR)
Limited agreement:
tariffs only
Comprehensive
agreement:
low ambition
Comprehensive
agreement:
high ambition
Total EU [mill. €] 12,934 39,813 70,82
US [mill. €] 5,081 29,982 58,434
EU [%] 0.09 0.28 0.49
US [%] 0.03 0.18 0.35
EU [€ per household] 99 306 545
US [€ per household] 57 336 655
Notes: Estimates to be interpreted as changes relative to a projected 2027 global economy.
Figure 2 Market Access Impact Ranking (CEPR)
• Those industries benefit the most from TTIP which have higher share in
value added.
15
• Trade in processed food, chemicals, transport equipment, metal and
wood products and business services will increase the most.
• Most trade diversion from EU internal trade to US trade will occur in
the sectors of motor vehicles, chemicals, electrical machinery, metals
and metal products.
Table 11 Sectorial changes in output and trade diversion (CEPR)
Scenario/Sector
Baseline
shares in
value added
Output
change:
Less
ambitious
Output
change:
Ambitious
Export
change (non
US) Total
[million €]
Trade
diverted from
intra-EU
trade Total
[million €]
Agr forestry fisheries 0.040 0.05 0.06 -1 270 269
Other primary sectors 0.019 0.01 0.02 250 345
Processed foods 0.030 0.30 0.57 3 247 -425
Chemicals 0.028 0.09 0.37 5 591 -13 208
Electrical machinery 0.004 -3.74 -7.28 -2 551 -12 829
Motor vehicles 0.015 0.24 1.54 7 559 -36 517
Other transport equipment 0.007 -0.17 -0.08 1 074 -2 468
Other machinery 0.037 0.40 0.37 1 422 492
Metals and metal products 0.021 -0.71 -1.50 4 139 -11 464
Wood and paper products 0.023 0.08 0.08 2 454 -799
Other manufactures 0.029 0.69 0.79 2 243 2 087
Water transport 0.003 0.55 0.99 951 -35
Air transport 0.003 0.30 0.44 810 76
Finance 0.032 0.23 0.42 552 129
Insurance 0.010 0.44 0.83 406 84
Business services 0.222 0.15 0.25 2 808 1 068
Communications 0.023 0.10 0.17 295 53
Construction 0.083 0.31 0.53 336 131
Personal services 0.035 0.15 0.26 898 124
Other services 0.338 0.16 0.28 2 065 795
Total 33 279 -72 092
Notes: Estimates to be interpreted as changes relative to a projected 2027 global economy. All amounts are shown in million
euros.
16
1.4.4. Bertelsmann/Ifo (2013)
• Under the most likely scenario all effects again are under 1% and are
understood as a one-time increase over the course of 15 years.
Table 12 Estimated changes if only tariffs are lowered (Bertelsmann/ifo)
Country
Percentage
rise in
employment
Change in
unemployment
rate in
percentage points
Percentage
change in real
wages
Australia -0.12 0.11 -0.56
Austria 0.07 -0.07 0.32
Belgium 0.02 -0.02 0.09
Canada -0.15 0.15 -0.71
Czech Republic 0.11 -0.10 0.53
Denmark 0.13 -0.12 0.63
Finland 0.21 -0.19 0.97
France 0.12 -0.11 0.54
Germany 0.12 -0.11 0.54
Greece 0.20 -0.17 0.93
Hungary 0.15 -0.13 0.70
Iceland -0.12 0.11 -0.56
Ireland 0.24 -0.21 1.14
Italy 0.16 -0.15 0.72
Japan -0.03 0.03 -0.14
Netherlands 0.09 -0.08 0.40
New Zealand -0.08 0.07 -0.37
Norway -0.12 0.12 -0.55
Poland 0.15 -0.13 0.69
Portugal 0.22 -0.19 1.20
Slovakia 0.14 -0.12 0.66
South Korea -0.03 0.03 -0.15
Spain 0.20 -0.16 0.92
Sweden 0.18 -0.16 0.85
Switzerland -0.11 0.10 -0.50
Turkey -0.11 0.10 -0.51
United Kingdom 0.37 -0.34 1.72
United States 0.20 -0.18 0.93
Average
(GDP-weighted) 0.13 -0.11 0.59
17
• Trade partners of the US and EU are hurt significantly by TTIP
under this model.
Table 13 Effects under "deep liberalization” scenario (Bertelsmann/ifo)
Country
Percentage
rise in
employment
Change in
unemployment
rate in percentage
points
Percentage
change in real
wages
Australia -0.47 0.44 -2.14
Austria 0.28 -0.27 1.33
Belgium 0.09 -0.08 0.42
Canada -0.60 0.56 -2.75
Czech Republic 0.46 -0.42 2.14
Denmark 0.54 -0.50 2.54
Finland 0.81 -0.75 3.84
France 0.47 -0.43 2.22
Germany 0.47 -0.43 2.19
Greece 0.78 -0.68 3.68
Hungary 0.60 -0.53 2.81
Iceland -0.46 0.42 -2.12
Ireland 0.97 -0.84 4.61
Italy 0.62 -0.57 2.90
Japan -0.11 0.11 -0.53
Netherlands 0.35 -0.34 1.65
New Zealand -0.30 0.28 -1.40
Norway -0.46 0.44 -2.12
Poland 0.58 -0.53 2.75
Portugal 0.85 -0.76 4.03
Slovakia 0.56 -0.48 2.63
South Korea -0.13 0.12 -0.58
Spain 0.78 -0.62 3.65
Sweden 0.72 -0.65 3.37
Switzerland -0.43 0.41 -1.96
Turkey -0.42 0.38 -1.94
United Kingdom 1.38 -1.27 6.60
United States 0.78 -0.71 3.68
Average
(GDP-weighted) 0.50 -0.45 2.34
18
Figure 3 Changes in global per capita incomes if only tariffs are reduced (Bertelsmann/ifo)
Figure 3 Changes in global per capita incomes under "deep liberalization" scenario (Bertelsmann/ifo)
• Assumptions of the second scenario are deemed unrealistic by the
European Commission. It only appears in the Bertelsmann policy
paper version of the original study.
19
1.4.5. Capaldo (2014)
• The only study not using CGE methodology and taking into account
short-term effects in the economy shows considerable negative effects
of TTIP.
• Over 500.000 jobs will be lost, GDP decreases (however, the rate is
under 1%), tax incomes and net exports decrease.
Table 14 Long-term impact of TTIP (Capaldo)
Net Exports
[% GDP]
GDP Growth
[Diff between %]
Employment
[Units]
Empl. Income
[EUR/employee]
Net Taxes
[% GDP]
Depend. Ratio
[Diff between %]
US 1.02 0.36 784 000 699 0.00 -0.97
United Kingdom -0.95 -0.07 -3 000 -4 245 -0.39 0.01
Germany -1.14 -0.29 -134 000 -3 402 -0.28 0.75
France -1.90 -0.48 -130 000 -5 518 -0.64 1.31
Italy -0.36 -0.03 -3 000 -661 0.00 0.02
Other Northern Europe -2.07 -0.50 -223 000 -4 848 -0.34 1.33
Other Southern Europe -0.70 -0.21 -90 000 -165 -0.01 0.33
EU total -583 000
Note: Net Taxes are indirect taxes minus subsidies. Dependency Ratio is defined as ratio of total population to employed
population.
20
• After a hypothetical TTIP introduction in 2015, projected share of
labour in nation income declines steadily, exacerbating previous
negative trends.
Figure 5 labour incomes as % of GDP (Capaldo). Blue: baseline projection without TTIP. Red: projected labour share
under TTIP
1.5. Criticism of the quantitative studies
1.5.1. Oversold results
• Almost all studies deal studies show one-time level increases in GDP which
are not affecting long term growth.
• Most of the economic benefits predicted are negligible. Myant and O’Brien
point out that by optimistic assumptions the income increase of average Europeans would
amount for the price of a cup of coffee per person per week, which does not justify optimal
optimism (Myant and O’Brien, 2015).
21
• The actionability of NTMs are overestimated. The studies call a 25% reduction
in total NTMs the “ambitious” scenario. While this seems conservative, according to the Ecorys
survey this reduction amounts to half the NTMs faced by firms engaged in within-EU trade. That
is, the “ambitious” scenario would essentially mean assuming “that the US will be half-way to
becoming an embedded member of the EU” (Myant and O’Brien, 2015). The total social
benefit of the trade agreement is crucially sensitive to the assumed actionability level of the
barriers. The benefits are expected to be higher the more non-trade measures are eliminated,
thus, the estimated net benefits of TTIP are potentially overestimated along this margin as well
(Reza et al. 2014).
• The ifo paper’s later version is considered unrealistically positive by even the
European Commission. The second paper apparently uses gross output instead of GDP,
yielding in 2-4 times higher than realistic effects. (Myand and O’Brien, 2015)
1.5.2. Conceptual errors, biased opinions
• Social costs of dismantling NTMs are neglected. When calling for dismantling
non-trade barriers, all supportive studies assume that this can be done without significant social
costs.
• The nature of NTMs are misunderstood, the calculations are based on
opinions biased in one direction. Also, the catalog of non-trade measures in the EU-US trade is
based on a survey which is seriously biased towards business interests (e.g. only firm managers
and leaders of business associations were interviewed whose opinion, how justified they might
be, are far from being the only valid points in the debate (Raza et al. 2014). Also, these “barriers
to business” are typically measures that facilitate internalizing negative externalities, alleviating
information asymmetries etc. From this it directly follows that by dismantling them the negative
social costs they were trying to prevent from occurring will reappear instantly (Myant and
O’Brien 2015).
• Social costs of adjustment are ignored. The supportive studies assume away
macroeconomic adjustment costs, that is, the costs incurred by societies through the transition to
the new trade regime. These may involve costs of
o labour market adjustments (e.g. unemployment benefits), effects on public
budget balance (through the missing tax revenue from firms going out of
business and people losing their job),
o current account balance (large changes in trade flows might end up in currency
devaluations, which, if become common, can result in a race to the bottom
[Capaldo, 2014]). TTIP, as all trade agreements, is expected to result in a
reallocation of labour and capital across sectors. Essentially this means that
people who lose jobs in one sector are supposed to take up new ones in a totally
different but more competitive sector, which is potentially an unrealistic
assumption.
o If it indeed is, then TTIP will increase not just temporary, but structural
unemployment as well, a phenomenon also assumed away by these models
(Reza et al. 2014).
22
A back-of-the-envelope calculation for the expected social costs of macroeconomic
adjustment is found in Table 15. The authors estimate that the social costs will be somewhere
between €32 and €60 billion for the next 15 years at 2012 prices.
Table 15 Rough calculation of macroeconomic adjustment costs (from Reza et al. 2014)
Lower Bound
(p.a.)
Lower Bound
(cumulative,
10 year period)
Upper Bound
(p.a.)
Upper Bound
(cumulative,
10 year period)
1. Loss of Public Revenue
Annual Loss of Tariff Revenues of 2.6 bn 2 600 000 000 26 000 000 000
Annual Loss of Tariff Revenues of
(€2.6+€5.4)*0.5
4 000 000 000 40 000 000 000
Adjustment Margin for Phase-Out Periods,
and Carve-Outs for
sensitive products (10%) 260 000 000 2 600 000 000 400 000 000 4 000 000 000
Sub-Total 2 340 000 000 23 400 000 000 3 600 000 000 36 000 000 000
2. Costs of Unemployment
a. Unemployment Benefits
43,000 long-term unemployed post-TTIP
(Year 1) 681 120 000 681 120 000
110,000 long-term unemployed post-TTIP
(Year 1)
1 742 400 000 1 742 400 000
43,000 long-term unemployed post-TTIP
(Year 2 - 5) 423 120 000 1 692 480 000
110,000 long-term unemployed post-TTIP
(Year 2 - 5)
1 082 400 000 4 329 600 000
387,000 short term unemployed post TTIP
(6 months)
3 065 040 000
990,000 short term unemployed post TTIP
(6 months)
7 840 800 000
Sub-Total
5 438 640 000
13 912 800 000
b. Foregone Public Income from Taxes and Social
Contributions
43,000 long-term unemployed post-TTIP
(Years 1 - 5)
2 039 705 000
111,000 long-term unemployed post-TTIP
(Years 1 - 5)
5 217 850 000
387,000 short-term unemployed post TTIP
(6 months)
1 835 734 500
990,000 short-term unemployed post TTIP
(6 months)
4 696 065 000
Sub-Total
3 875 439 500
9 913 915 000
Cumulative Adjustment Costs - TOTAL 32 714 079 500 59 826 715 000
Assumptions: Average duration of long-term unemployment during TTIP implementation phase: 5 years; Average duration of
short-term unemployment during TTIP implementation phase: 0.5 years; Number of displaced persons post-TTIP: 430,000
(lower bound) – 1,100,000 (upper bound), of which 90 % short-term and 10 % long-term unemployment
• Macroeconomic adjustment costs of TTIP range from €32 billion and €60
billion even by a simple calculation.
• Trade diversion effects are downplayed. The studies downplay some of the
negative effects. Trade diversion is most likely to occur, disproportionally hurting low income
partners of EU and the US, and also weakening internal trade relations within the EU. (Raza et
al. 2014)
• Ex post evaluations are usually showing smaller benefits than ex ante impact
studies. While the impact studies refer many times to the benefits of previous big trade
23
liberalization event (the Ifo paper go as far as assuming that the TTIP’s effects will be identical
to those of NAFTA, for example), they ignore that the ex ante impact studies of these particular
trade agreements tended to prove overestimates of the actual ex post social benefits. In the case
of TTIP the predicted benefits of which are already modest at best, any overestimation can mean
that there will be no positive effect of the agreement at all.
1.5.3. Bad economics
• The modelling framework might be inappropriate theoretically. The model in
use in 4 out of 5 impact assessment studies is the so called Computable General Equilibrium
(CGE) modelling framework, which not a “general equilibrium model” in a microeconomic
sense (does not describe an optimal welfare allocation), but only in the strict macroeconomic
sense that the aggregate resource constraints of the economy apply. In this sense CGE is a
misnomer, while the feasibility of any microeconomically valid general equilibrium model is
questionable at best (Raza et al. 2014)
• The modelling framework is inappropriate practically.
o These models apply “long run” assumptions of macroeconomics, e.g. they
assume that on the long run all factors of production are allocated in some sector
(e.g. if there is unemployment some sector, wages go down somewhere and firms
suck up the idle workforce). Also, perhaps more importantly, the full factor
employment assumptions make these models unable to model any employment
effect (Raza et al. 2014, Myant and O’Brien 2015).
o The models only consider the average values of the variables, not
distributions. That is, if a model predicts 0.3% growth in GDP, it does not tell
whether that is a very small income growth for all individuals, or a single person
gets very rich. Or many get very rich, and many people get substantially poorer
on average resulting in a slight positive change (Capaldo 2014).
o Two out of four CGE studies consider the EU as a whole, again, saying
nothing about how the economic effects of TTIP are distributed across European
subregions and countries. This holds for income gains, but, perhaps most
importantly for possible displacement effects as well. (Capaldo 2014, Myant and
O’Brien 2015).
o CGE models used by the Ecorys, CEPR and CEPII models disregard the
government as an active entity. Government income and spending is
incorporated in the workings of the representative household, while these models
also assume the budget deficit to be constant (Raza et al. 2014)
o The models disregard foreign direct investment completely. Though one of the
main reasons for the TTIP is to improve conditions for FDI, these general
equilibrium models completely disregard it. The studies present calculations for
FDI effects, but they do not come from the same models, these are completely
separate econometric estimations. (Raza et el. 2014)
While these assumptions are useful for some purposes, they are unfit for saying anything
on the short run consequences on the EU and US economies, which are potentially substantial,
especially in the EU environment which already suffers from persistent unemployment and
anaemic economic growth.
• Quantitative assessment of non-trade measures is unsubstantiated at best in
the models. By their very nature, parts of the trade costs caused by the non-trade measures are
unobservable, and the tariff equivalents of these are hard to measure.
24
2. Argument Catalog
This chapter presents the main arguments for and against TTIP, broken down into
categories by the content of the argument. For each category we summarized the main lines
along which the arguments go and then categorize the arguments into either “positive”,
“negative” or “mixed” categories. Each argument is followed by a reference to the document it
was taken from.
The categories we defined are:
1 Effectiveness of TTIP in general
2 Regulatory convergence
3 Environment
4 Democracy and transparency
5 Geopolitics, multilateralism vs bilateralism
6 Effects on 3rd countries
7 Agriculture and food security
8 Investment protection
2.1. Effectiveness of TTIP in general
Summary
The positive argument relies on the growth effects of TTIP and that market penetration will be
easier for European companies.
Those against TTIP instead point out the unreliability of the quantitative calculations and that the
envisioned growth effects are minuscule. Another concern is that quantitative studies have close
to no say about the distribution of costs and benefits created by TTIP.
Positive
• Two key arguments behind promoting TTIP: 1) TTIP would create significant
economic gains, 2) it would create new dynamic in the global trading system.
The first is now needed by Europe in particular. (Erixon, 2012a and 2012b)
• The idea of TTIP was embraced as a “last resort” by the EU to invigorate the
economy as monetary policy and fiscal austerity failed them. Also, it was a means
for the EU and the US to reassert global economic leadership. (Ikenson, 2014)
• TTIP will benefit small and medium enterprises which are now unable to
penetrate US markets. (Mildner, 2013)
• Myth says that “TTIP will only benefit big business”, while SMEs and consumers
also will benefit the most. The reason is that streamlined regulations and standards
would decrease the fixed costs of compliance which can be deterring smaller
firms from penetrating the US market. A simpler competition and public
procurement law would benefit small firms who do not have an own legal
department. Consumers would benefit from lower prices and increased varieties.
(FGI, 2014)
• The effects on SMEs are likely to be positive, since TTIP decreases the relative
cost of entering the global market. (DG For international Policies, 2015)
• “Brain drain” type of effects is not expected, since the skill levels of the two
signatory parties are similar. (DG For international Policies, 2015)
Mixed
• The obstacles that need to be overcome for TTIP to function are yet unexplored.
We cannot even estimate the hardship and the costs. (Dieter, 2013)
25
• The TTIP will not bring equal benefits to all member states, but average increase
is expected. (DG For international Policies, 2015)
Negative
• The main goal of TTIP is to create economic growth. It is achieved through
reducing tariffs and non-tariff barriers. However, while tariffs protect from
competition and thus hinder growth, regulations are designed to protect from
hidden risks in the use of a given product or service. They promote consumer
welfare, essentially. The economic benefits thus depend on the level of regulatory
convergence achieved. (Fabry et al. 2014)
• Most of the studies say that economic gains will stem from alleviating NTM-s, but
the US and the EU are working on those since 1990, without any major success. If
they fail to do again, the economic gains of TTIP are under question. (Karnakar,
2013)
• Reducing tariffs is also harder than expected since they represent vested interests
in sugar, textiles etc. industries. (Karnakar, 2013)
• Since the anticipated “tremendous impact” of TTIP is entirely relying on legal
harmonisation, historical experience suggests that it will not live up to its
expectations. It will not achieve regulatory convergence and new global standards,
but through mutual recognition it will only lead to deregulation and will have no
indirect spillovers on the rest of the world. (De Ville, 2014)
• The previous free trade agreements such as NAFTA brought about job losses, yet
TTIP is sold to the general public as an engine of job creation.(Hartmann, 2014)
• It is possible that all social costs of the TTIP will be concentrated on some
member states of the EU, while the scarce benefits will be enjoyed by others
(Bizzarri, 2013)
2.2. Regulatory convergence
2.2.1. Regulatory convergence – general remarks
Summary
Supporters of TTIP emphasize that regulatory convergence means that doing business is made
easier while retaining the level of previous standards.
Those who oppose TTIP claim that the main thing at stake is the “precautionary principle”, the
general EU principle that for something (that is, a technology, a procedure or a given chemical)
to become legal, its non-harmfulness must be proven. This is not the case in the US.
Positive
• Harmonizing regulations makes doing business easier. The reason why these are
different is not due to divergent policy choices but purely that they were devised
independently. The goal is not to lower the levels of consumer protection, but to
encourage transparency and collaboration. (BusinessEurope,2014)
• TTIP promotes standards that are harmonised, but higher. It would lower costs
and open markets, and the EU – US standards would be promoted beyond the
transatlantic market. (BusinessEurope,2014)
• Myth says that “EU's high standards of consumer and environmental protection are
at risk”. The signing parties say that it is important to uphold the “right to
regulate in the public interest”. The aim is not to reduce the global level of
consumer safety but to achieve regulatory convergence, so that the same rules apply
on both sides of the Atlantic. (FGI, 2014)
26
Negative
• The EU looks to the Precautionary Principle as the main regulatory principle
(“better safe than sorry” - for new technologies it must be proven that they are not
harmful for human life and the environment) while US employs “risk assessment”
approach linked to cost-benefit analyses, looking at cost for businesses versus
harms to citizens. These are hard to reconcile. Some argue that for US business the
TTIP is just a tool to get rid of the precautionary principle, particularly in the
case of policies such as REACH, the EU directive on Registration, Evaluation,
Authorisation and Restriction of Chemicals (Barker, 2014)
• EU has much stronger protections for consumers and environment in general,
which can be harmed by TTIP (Baker, 2014)
• TTIP is about pushing through regulatory changes which could not have been
pushed through the regular political process (Baker, 2014)
• Many of the factors embedded in TTIP are against the concept of free trade.
Instead of promoting less regulations and bigger liberty, these will extend existing
regulations (Baker, 2014)
• Removing regulatory barriers essentially means removing or downgrading of key
social standards and environmental regulations, such as labour rights and food
safety rules. (Hilary, 2014)
• The EU's use of the “precautionary principle” is a core issue – the TTIP
negotiations will essentially mean that the burden of proof shifts from those who
want to introduce a new chemical or technology to those who claim that it is
unhealthy. (Hilary 2014, Bizarri 2013)
2.2.2. Labour rights
Summary
The main question in the debate is whether TTIP would deteriorate European labour standards.
Supporters say that the trade deal has no provisions on labour, while opponents say that
eliminating “regulatory divergence” can be interpreted this way, and opening up markets can end
up in a “race to the bottom” where both EU and US engage in a series of cuts in labour rights to
ensure competitiveness.
Positive
• Myth says that “TTIP will erode high labour standards”. TTIP does not restrict the
contracting parties' right to maintain domestic regulation on labour affairs.
(FGI, 2014)
Negative
• Currently trade creates winners and losers, not winners and winners. Declining
labour share in income point out that workers in the US and in the EU have been
losing. (AFL-CIO, 2014)
• TTIP will hit employment in a time when youth unemployment is already at over
50% in some EU member states (Hilary, 2014)
• As the US has not ratified ILO Conventions on labour standards such as collective
bargaining and freedom of association, the “removal of trade barriers” in this regard
might mean a race to the bottom in terms of labour rights. (AFL-CIO, 2014 ,
Hilary 2014)
• TTIP might revoke European workers' rights to self-organise if a “race to the
bottom” scenario emerges in labour relations. (Bizzarri, 2013)
27
2.2.3. Privatization of public services
Summary
Supporters of TTIP argue that privatization of public services is not on the table and it generally
is not there in free trade talks. The debate is on the fact that “opening up” a market to private
providers (which is indeed on the table) is essentially understood as a huge step towards
privatization as the opponents understand it.
Positive
• Myth says that “TTIP will lead to privatization in the areas of water supply,
healthcare and education”. The European Commission has declared that the
special status of public services will not be affected by TTIP. Restrictions on
market access to public services are found even in WTO agreements. Opening of
public procurement markets will not result in privatization but lower prices for
consumers and equal treatment of companies in the US procurement market. (FGI,
2014)
Negative
• TTIP is opening up public services for liberalization in an unprecedented way
(Bizzarri, 2013)
• TTIP should not facilitate replacing state provision of public services with private
provision but it currently defines public services too narrowly, making such an
outcome possible. (AFL-CIO, 2014)
• The US government has confirmed that TTIP will be used to open up service
markets in Europe in areas such as public utilities. The only exceptions the EC
wants to see are those related to the judiciary, border policing and air traffic control.
(Hilary, 2014)
• It will be effectively impossible to restore public services once they have been
privatized. (Hilary, 2014)
• The liberalization is done according to a “negative list”, that is, everything not
included in it is potentially subject to liberalization. The EU traditionally applied a
“positive list” approach to liberalization of public services. (Hilary, 2014)
2.2.4. Access to procurement markets
Summary
One of the main claimed benefits of TTIP is that EU companies would be able to enter the huge
US public procurement market which should withdraw its “buy American” regulations.
Opponents claim that the other side of this coin is that local governments would not have the
option to buy from local, more sustainable producers.
Positive
• EU companies would have access to the US procurement market.
(BusinessEurope, 2014)
Negative
• Opening up of public procurement markets will make local governments unable to
pursue they local social and ecological agendas. (Hilary, 2014)
• If TTIP will liberalize public procurement, then no levels of government in
Europe will be able to explore any alternative economic model to international
free trade (Bizzarri, 2013)
• Opening up public services and government procurement markets essentially
serves transnational corporate interests and will spark waves of privatizations in
sectors such as health and education. (Hilary, 2014)
28
2.2.5. Regulatory convergence – examples from particular industries
2.2.5.1. Patents
Positive
• Harmonizing intellectual property right would support innovation and R&D
investment. EU and US could lead globally in IPR protection together.
(BusinessEurope,2014)
Negative
• The patent system in the US is frivolous and corrupt, and the patenting practices
raise prices and impede competition. This kind of patenting might arrive to
Europe through TTIP. (Baker, 2014)
• Americans pay on average twice as much on prescription drugs due to the patent
monopolies of drug companies. The pharmaceutical industry wants similar
regulations passed in the EU. (Baker, 2014)
• Adaptation of US patenting standards puts the access to information at risk. E.g. the
pharmaceutical industry seeks to restrict public access to clinical trial data under
the guise of the TTIP. (Hilary, 2014)
• TTIP will be undermining Europeans' access to affordable medicine through US
patent rules (Bizzarri, 2013)
2.2.5.2. Finance
• The financial sector seeks to undo the reforms which came after the crisis of
2008 (Bizzarri 2013, Hilary 2014)
2.2.5.3. Culture
• The cultural sector has relatively low economic performance but has a greater
relevance to society. (Kirchschlager, 2014)
• EU audiovisial markets are relatively open for US companies but not vice versa.
(Kirchschlager, 2014)
• Hollywood movies enjoy huge successes in Europe even under the protection
regime. (Kirchschlager, 2014)
2.2.5.4. Privacy
• There is no comprehensive EU data protection law which would be needed before
any negotiation takes place. TTIP promotes “flow of data”, but not data
protection. Sensitive personal data will be more likely to be stored in the cloud
storage of a US company exposing EU citizens. (Knoll, 2014)
• Some elements of the already rejected Anti-Counterfeiting Trade Agreement
are planned to be reintroduced under TTIP. Elements of these included
requirements of the internet service providers to monitor online activity to see
whether the user commits copyright infringements. (Bizarra 2013, Hilary 2014)
• It will be easier to gain access to personal information for commercial
purposes. (Hilary, 2014)
2.3. Environment
Summary
The main environmental concern of opponents is shale gas, through two channels: 1) enforcing
fracking technology on the European continent, 2) exacerbating fracking activities in America
through driving up demand. They argue that fracking is environmentally harmful. Supporters of
TTIP argue that since shale gas can be sold at a higher price in Asia as in Europe, TTIP will not
increase the demand for fossil fuel.
29
Positive
• The EC does not foresee the US removal of the ban on crude oil exports (DG
for Internal Policies, 2015)
• Liquid natural gas imports from the US are not likely to increase to a large extent.
Spot prices on the Asia-Pacific markets are much higher than in Europe, so US
exports will probably be directed there.(DG for Internal Policies, 2015)
• Since there will be no significant increase in the EU of US gas and oil exports, it is
not likely to have an adverse effect on competitiveness of EU industries. (DG
for Internal Policies, 2015)
• There will be a positive effect on energy security though (even if the amount
actually traded will not grow significantly, it will be important that there is an
additional source). (DG for Internal Policies, 2015)
• Trade in renewable technologies is likely to increase which will benefit the EU
wind energy manufacturing sector. (DG for Internal Policies, 2015)
Negative
• More stringent regulations in terms of pollution and the use of the precautionary
principle in the use of new chemicals and technologies are labelled as “barriers to
business” under TTIP. (Hartmann 2014)
• Environmental standards will be undermined if “mutual recognition” will be the
way how regulations converge across the Atlantic. (Bizzarri, 2013)
• The “precautionary principle” is weakened to easier adopt technologies in the EU
such as “fracking” in shale gas production. If the liquid natural gas meets high
demand in Europe, hydraulic fracturing will be expanded in the US as well.
(Bizzarri, 2013)
• TTIP will only help reducing CO2 emissions if it involves the phasing out of fossil
fuel subsidies. However, it appears not to be on the table so far. (Adolf et al. 2013)
• Deregulation of crude oil or shale gas exports from the US might drive down
energy prices and would incentivise increased fossil fuel use. (Adolf et al. 2013)
• TTIP is used as a lobby vehicle to attack EU's Fuel Quality Directive, which aims at
reducing the climate impact of transport fuels. The Canadian government (owner of
one of the biggest oil reserves of the world in the form of tar sand) and oil
companies have lobbied extensively against the FQD since its birth in 2009.
(Flues, 2014)
• TTIP threatens to undermine environmental regulations within the EU which are
much stricter than in the US (Hilary, 2014)
• Growing evidence shows huge health and environmental risks associated with
hydraulic fracturing technology of extracting fossil fuels. The dangers of fracking
include increased greenhouse gas emissions, contamination of water, earthquakes.
(Cingotti et al, 2014)
• In the US oil and gas production is exempt of major environmental laws. ISDS can
be a backdoor through which the fracking resistance can be broken. (Cingotti et al,
2014)
30
2.4. Democracy and transparency
Summary
Proponents of TTIP say that since the European Commission is operating under the mandate of
the European Council and the European Parliament in the trade talks, and because national
assemblies will most likely have to ratify it one by one in the end, the TTIP talks cannot be
labelled undemocratic. Opponents think otherwise, and say that the whole agenda of the trade
talks operates under corporate interests and the optimistic propaganda of the Commission is just
creating a false sensation of transparency.
Positive
• Myth says that “TTIP is being negotiated behind closed doors”. The European
Commission briefs the European Council and the Trade Committee of the European
Parliament regularly. When negotiations are complete, the Council and the
Parliament will have to approve it, and chances are that the individual member
states will also have a separate decision at their hands. The European Commission
has set up the TTIP Advisory Group consisting of NGOs, trade unions and
businesses. (FGI, 2014)
• Confidentiality of the trade talks does not mean that they are undemocratic, as the
negotiating mandate of the European Commission comes from the EU Parliament
and the member states. The United States Congress is also regularly advised on
US positions. (Körnig and Schmicker, 2014)
Negative
• TTIP is developing according to corporate wish lists (IUF, 2014)
• Progress is slowing at WTO, so corporations are pursuing the “fast track” under
the guise of the TTIP and other regional arrangements (IUF, 2014)
• TTIP is a product of twenty years of lobbying on the part of EU and USA
corporations for removal of regulations, starting from the founding of the
TransAtlantic Business Dialogue group of CEOs. (Hilary, 2014)
2.5. Geopolitics, multilateralism vs bilateralism
Summary
This system of arguments revolves around two key points. 1) Was TTIP a logical cure for the
stalled trade multilateralism of WTO? Is it going to give new energy to trade liberalization, or
exactly the opposite, it will divide countries and revert back to the pre-1945 discriminatory
system of world trade? 2) Is the issue of TTIP an attack on emerging powers in a desperate
attempt of the west to regain leadership in the world economy, or is it a healthy initiative which
will have positive spillovers to emerging economies?
Positive
Multilateral free trade agreements are currently dysfunctional. Two key
reasons for promoting bilateral free trade agreements instead are the presence of
globalized supply chains and that they would trigger a positive dynamic of trade
liberalization.(Erixon, 2012)
The main problem of the global trade system is lack of leadership. The EU and the
US could reclaim leadership by signing TTIP.(Erixon, 2012)
The claim that bilateral initiatives poison multilateral trade policy is false.
Multilateral talks have always been urged by one particular actor involved (US
in the Kennedy Round in the GATT tried to reduce trade diversion from the
31
creation of the Common Market in Europe* the Uruguay Round was driven by the
NAFTA initiative and the single market of Europe) (Erixon, 2012)
The TTIP would create a change in trade preferences for large third country trading
partners as well (like China and Brazil) to move towards liberalization in order
not to risk losing current trade (Erixon, 2012)
TTIP could set an international example for reducing NTB-s. (Erixon, 2012)
If TTIP is a result of an open negotiating process, it can have beneficial effect on
trade multilateralism (Pardo, 2013)
Myth says that “TTIP will damage the multilateral trading system and other
countries”. Such agreements supplement multilateral trade by developing new
rules. Also the agreement pushes 3rd
countries towards liberalization which in
effect help multilateral trade getting a new impetus. (FGI, 2014)
The Transatlantic powers are now in defence within the world economy. TTIP
will give the EU and the US the first mover advantage within the deadlocked World
Trade Organization. (Venhaus, 2014)
TTIP will encourage WTO negotiations, so it is not a substitute for
multilateralism but a complement. (Körnig and Schmucker, 2014)
TTIP is a pragmatic answer for shift from global to regional multilateralism.
This follows from the judgment that some liberalization is better than no
liberalization (with the multilateral trade talks essentially stalemated). (Straubhaar,
2013)
Equal treatment of the states is infeasible, tailor-made approaches are needed in
trade relations (as well). (Straubhaar, 2013)
TTIP was conceived to compete with Asian countries; it is a step towards an
“economic NATO” as Hillary Clinton put it. In this regard, it is clearly a
geopolitical move. TTIP is a key for Europe to rebalance the “pacific pivot” of the
US (its previous turn towards Asian economic partnerships) (Van Ham, 2013)
TTIP is the best chance the world has for reinvigorating the global trade
liberalization process (Van Ham, 2013)
The TTIP talks now have a security edge as well. In the light of the Ukraine crisis
it is important, especially for countries like Poland, to boost transatlantic
cooperation and recast the Western alliance by all means. (Plociennik, 2014)
TTIP is not a defensive strategy (not targeted against third countries); since both
signatory parties have their own other trade agendas as well (e.g. The EU is
negotiating free trade agreements with several Asian countries, Canada, and wants
to improve its trade with Mexico and Latin America as well). The EU also tries to
improve market access of several African countries through Economic Partnership
Agreements. (Erixon 2012b)
Negative
Regional trade agreements are partly a product of the impasse in the WTO, but also
suck “negotiating energy” out of it. (Draper et al. 2014)
TTIP talks could tie up a considerable proportion of EU and US negotiating
capacity. (Mildner and Schmucker, 2013)
TTIP would lead to a relative decline of traditional European integration to the
benefit of transatlantic integration. The European standards and goals are threatened
(e.g. Automotive industry regulations which are labelled “discriminatory” are in
effect promoting energy efficiency). More importantly, trade diversion will lead to
32
the political weakening of the integration as trade has been its main driving force
(e.g. UK ties with the EU will be further loosened, Germany will dramatically
decrease its trade with its traditional EU partners). (Mathieu and Hager, 2014)
An exclusive TTIP agreement will force China to follow a balancing strategy
and form competitive regional trade blocks. If TTIP is transparent and open,
China may want to reform constructively instead of expelling the current liberal
global order.(Trigkas, 2014)
The TTIP is part of a strategy in order to contain the rise of emerging nations by “a
new trench of global trade, undermining production networks and diverting the flow
of goods”. As a result, the world will become more divided than united.
(Venhaus, 2014)
Preferential trade agreements contain a lot of different and contradictory
rules. TTIP might exacerbate the “spaghetti bowl effect”. (Mildner and Schmucker,
2013)
TTIP and similar large-scale projects endanger the future of a multilateral
trading order. These agreements betray their principles which aimed to overcome
the trade discrimination of the inter-war years. (Dieter, 2013)
The long term political damage could be considerable. Discrimination is creeping
back into trade policy and this could generate growing conflicts in the new
multipolar world order. Geopolitics is undermining a liberal consensus in trade
policy that has lasted since 1945.(Dieter, 2013)
TTIP will have side effects on the long term development of the European
integration, but it is not clear whether it will push toward more or less
federalization on the long run. (Van Ham, 2013)
2.6. Effects on third countries
Summary
Most quantitative studies agree upon that there will be trade diversion from 3rd
countries to
Transatlantic trade, which means that lower income countries will be hurt by the TTIP through
this channel. The debate is more about whether the eventual benefits outweigh the cost. One
argument is that the countries in question will have the incentive to unilaterally adopt US and EU
standards, while others say that at best this will create double standards (they will export higher
quality goods and produce lower quality varieties for local consumption).
Mixed
If there is regulatory convergence under TTIP, large emerging markets (such as
India, China) must adapt somehow. They might not take the higher product
standards since their emerging middle class is very price sensitive. The most likely
is that they will adapt dual standards in exporting and home market production.
(Karnakar, 2013)
Indirect spillovers (third countries adapting TTIP standards unilaterally) will only
work under proper incentives for those countries. The trade partners of TTIP
countries could be categorized into 3 groups: “closest neighbours” (NAFTA
countries for the US, Switzerland, Iceland, Norway and Turkey for the EU),
“biggest traders” (Brazil, China, India, Indonesia, Japan, Korea, South Africa),
“other developed open economies” (Australia, New Zealand, Singapore, Hong
Kong, Israel and Chile). The authors argue that only “closest neighbours” have
enough incentives to adapt TTIP rules unilaterally. There could be, however,
“domino effects”, meaning that third countries sign defensive FTAs in order to
33
reduce the effect induced by the primary FTA. The authors consider this unlikely.
(Lejour et al. 2014)
Indirect spillovers (3rd
countries unilaterally adopting higher EU-US standards) can
be expected critically in the electrical equipment and the chemical industries. To
lesser extent there are incentives in the mining and quarrying and transport
equipment industries. (Lejour et al. 2014)
Negative
ACP countries could be particularly hurt by the TTIP through “preference
erosion” (many of these countries had preferential trade agreements with future
TTIP countries which might lose their edge in the future to countries with similar
export structure which will be a TTIP members) (Draper et al. 2014)
Trade costs will increase for areas where requirements and standards are made
stricter. However, harmonization efforts could lower the costs of accessing new
markets. These two effects compete with each other in determining whether third
countries will suffer or benefit from TTIP. (Draper et al. 2014)
Developing countries will suffer from an EU-US agreement. (Hartmann, 2014)
Impact assessments on 3rd countries
Effects on trade with Brazil will be significant: ranging from -0.5% in imports and
exports (if only tariffs are reduced) to -8-10% if NTMs are also reduced. (similar
CGE/GTAP calculations) TTIP is clearly shown in the study as a threat.
(Thorstensen and Ferraz, 2014)
14 countries are exporting to the EU and the US mostly products which are
dependent on sanitary and phitosanitary (SPS) regulations. If the EU-US agreement
results in greater regulatory cooperation, the exports of these countries would
suffer. The countries in question mostly are low income countries of Africa (such
as Nigeria, Ghana, Kenya, Malawi etc.) (Rollo et al. 2014)
A study on the effects of TTIP on the BRICS economies shows that real GDP-s are
going to range from a modest decrease (-0.12% for China) and a negligible increase
(+0.1% for Brazil). Except for Brazil, aggregate exports and imports of the BRICS
economies will decrease between 0.05 and 0.17%. These changes are made up by
a bigger decrease in their EU/US trade and a substitutionary increase in their
trade among themselves. (Cai et al. 2014)
2.7. Agriculture and food security
Summary
Core points in this topic are: 1) Fate of remaining mega-tariffs: US puts high tariffs on tobacco,
EU on dairy products. Will these be lifted? 2) Use of pesticides – will the EU water up its strict
chemical substance regulation policies (REACH)? Will it abandon the “precautionary principle”
3) Chlorination of poultry, hormone-treated beef and pork: EU does not allow these practices,
the US does. 4) Ban on GMO production in Europe, ban on sales of processed foods that use
GMOs: one of the core issues for European consumer. 5) Protection of geographical identifiers:
US does not accept as of now the EU policy that the use of some geographical descriptions is
restricted to producers of some area (e.g. Feta and parmesan cheese).
Supporters of TTIP argue that there is a chance to expand markets for EU companies while
maintaining the higher standards of food security.
34
Positive
Exports to the US have been grown dynamically for the last 20 years. TTIP
may bring about market gains for the EU in the dairy product sector and the meat
and meat preparation industries. Restrictions do to risks related to “mad cow”
disease could be lifted in the future. Wine and spirits are the main driving force of
the exports to the US. Duties and taxes on EU products are now seen as
discriminatory. Stronger protection of geographical indications in the US could lead
to an increase in exports. (DG for Internal Policies, 2014)
Myth says that “TTIP will undermine European health and food safety standards”.
Especially through GMOs and hormone-treated meat. The TTIP does not affect
the mandate of the European Food Safety Authority and its regulatory
processes so the treatment of GMOs will not be any less strict. Ban on hormone-
fattened meat is non-negotiable. Though in a 1997 decision the WTO ruled that the
EU import ban is not legitimate, the EU decided to carry on with it anyway. (FGI,
2014)
The example of the free trade agreement with Canada showed that existing
hygienic and health standards can be preserved (hormone-treated beef still
cannot be imported from Canada).(Körnig and Schmucker, 2014)
The EC has stressed that basic laws, such as those relating to GMOs are not part of
the negotiations. EU has never changed its GMO approval system even on the urge
of WTO. (Schmucker, 2014)
Mixed
The US GM producers have given up on exporting GM seeds to the EU any time in
the near future, so the debate is essentially about the introduction of food
products that have GM raw materials in them, and about their labelling. (Josling
and Tangermann, 2014)
Implementation of tariff cuts can be facilitated two ways: 1) exclude some sensitive
products 2) define a lengthy transition period. (Josling and Tangermann, 2014)
Another issue is that of subsidies. If the EU and the US are able to agree to reduce
domestic subsidies among themselves, they could “set an example that the rest of
the WTO membership would find difficult not to follow” (Josling and
Tangermann, 2014)
While the US is the most important single country in EU agricultural exports,
the reverse is not true. The importance of the EU as an agricultural trade partner
has been declining steadily for the US. The most important EU exports are
alcoholic beverages (spirits, wine and beer). The highest value items in US exports
to the EU are edible nuts and fruits. Also, there is no significant intra-industry trade
in the agricultural sector. (Josling and Tangermann, 2014)
“In terms of agriculture I don't think it is very win-win. The US ill benefit
more than the EU in the sector.” (Bureau, 2014)
“If some mutual recognition can be reached [in the chemical products regulation], it
will mean that some products could be accredited in the US to export chemical
substances more easily to the EU, even though they don't comply with the ore
demanding EU regulations” (Bureau, 2014)
The average tariff level for the EU is 6.4%, and 3.9% for the US. Trade-weighted
tariff averages are also small. Nevertheless, tariffs are of political concern in the
TTIP regulations, since some sub-sectors are protected by “mega-tariffs” (such
as 600% tariff for the dairy sector in the EU, or a 350% tariff for tobacco in the US)
35
(Josling and Tangermann, 2014)
The impetus for dealing with NTMs in the agricultural sector comes from the
US. The most important regulatory issues the US agricultural sector wants to see
resolved are 1) growth additives in livestock 2) methods of pathogen reduction in
slaughterhouses 3) approval of genetically modified varieties of corn and soybeans.
The EU producers want milk quotas to be abolished, and protection for
geographical indication for cheese, specialty meats and wine. (Josling and
Tangermann, 2014)
Regulatory divergence could be overcome through the strategies of either
harmonisation (probably only for the least sensitive sectors), or mutual recognition
(either on regulations themselves or conformity tests) or equivalence (by stating
that the aims of different regulations were the same; the effectiveness of the
standards are comparable and trusting the other country that it would carry out its
inspection and verification with at least equal diligence). (Josling and Tangermann,
2014)
Food security will only be harmonised where there is equivalence (Mildner, 2013)
Negative
Beef production in the US is more competitive. The US could supply the EU with
even hormone-free beef as well. Liberalization impact on this sector would be
substantial. EU corn production is less cost-competitive. Regulations impose
different costs on EU and US producers since EU producers are not allowed to use
growth hormone or pathogen reduction treatments or GMOs to lower production
costs. The US also wants to see EU farm subsidies lowered. (DG for Internal
Policies, 2014)
TTIP would open the doors for agricultural exports at dumping prices, hurting
ecologically friendly family businesses on both sides of the Atlantic. (Hartmann,
2014)
Concerns about TTIP's effects on the food supply include (Hansehn-Kuhn,
2013)
1) Food safety: restrictions on GMOs, product labelling, hormone-treated
beef, and chlorinated rinses of poultry are the main points in question. If
the deregulatory approach prevails, it could be carried over to new
technologies, such as nanotechnology in agriculture.
2) In the US the Environmental Protection Agency has to prove that a
chemical is unsafe in order to ban its use in the food industry, on the other
hand, under EU regulations (REACH) the safety of a new chemical is
what needs to be proved. The Trade Representative of the US has been
lobbying against this EU regulation since it was conceived.
3) Procurement policy reform may also mean that local institutions (such as
schools) will not be able to give preference to local producers in procuring
food.
4) If financial transparency rules are included as a TTIP chapter, it will make
financial rules subject to the ISDR mechanism.
EU Geographical Indicators are at risk through the TTIP negotiations. This is
especially important since wine and spirits are one of the biggest items in the EU
export basket. (DG For international Policies, 2015)
A report claims that the pesticide industry actively lobbied for weakening EU
laws on using carcinogens as pesticides, importing pesticide-treated US food,
efforts to regulate hormone disrupting chemicals. These companies seemed to
36
obstruct efforts to save bee populations, blocked access to information vital to
developing non-toxic alternatives and to install a regulatory ceiling hampering
global pesticide regulation. Maximum residue levels are in many cases 10 times
bigger in the US than in the EU. The report also lists 82 pesticides not allowed in
the EU but allowed in the US. (Smith et al. 2015)
Reforming European agriculture on more sustainable lines will be jeopardized by
cheap US produces. This would lead to a decrease in EU agricultural
employment and incentivize further concentration of EU agriculture along the US
agricultural business model. (Bizzarri, 2013)
2.8. Investment protection
Summary
One of the biggest controversies around the TTIP talks is the planned introduction of an ISDS, or
an Investor-state Dispute Settlement mechanism under which private companies would be able
to seek compensation before an arbitral tribunal for government policies that are perceived as
harming their profits.
The supporters of ISDS say that protecting investors' rights increases investment and investment
into R&D in particular. They also say that some form of ISDS is already in effect in most
countries in question, so it is better to put everything under the same regulatory framework.
Also, ISDS would also help protecting European interests in the US, not just vice versa.
The main arguments of the opponents are that 1) ISDS was designed for dealing with countries
without properly working legal systems, which is not the case now 2) ISDS undermines
democratically elected authorities by being able to sue them over their policies at international
arbitration courts 3) since only foreign firms are able to use the devices given by ISDS, it has a
discriminatory effect against local competitors.
Positive
Excluding ISDS from TTIP might have a negative impact on European
businesses, as they will not be able to protect their investments in the US, while
they competitors there can, since ISDS is already included in NAFTA and perhaps
will be included in TTP. Also, US companies can still use ISDS by setting up
subsidiaries in European countries and use intra-EU ISDS mechanisms. (Pardo
2014)
Myth says that investment protection clauses are not needed and they help US
investors overturn EU legislation. Investment protection agreements are one of the
reasons FDI may exist at all. Existing agreements could be improved through TTIP.
The ideas within ISDS are the same as the US and EU have been promoting in
negotiations with 3rd
parties, so not including it in TTIP would undermine its
legitimacy. Also, ISDS would help EU investors within the US. (FGI, 2014)
The ISDS was initially conceived to protect firms that invest in economies with
fragile legal systems. The EC seeks to implement it in a way that it does not
include compensations for revenue lost due to consumer, environment and health
standards. (Körnig and Schmucker, 2014)
ISDS would help protect the investments of EU companies in the US, and allows
investors to settle disputes on “neutral grounds”. (BusinessEurope, 2014)
The EU has ratified only one treaty containing an ISDS mechanism, the 1994
Energy Charter Treaty which has 53 members. The FTAs with Canada and
Singapore have an ISDS mechanism, but these have not yet been ratified (Fabry and
Garbasso, 2015)
37
The CETA, TTIP and TTP agreements could help encourage a more coherent
regional approach to investment agreements. Now there is not a common model
for this, bilateral agreements all use their own version of investment protection. An
agreement between the EU and the US could lead to a generalization of standards
around the world. (Fabry and Garbasso, 2015)
International arbitration is neutral, so it is preferable to national courts for
investors. (Fabry and Garbasso, 2015)
International arbitration is generally faster than normal court cases. (Fabry and
Garbasso, 2015)
Agreements with ISDS show a commitment to guaranteeing a predictable
investment environment. (Fabry and Garbasso, 2015)
ISDS is about extending the rule of law. The states would retain their power to
expropriate, but the investors could seek compensation more effectively. ISDS
lowers expected costs for companies thus they will have more resources to serve
consumers. (Zulaga 2014)
Negative
ISDS is prone to procedural flaws, loopholes and controversies. (Pardo 2014)
Investor-state arbitration procedures proposed under ISDS undermine
environmental and social laws of the EU, and fundamental principles of rule of
law. (Hartmann, 2014)
Under the pretext of protecting investors, publishing houses and media companies
increasingly try to control users of culture and information. (Hartmann, 2014)
Investment tribunals never directly invalidate environmental regulations, but
they may decide on the payment of substantial compensatory payments.
(Gerstetter and Meyer-Ohlendorf, 2013)
Since the rule of law is respected in both EU and US legal systems, there is no
reason to include ISDS in the TTIP. Without any such previous regulation the EU
and the US managed to become each other’s most important partners in FDI.
(Gerstetter and Meyer-Ohlendorf, 2013)
The kind of legal support which TTIP gives foreign investors is not available for
domestic competitors, so it is in effect disrupting free competition. (Gerstetter and
Meyer-Ohlendorf, 2013)
Experience with ISDS claims since NAFTA came into effect shows what effect
TTIP would have on dispute settlement in Europe – huge compensations paid
from public money to private interests. (IUF, 2014)
There is no empirical evidence that lack of ISDS limits foreign investment.
There is no ISDS in any agreements Brasil has or between the US and China. (IUF,
2014)
If ISDS is included in the TTIP, foreign investors will be able to sue host countries
for loss of profits caused by reversing earlier privatisation. (Hilary, 2014)
Under ISDS, corporations will be able to claim compensation for any future
improvements in the terms and conditions of employment (Hilary, 2014)
93% of bilateral investment treaties contain an ISDS. But most of the time they are
agreements between developed and developing countries (Fabry and Garbasso,
2015)
The lack of ISDS will not certainly mean that FDI is diverted towards 3rd
38
countries, since the EU and the US are already very important partners in terms of
FDI, while there is no comprehensive ISDS mechanism in their relations (Fabry and
Garbasso, 2015)
Even the prospect of paying compensations may lead some governments to
withdraw or modify laws. This is called the “regulatory chill”. (Fabry and
Garbasso, 2015)
In developed legal systems, such as the EU and the US, the investors have many
other devices to cover regulatory risks, such as private insurance policies. (Fabry
and Garbasso, 2015)
If ISDS is part of TTIP, reverse discrimination may occur: US companies gain the
right to begin international arbitration, while European investors must stick with
national courts. (Fabry and Garbasso, 2015)
Delegating authority to transnational tribunals has a political cost. It is a huge
political issue to determine what restrictions on sovereignty are acceptable. (Fabry
and Garbasso, 2015)
ISDS has a hybrid public/private nature, and states have a transparency obligation
towards their citizens, so arbitration procedures taking place behind closed
doors are not preferable. (Fabry and Garbasso, 2015)
Law firms specializing in international arbitration have an influence over the
selection of panel members, and may be able to choose those people who are not
impartial. (Fabry and Garbasso, 2015)
The cost of proceedings is generally very high, on the order of magnitude of
millions of dollars. Logical consequence would be that it is only affordable for big
corporations. On the other hand, one quarter who lay complaints currently are
individuals or small companies, medium and large multinationals only amount of
half of the investors. (Fabry and Garbasso, 2015)
In the EU, the compensation payouts ranged from USD$0.46 million to USD$800
million, while in the US they ranged between USD$0.5 million and USD$1800
million (Fabry and Garbasso, 2015)
The formulation of ISDS provisions is often misleading for the public. E.g.
Protection from “indirect expropriation” means protection from lowering future
profits, and legitimate environmental and public policies can easily interpreted this
way. Guaranteeing the “free transfer of funds of capital and payments by investors”
means that the investor can always withdraw all money, increasing
macroeconomic risks of sudden huge in- and outflows of capital for countries.
Private lawyers will decide which policies are necessary to pursue public policy
objectives – they are often not independent. (Seattle to Brussels Network, 2013)
39
3. Country by country assessment
3.1. TTIP’s possible effects on Austria
Country factsheet
• GDP/capita: 49039 $ (2014) (http://countryeconomy.com/)
• GDP: 428322 Mill. $ (2014)
• 10th
biggest economy in 2013 in Europe, 28th
biggest economy in the world (UN)
• Unemployment in 2014: 4.9% (EuroStat)
TTIP general impact according to the core quantitative studies
• Long-term effects on welfare depending on scenario taken: +0.22 to 4.73% (CESifo)
• Less skilled labour: change in employment: +0.528% ; More skilled labour: change in
employment: +0.511% and change in wages +1.059% (less skilled labour), +1.025%
(more skilled labour) (FIW-Research Reports)
• Changes in Austrian exports: to USA +43.7%, to EU -0.6%. Changes in Austrian
imports: from USA +85.3%, from EU +1.1% (FIW-Research Reports)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 3.7 billion $, 0.87% of GDP
• Export: 10.2 billion $, 2.37% of GDP
• Total: 3.24% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Transportation Equipment (1,727,585)
• Chemicals (1,612,363)
• Machinery, Except Electrical (1,652,792)
• Computer & Electronic Products (1,158,633)
• Fabricated Metal Products, Nesoi (806,257)
5 product categories imported at biggest value from US (2014 value thousand $)
• Chemicals (1,784,517)
• Transportation Equipment (476863)
• Computer & Electronic Products (290,970)
• Machinery, Except Electrical (262,857)
• Special Classification Provisions, Nesoi (181,071)
Other impact assessments
• A distinct impact study was carried out for Austria by FIW – Research Centre
International Economics (Francois – Pindyuk, 2012 [Note: Joseph Francois was also
one of the authors of the Ecorys study, and the authors here implement a similar
methodology]). The study predicts a 1.7% increase in national income ($ 5568
million), 0.5% increase in wages and 1% increase in employment for both skilled and
unskilled labour. Notably there is no reference to the time horizon of these changes,
but the modelling framework suggests that this should be understood as
macroeconomic “long run” (perhaps about 15 years, as in the quantitative studies).
40
• The study suggests that the industries of Motor vehicles, Textiles and that of
Construction will benefit the most. While Other transport equipment, Other goods
industries will shrink in terms of output. Employment in the former industries will
grow between 9 (Motor vehicles) and 1.5 percent (Textiles), while the Transport and
Other transport equipment industries and Other goods will shrink between 1% and
2%.
• The study predicts minuscule trade diversion in terms of the EU partners of Austria:
only the Other transport equipment category's EU exports will shrink over 10 percent,
while Textiles and Other transport equipment exports to the US roughly doubles by
the prediction. Processed foods, Chemicals, Metals, Electrical machinery, Motor
vehicles and Other machinery are predicted to have an US export increase between
1/3 and 1/2.
3.2. TTIP’s possible effects on Belgium
Country factsheet
• GDP/capita: 45538$ (2014) (http://countryeconomy.com/)
• GDP: 524806 Mill. $ (2014)
• 9th
biggest economy in 2013 in Europe, 24th
biggest economy in the world (UN)
• Unemployment in 2014: 8.4% (EuroStat)
TTIP general impact according to studies
• Long-term effects on welfare depending on scenario taken: +0.09 to 4.12% (CESifo)
• Though does not give a country specific estimate, for the region (“Other Northern and
Western Europe”) it predicts a 2.07% decrease in net exports, 0.50% decrease in
GDP, -4848 Euros of per capita income per employee, and a 1.33% increase in
dependency ratio. (Capaldo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 34.8 billion $, 6.63% of GDP
• Export: 21.0 billion $, 4.01% of GDP
• Total: 10.64% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Chemicals (5,998,768)
• Miscellaneous Manufactured Commodities (4,243,422)
• Petroleum & Coal Products (3,301,829)
• Transportation Equipment (1,351,525)
• Machinery, Except Electrical (976,020)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Chemicals (14,499,346)
• Miscellaneous Manufactured Commodities (7,268,481)
• Machinery, Except Electrical (2,827,188)
• Computer & Electronic Products (2,159,320)
• Transportation Equipment (1,677,063)
41
3.3. TTIP’s possible effects on Bulgaria
Country factsheet
• GDP/capita: 7499$ (2014) (http://countryeconomy.com/)
• GDP: 54480 Mill. $ (2014)
• 22th
biggest economy in 2013 in Europe, 78th
biggest economy in the world (UN)
• Unemployment in 2014: 10.8% (EuroStat)
TTIP general impact according to studies
• The Ifo study predicts 3.9% growth of per capita income for Bulgaria under the
“preferred” scenario (which was coined “unrealistic” by the European Commission)
(Bertelsmann/ifo)
• Though does not give a country specific estimate, for the region (“Other Southern
Europe”) it predicts a 0.7% decrease in net exports, 0.21% decrease in GDP, -165
Euros of per capita income per employee, and a 0.33% increase in dependency ratio.
(Capaldo)
• Long-term effects on welfare depending on scenario taken: +0.33 to 5.90% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 359 million $, 0.66% of GDP
• Export: 622 million $, 1.14% of GDP
• Total: 1.80% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Chemicals (88,791)
• Apparel & Accessories (85,340)
• Computer & Electronic Products (77,982)
• Machinery, Except Electrical (69,602)
• Agricultural Products (50,399)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Machinery, Except Electrical (90,552)
• Computer & Electronic Products (69,888)
• Agricultural Products (28,145)
• Petroleum & Coal Products (26,310)
• Chemicals (25,980)
3.4. TTIP’s possible effects on Croatia
Country factsheet
• GDP/capita: 13518$ (2014) (http://countryeconomy.com/)
• GDP: 57869 Mill. $ (2014)
• 21th
biggest economy in 2013 in Europe, 74th
biggest economy in the world (UN)
• Unemployment in 2014: 16.4% (EuroStat)
TTIP general impact according to studies
42
• The Ifo study predicts a per capita GDP growth of 5.3% under “preferred” scenario,
which was called unrealistic by the European Commission. More conservative
estimates are between 0.34 and 0.5%.
• Though does not give a country specific estimate, for the region (“Other Southern
Europe”) it predicts a 0.7% decrease in net exports, 0.21% decrease in GDP, -165
Euros of per capita income per employee, and a 0.33% increase in dependency ratio.
(Capaldo)
• Long-term effects on welfare depending on scenario taken: +0.38 to 5.49% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 344 million $, 0.59% of GDP
• Export: 478 million $, 0.83% of GDP
• Total: 1.42% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Chemicals (205,889)
• Fabricated Metal Products, Nesoi (98,945)
• Machinery, Except Electrical (55,163)
• Computer & Electronic Products (19,877)
• Food & Kindred Products (16,005)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Minerals & Ores (189,306)
• Machinery, Except Electrical (27,256)
• Chemicals (24,726)
• Computer & Electronic Products (23,834)
• Transportation Equipment (11,187)
3.5. TTIP’s possible effects on Cyprus
Country factsheet
• GDP/capita: 19201$ (2014) (http://countryeconomy.com/)
• GDP: 21911 Mill. $ (2014)
• 27th
biggest economy in 2013 in Europe, 107th
biggest economy in the world (UN)
• Unemployment in 2014: 16.4% (EuroStat)
TTIP general impact according to studies
• Though does not give a country specific estimate, for the region (“Other Southern
Europe”) it predicts a 0.7% decrease in net exports, 0.21% decrease in GDP, -165
Euros of per capita income per employee, and a 0.33% increase in dependency ratio.
(Capaldo)
• Long-term effects on welfare depending on scenario taken: +0.37 to 6.33% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 154 million $, 0.70% of GDP
• Export: 66 million $, 0.30% of GDP
43
• Total: 1.00% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Computer & Electronic Products (29,208)
• Goods Returned (exports For Canada Only) (12,651)
• Food & Kindred Products (6,541)
• Machinery, Except Electrical (2,682)
• Chemicals (2,563)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Transportation Equipment (33,938)
• Machinery, Except Electrical (27,826)
• Computer & Electronic Products (24,163)
• Fabricated Metal Products, Nesoi (14,764)
• Special Classification Provisions, Nesoi (8,199)
• Paper (6,060)
3.6. TTIP’s possible effects on the Czech Republic
Country factsheet
• GDP/capita: 18871$ (2014) (http://countryeconomy.com/)
• GDP: 208796 Mill. $ (2014)
• 16th
biggest economy in 2013 in Europe, 48th
biggest economy in the world (UN)
• Unemployment in 2014: 5.8% (EuroStat)
TTIP general impact according to studies
• Though does not give a country specific estimate, for the region (“Other Southern and
Eastern Europe”) it predicts a 0.7% decrease in net exports, 0.21% decrease in GDP, -
165 Euros of per capita income per employee, and a 0.33% increase in dependency
ratio. (Capaldo)
• Long-term effects on welfare depending on scenario taken: +0.24 to 4.96% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 2.3 billion $, 1.10% of GDP
• Export: 4.2 billion $, 2.02% of GDP
• Total: 3.13% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Transportation Equipment (766,531)
• Machinery, Except Electrical (619,341)
• Computer & Electronic Products (483,044)
• Electrical Equipment, Appliances & Components (407,270)
• Chemicals (397,342)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Computer & Electronic Products (808,253)
• Machinery, Except Electrical (326,747)
44
• Transportation Equipment (306,442)
• Chemicals (129,651)
• Electrical Equipment, Appliances & Components (123,283)
3.7. TTIP’s possible effects on Denmark
Country factsheet
• GDP/capita: 59129$ (2014) (http://countryeconomy.com/)
• GDP: 335878 Mill. $ (2014)
• 11th
biggest economy in 2013 in Europe, 34th
biggest economy in the world (UN)
• Unemployment in 2014: 6.4% (EuroStat)
TTIP general impact according to studies
• Though does not give a country specific estimate, for the region (“Other Northern and
Western Europe”) it predicts a 2.07% decrease in net exports, 0.50% decrease in
GDP, -4848 Euros of per capita income per employee, and a 1.33% increase in
dependency ratio. (Capaldo)
• Long-term effects on welfare depending on scenario taken: +0.28 to 5.38% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 2.3 billion $, 0.70% of GDP
• Export: 7.8 billion $, 2.33% of GDP
• Total: 3.02% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Chemicals (3,682,276)
• Machinery, Except Electrical (945,138)
• Computer & Electronic Products (905,273)
• Food & Kindred Products (483,075)
• Miscellaneous Manufactured Commodities (314,504)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Computer & Electronic Products (446,965)
• Chemicals (306,288)
• Transportation Equipment (303,913)
• Machinery, Except Electrical (274,674)
• Electrical Equipment, Appliances & Components (143,725)
3.8. TTIP’s possible effects on Estonia
Country factsheet
• GDP/capita: 18852$ (2014) (http://countryeconomy.com/)
• GDP: 24880 Mill. $ (2014)
• 26th
biggest economy in 2013 in Europe, 106th
biggest economy in the world (UN)
• Unemployment in 2014: 6.6% (EuroStat)
45
TTIP general impact according to studies
• Long-term effects on welfare depending on scenario taken: +0.36 to 6.29% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 308 million $, 1.24% of GDP
• Export: 572 million $, 2.30% of GDP
• Total: 3.54% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Computer & Electronic Products (358,240)
• Electrical Equipment, Appliances & Components (37,442)
• Miscellaneous Manufactured Commodities (32,311)
• Chemicals (31,819)
• Machinery, Except Electrical (17,330)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Computer & Electronic Products (67,820)
• Machinery, Except Electrical (52,211)
• Transportation Equipment (38,879)
• Chemicals (33,517)
• Miscellaneous Manufactured Commodities (22,689)
3.9. TTIP’s possible effects on Finland
Country factsheet
• GDP/capita: 49147$ (2014) (http://countryeconomy.com/)
• GDP: 267329 Mill. $ (2014)
• 12th
biggest economy in 2013 in Europe, 41st biggest economy in the world (UN)
• Unemployment in 2014: 8.9% (EuroStat)
TTIP general impact according to studies
• Though does not give a country specific estimate for the region (“Other Northern and
Western Europe”) it predicts a 2.07% decrease in net exports, 0.50% decrease in
GDP, -4848 Euros of per capita income per employee, and a 1.33% increase in
dependency ratio. (Capaldo)
• Long-term effects on welfare depending on scenario taken: +0.39 to 6.58% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 2.2 billion $, 0.81% of GDP
• Export: 5.0 billion $, 1.88% of GDP
• Total: 2.69% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Chemicals (918,846)
• Paper (862,507)
• Machinery, Except Electrical (691,587)
46
• Petroleum & Coal Products (672,379)
• Computer & Electronic Products (528,105)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Computer & Electronic Products (426,759)
• Transportation Equipment (363,625)
• Machinery, Except Electrical (234,038)
• Minerals & Ores (203,133)
• Chemicals (202,370)
3.10. TTIP’s possible effects on France
Country factsheet
• GDP/capita: 44099$ (2014) (http://countryeconomy.com/)
• GDP: 2806428 Mill. $ (2014)
• 2nd
biggest economy in 2013 in Europe, 5th
biggest economy in the world (UN)
• Unemployment in 2014: 10.3% (EuroStat)
TTIP general impact according to studies
• +0.2% GDP by 2025, changes in exports between +0.5% and +3.8%, changes in real
incomes between 0% and 0.4% depending on the scenario taken (CEPII)
• +0.12% employment, -0.11% change in the unemployment rate in percentage points
and +0.54% in real wages if only tariffs are reduced; +0.47% employment gains, -
0.43% change in the unemployment rate and +2.22% change in real wages under
“deep liberalization” (Bertelsmann/ifo)
• -1.9 net exports (% of GDP), -0.48 percentage points of GDP growth, 130000 jobs
destroyed, -5518 EUR income per employee, -0.64 tax revenue (as % of GDP),
dependency ratio up by 1.31 percentage points (total population / employed
population) (Capaldo)
• Long-term effects on welfare depending on scenario taken: +0.28 to 5.32% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 31 billion $, 1.11% of GDP
• Export: 47 billion $, 1.68% of GDP
• Total: 2.79% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Chemicals (7,407,590)
• Beverages & Tobacco Products (3,511,324)
• Machinery, Except Electrical (3,441,139)
• Computer & Electronic Products (2,672,693)
• Used Or Second-hand Merchandise (2,516,403)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Chemicals (4,565,781)
• Petroleum & Coal Products (4,065,732)
• Computer & Electronic Products (2,969,549)
• Machinery, Except Electrical (2,098,082)
47
• Miscellaneous Manufactured Commodities (1,716,410)
3.11. TTIP’s possible effects on Germany
Country factsheet
• GDP/capita: 46269 $ (2014) (http://countryeconomy.com/)
• GDP: 3856928 Mill. $ (2014)
• 1st biggest economy in 2013 in Europe, 4
th biggest economy in the world (UN)
• Unemployment in 2014: 4.9% (EuroStat)
TTIP general impact according to studies
• +0.4% GDP by 2025, changes in exports between +0.3% and +3%, changes in real
incomes between 0% and 0.5% depending on the scenario taken (CEPII)
• +0.12% employment, -0.11% change in the unemployment rate in percentage points
and +0.54% in real wages if only tariffs are reduced; +0.47% employment gains, -
0.43% change in the unemployment rate and +2.19% change in real wages under
“deep liberalization” (Bertelsmann/ifo)
• -1.14 net exports (% of GDP), -0.29 percentage points of GDP growth, 134000 jobs
destroyed, -3402 EUR income per employee, -0.28 tax revenue (as % of GDP),
dependency ratio up by 0.75 percentage points (total population / employed
population) (Capaldo)
• Long-term effects on welfare depending on scenario taken: +0.28 to 5.28% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 49 billion, 1.28% of GDP
• Export: 124 billion, 3.21% of GDP
• Total: 4.49% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Transportation Equipment (40,266,203)
• Chemicals (23,156,397)
• Machinery, Except Electrical (19,491,277)
• Computer & Electronic Products (9,723,730)
• Fabricated Metal Products, Nesoi (4,647,713)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Transportation Equipment (13,317,123)
• Computer & Electronic Products (7,114,488)
• Chemicals (6,960,533)
• Machinery, Except Electrical (4,607,334)
• Miscellaneous Manufactured Commodities (3,258,491)
Other impact assessments
• The Bertelsmann policy paper (based on the ifo study) predicts that a comprehensive
liberalization can cause huge trade diversion (e.g. US-Germany trade doubles,
Germany – UK trade down by half, and down by a quarter in the case of Italy and
France. These numbers are probably unrealistically high. Also, the study predicts that
TTIP will enhance Germany's trade with Japan and shrink its trade with China. Sharp
48
decline in trade is anticipated with the PIIGS economies (trade down by one third)
and also with all BRICS countries. (Bertelsmann 2013)
3.12. TTIP’s possible effects on Greece
Country factsheet
• GDP/capita: 21956$ (2014) (http://countryeconomy.com/)
• GDP: 242230 Mill. $ (2014)
• 13th
biggest economy in 2013 in Europe, 43rd
biggest economy in the world (UN)
• Unemployment in 2014: 25.8% (EuroStat)
TTIP general impact according to studies
• Though does not give a country specific estimate, for the region (“Other Southern and
Eastern Europe”) it predicts a 0.7% decrease in net exports, 0.21% decrease in GDP, -
165 Euros of per capita income per employee, and a 0.33% increase in dependency
ratio. (Capaldo)
• Long-term effects on welfare depending on scenario taken: +0.35 to 6.17% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Export: 1.1 billion $, 0.46% of GDP
• Import: 0.8 billion $, 0.32% of GDP
• Total: 0.78% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Food & Kindred Products (260,475)
• Primary Metal Mfg (144,606)
• Fabricated Metal Products, Nesoi (120,903)
• Transportation Equipment (79,742)
• Nonmetallic Mineral Products (78,708)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Computer & Electronic Products (132,632)
• Transportation Equipment (120,165)
• Chemicals (71,273)
• Petroleum & Coal Products (57,981)
• Machinery, Except Electrical (57,536)
3.13. TTIP’s possible effects on Hungary
Country factsheet
• GDP/capita: 13481$ (2014) (http://countryeconomy.com/)
• GDP: 133424 Mill. $ (2014)
• 18th
biggest economy in 2013 in Europe, 59th
biggest economy in the world (UN)
• Unemployment in 2014: 7.3% (EuroStat)
49
TTIP general impact according to studies
• Though does not give a country specific estimate, for the region (“Other Southern and
Eastern Europe”) it predicts a 0.7% decrease in net exports, 0.21% decrease in GDP, -
165 Euros of per capita income per employee, and a 0.33% increase in dependency
ratio. (Capaldo)
• Long-term effects on welfare depending on scenario taken: +0.28 – 5.44% (CESifo)
Trade with the US
Trade with the US in 2014:
• Import: 1.8 billion $, 1.38% of GDP
• Export: 5.2 billion $, 3.90% of GDP
• Total: 5.28% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Transportation Equipment (2,014,454)
• Computer & Electronic Products (996,874)
• Machinery, Except Electrical (643,668)
• Electrical Equipment, Appliances & Components (503,956)
• Chemicals (202,704)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Machinery, Except Electrical (588,430)
• Computer & Electronic Products (483,515)
• Transportation Equipment (201,476)
• Electrical Equipment, Appliances & Components (125,933)
• Fabricated Metal Products, Nesoi (116,765)
3.14. TTIP’s possible effects on Ireland
Country factsheet
• GDP/capita: 50503$ (2014) (http://countryeconomy.com/)
• GDP: 232077 Mill. $ (2014)
• 14th
biggest economy in 2013 in Europe, 44th
biggest economy in the world (UN)
• Unemployment in 2014: 10.5% (EuroStat)
TTIP general impact according to studies
• Though does not give a country specific estimate, for the region (“Other Northern and
Western Europe”) it predicts a 2.07% decrease in net exports, 0.50% decrease in
GDP, -4848 Euros of per capita income per employee, and a 1.33% increase in
dependency ratio. (Capaldo)
• Long-term effects on welfare depending on scenario taken: +0.39 to 6.70% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 8 billion $, 3.35% of GDP
• Export: 33 billion $, 14.32% of GDP
• Total: 17.67% of GDP
50
5 product categories exported at biggest value to US (2014 value, thousand $)
• Chemicals (23,473,239)
• Miscellaneous Manufactured Commodities (4,322,280)
• Computer & Electronic Products (1,899,423)
• Goods Returned (exports For Canada Only) (1,260,360)
• Beverages & Tobacco Products (615,005)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Chemicals (2,630,732)
• Computer & Electronic Products (1,244,447)
• Transportation Equipment (844,791)
• Machinery, Except Electrical (822,014)
• Miscellaneous Manufactured Commodities (739,143)
3.15. TTIP’s possible effects on Italy
Country factsheet
• GDP/capita: 35926$ (2014) (http://countryeconomy.com/)
• GDP: 2149485 Mill. $ (2014)
• 4th
biggest economy in 2013 in Europe, 8th
biggest economy in the world (UN)
• Unemployment in 2014: 12.9% (EuroStat)
TTIP general impact according to studies
• -0.36 net exports (% of GDP), -0.03 percentage points of GDP growth, 3000 jobs
destroyed, -661 EUR income per employee, -0.00 tax revenue (as % of GDP),
dependency ratio up by 0.02 percentage points (total population / employed
population) (Capaldo)
• Long-term effects on welfare depending on scenario taken: +0.32 to 5.74% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 17 billion $, 0.79% of GDP
• Export: 43 billion $, 2.00% of GDP
• Total: 2.79% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Machinery, Except Electrical (8,310,251)
• Transportation Equipment (5,007,579)
• Chemicals (4,734,102)
• Leather & Allied Products (2,544,059)
• Fabricated Metal Products, Nesoi (2,509,683)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Chemicals (3,342,400)
• Transportation Equipment (2,232,353)
• Computer & Electronic Products (1,739,692)
• Machinery, Except Electrical (1,656,248)
• Primary Metal Mfg (843,485)
51
3.16. TTIP’s possible effects on Latvia
Country factsheet
• GDP/capita: 15187$ (2014) (http://countryeconomy.com/)
• GDP: 30957 Mill. $ (2014)
• 25th
biggest economy in 2013 in Europe, 98th
biggest economy in the world (UN)
• Unemployment in 2014: 10.7% (EuroStat)
TTIP general impact according to studies
• Long-term effects on welfare depending on scenario taken: +0.34 to 6.09% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 428 million $, 1.38% of GDP
• Export: 291 million $, 0.94% of GDP
• Total: 2.32% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Computer & Electronic Products (26,263)
• Machinery, Except Electrical (20,804)
• Food & Kindred Products (4,179)
• Transportation Equipment (1,055)
• Chemicals (8,470)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Computer & Electronic Products (81,931)
• Machinery, Except Electrical (68,249)
• Food & Kindred Products (51,817)
• Transportation Equipment (40,482)
• Chemicals (32,433)
3.17. TTIP’s possible effects on Lithuania
Country factsheet
• GDP/capita: 15649$ (2014) (http://countryeconomy.com/)
• GDP: 45932 Mill. $ (2014)
• 24th
biggest economy in 2013 in Europe, 87th
biggest economy in the world (UN)
• Unemployment in 2014: 9.4% (EuroStat)
TTIP general impact according to studies
• Long-term effects on welfare depending on scenario taken: +0.33 to 5.94% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 732 million $, 1.59% of GDP
• Export: 1.1 billion $, 2.36% of GDP
• Total: 3.95% of GDP
52
5 product categories exported at biggest value to US (2014 value, thousand $)
• Petroleum & Coal Products (713,112)
• Furniture & Fixtures (127,081)
• Chemicals (65,172)
• Food & Kindred Products (38,115)
• Computer & Electronic Products (26,225)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Used Or Second-hand Merchandise (204,222)
• Machinery, Except Electrical (85,468)
• Petroleum & Coal Products (78,147)
• Computer & Electronic Products (57,843)
• Transportation Equipment (54,486)
3.18. TTIP’s possible effects on Luxembourg
Country factsheet
• GDP/capita: 110697$ (2014) (http://countryeconomy.com/)
• GDP: 60131 Mill. $ (2014)
• 20th
biggest economy in 2013 in Europe, 73rd
biggest economy in the world (UN)
• Unemployment in 2014: 5.9% (EuroStat)
TTIP general impact according to studies
• Though does not give a country specific estimate, for the region (“Other Northern and
Western Europe”) it predicts a 2.07% decrease in net exports, 0.50% decrease in
GDP, -4848 Euros of per capita income per employee, and a 1.33% increase in
dependency ratio. (Capaldo)
• Long-term effects on welfare depending on scenario taken: +0.19 to 4.48% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 1.5 billion $, 2.52% of GDP
• Export: 779 million $, 1.29% of GDP
• Total: 3.81% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Primary Metal Mfg (290,014)
• Fabricated Metal Products, Nesoi (59,393)
• Plastics & Rubber Products (50,820)
• Textiles & Fabrics (31,474)
• Machinery, Except Electrical (27,537)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Transportation Equipment (809,465)
• Used Or Second-hand Merchandise (141,947)
• Chemicals (129,735)
• Machinery, Except Electrical (100,014)
• Computer & Electronic Products (64,870)
53
3.19. TTIP’s possible effects on Malta
Country factsheet
• GDP/capita: 22780$ (2014) (http://countryeconomy.com/)
• GDP: 9642 Mill. $ (2014)
• 28th
biggest economy in 2013 in Europe, 141st biggest economy in the world (UN)
• Unemployment in 2014: 5.8% (EuroStat)
TTIP general impact according to studies
• Though does not give a country specific estimate, for the region (“Other Southern and
Eastern Europe”) it predicts a 0.7% decrease in net exports, 0.21% decrease in GDP, -
165 Euros of per capita income per employee, and a 0.33% increase in dependency
ratio. (Capaldo)
• Long-term effects on welfare depending on scenario taken: +0.41 to 6.86% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 969 million $, 10.05% of GDP
• Export: 183 million $, 1.89% of GDP
• Total: 11.95% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Computer & Electronic Products (96,251)
• Chemicals (26,398)
• Electrical Equipment, Appliances & Components (19,736)
• Miscellaneous Manufactured Commodities (11,442)
• Goods Returned (exports For Canada Only) (5,482)
• Machinery, Except Electrical (5,060)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Petroleum & Coal Products (828,282)
• Transportation Equipment (46,046)
• Machinery, Except Electrical (28,841)
• Special Classification Provisions, Nesoi (15,280)
• Computer & Electronic Products (10,028)
3.20. TTIP’s possible effects on the Netherlands
Country factsheet
• GDP/capita: 50816$ (2014) (http://countryeconomy.com/)
• GDP: 868143 Mill. $ (2014)
• 6th
biggest economy in 2013 in Europe, 17th
biggest economy in the world (UN)
• Unemployment in 2014: 6.7% (EuroStat)
TTIP general impact according to studies
• Though does not give a country specific estimate, for the region (“Other Northern and
Western Europe”) it predicts a 2.07% decrease in net exports, 0.50% decrease in
54
GDP, -4848 Euros of per capita income per employee, and a 1.33% increase in
dependency ratio. (Capaldo)
• Long-term effects on welfare depending on scenario taken: +0.22 to 4.73% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 44 billion $, 5.03% of GDP
• Export: 21 billion $, 2.45% of GDP
• Total: 7.48% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Chemicals (4,558,679)
• Machinery, Except Electrical (4,378,208)
• Petroleum & Coal Products (3,308,272)
• Beverages & Tobacco Products (1,122,448)
• Computer & Electronic Products (1,034,643)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Chemicals (9,312,221)
• Petroleum & Coal Products ( 8,167,277)
• Computer & Electronic Products (6,828,475)
• Miscellaneous Manufactured Commodities (4,388,746)
• Machinery, Except Electrical (2,738,539)
3.21. TTIP’s possible effects on Poland
Country factsheet
• GDP/capita: 13435$ (2014) (http://countryeconomy.com/)
• GDP: 525866 Mill. $ (2014)
• 8th biggest economy in 2013 in Europe, 23th biggest economy in the world (UN)
• Unemployment in 2014: 8.0% (EuroStat)
TTIP general impact according to studies
• Long-term effects on welfare depending on scenario taken: +0.28 to 5.44% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 3.7 billion $, 0.70% of GDP
• Export: 5.2 billion $, 1.00% of GDP
• Total: 1.70% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Transportation Equipment (1,087,650)
• Computer & Electronic Products (729,510)
• Machinery, Except Electrical (592,033)
• Electrical Equipment, Appliances & Components (487,481)
• Furniture & Fixtures (429,012)
55
5 product categories imported at biggest value from US (2014 value, thousand $)
• Transportation Equipment (1,104,357)
• Computer & Electronic Products (455,709)
• Machinery, Except Electrical (398,280)
• Chemicals (337,226)
• Electrical Equipment, Appliances & Components (163,179)
3.22. TTIP’s possible effects on Portugal
Country factsheet
• GDP/capita: 21733$ (2014) (http://countryeconomy.com/)
• GDP: 227324 Mill. $ (2014)
• 15th
biggest economy in 2013 in Europe, 45th
biggest economy in the world (UN)
• Unemployment in 2014: 13.4% (EuroStat)
TTIP general impact according to studies
• Though does not give a country specific estimate, for the region (“Other Southern and
Eastern Europe”) it predicts a 0.7% decrease in net exports, 0.21% decrease in GDP, -
165 Euros of per capita income per employee, and a 0.33% increase in dependency
ratio. (Capaldo)
• Long-term effects on welfare depending on scenario taken: +0.40 to 6.80% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 1.1 billion $, 0.50% of GDP
• Export: 3.2 billion $, 1.43% of GDP
• Total: 1.93% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Petroleum & Coal Products (812,260)
• Chemicals (328,717)
• Wood Products (223,275)
• Apparel & Accessories (192,801)
• Paper (175,951)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Agricultural Products (297,699)
• Transportation Equipment (218,592)
• Computer & Electronic Products (93,929)
• Chemicals (74,171)
• Oil & Gas (72,274)
Other impact assessments:
• CEPR conducted a separate CGE study for Portugal. They found that Portugal would
benefit proportionally more from tariff reduction than other EU member states.
Portugal may expect a GDP growth between 0.35-0.78% growth in GDP, 0.73-1.73%
growth in exports, 0.58-0.9% increase in low skill wages, somewhat lower increase in
medium- and high skill wages. (CEPR, 2014)
56
3.23. TTIP’s possible effects on Romania
Country factsheet
• GDP/capita: 9499$ (2014) (http://countryeconomy.com/)
• GDP: 189638 Mill. $ (2014)
• 17th
biggest economy in 2013 in Europe, 53rd
biggest economy in the world (UN)
• Unemployment in 2014: 6.4% (EuroStat)
TTIP general impact according to studies
• Though does not give a country specific estimate, for the region (“Other Southern and
Eastern Europe”) it predicts a 0.7% decrease in net exports, 0.21% decrease in GDP, -
165 Euros of per capita income per employee, and a 0.33% increase in dependency
ratio. (Capaldo)
• Long-term effects on welfare depending on scenario taken: +0.38 to 5.82% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 978 million $, 0.52% of GDP
• Export: 2.1 billion $, 1.13% of GDP
• Total: 1.64% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Computer & Electronic Products (413,510)
• Primary Metal Mfg (244,975)
• Fabricated Metal Products, Nesoi (219,674)
• Machinery, Except Electrical (191,573)
• Apparel & Accessories (188,690)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Machinery, Except Electrical (192,118)
• Petroleum & Coal Products (160,362)
• Computer & Electronic Products (156,162)
• Transportation Equipment (120,504)
• Electrical Equipment, Appliances & Components (58,860)
3.24. TTIP’s possible effects on Slovakia
Country factsheet
• GDP/capita: 17706$ (2014) (http://countryeconomy.com/)
• GDP: 97707 Mill. $ (2014)
• 19th
biggest economy in 2013 in Europe, 63rd
biggest economy in the world (UN)
• Unemployment in 2014: 12.5% (EuroStat)
TTIP general impact according to studies
• Though does not give a country specific estimate, for the region (“Other Southern and
Eastern Europe”) it predicts a 0.7% decrease in net exports, 0.21% decrease in GDP, -
165 Euros of per capita income per employee, and a 0.33% increase in dependency
ratio. (Capaldo)
57
• Long-term effects on welfare depending on scenario taken: +0.27 to 5.34% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 445 million $, 0.45% of GDP
• Export: 2.1 billion $, 2.16% of GDP
• Total: 2.61% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Transportation Equipment (1,190,172)
• Machinery, Except Electrical (213,522)
• Plastics & Rubber Products (168,354)
• Computer & Electronic Products (88,552)
• Electrical Equipment, Appliances & Components (82,983)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Computer & Electronic Products (96,601)
• Transportation Equipment (90,468)
• Machinery, Except Electrical (66,081)
• Minerals & Ores (55,282)
• Miscellaneous Manufactured Commodities (20,961)
3.25. TTIP’s possible effects on Slovenia
Country factsheet
• GDP/capita: 23317$ (2014) (http://countryeconomy.com/)
• GDP: 47987 Mill. $ (2014)
• 23rd
biggest economy in 2013 in Europe, 83rd
biggest economy in the world (UN)
• Unemployment in 2014: 9.7% (EuroStat)
TTIP general impact according to studies
• Long-term effects on welfare depending on scenario taken: +0.25 to 5.06% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 306 million $, 0.64% of GDP
• Export: 714 million $, 1.49% of GDP
• Total: 2.12% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Chemicals (162,002)
• Electrical Equipment, Appliances & Components (94,191)
• Primary Metal Mfg (83,405)
• Transportation Equipment (76,637)
• Machinery, Except Electrical (66,513)
58
5 product categories imported at biggest value from US (2014 value, thousand $)
• Chemicals (63,002)
• Fabricated Metal Products, Nesoi (55,224)
• Petroleum & Coal Products (39,718)
• Computer & Electronic Products (24,425)
• Minerals & Ores (21,913)
3.26. TTIP’s possible effects on Spain
Country factsheet
• GDP/capita: 29150$ (2014) (http://countryeconomy.com/)
• GDP: 1406176 Mill. $ (2014)
• 5th
biggest economy in 2013 in Europe, 13th
biggest economy in the world (UN)
• Unemployment in 2014: 23.7% (EuroStat)
TTIP general impact according to studies
• Though does not give a country specific estimate, for the region (“Other Southern and
Eastern Europe”) it predicts a 0.7% decrease in net exports, 0.21% decrease in GDP, -
165 Euros of per capita income per employee, and a 0.33% increase in dependency
ratio. (Capaldo)
• Long-term effects on welfare depending on scenario taken: +0.48 to 7.55% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 10.1 billion $, 0.72% of GDP
• Export: 14.9 billion $, 1.06% of GDP
• Total: 1.77% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Chemicals (2,588,883)
• Petroleum & Coal Products (2,334,580)
• Transportation Equipment (2,032,432)
• Food & Kindred Products (1,259,787)
• Machinery, Except Electrical (1,247,936)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Chemicals (2,893,569)
• Agricultural Products (1,532,674
• Transportation Equipment (1,041,851)
• Computer & Electronic Products (705,169)
• Machinery, Except Electrical (522,076)
3.27. TTIP’s possible effects on Sweden
Country factsheet
• GDP/capita: 60430$ (2014) (http://countryeconomy.com/)
• GDP: 579680 Mill. $ (2014)
• 7th
biggest economy in 2013 in Europe, 22nd
biggest economy in the world (UN)
59
• Unemployment in 2014: 7.8% (EuroStat)
TTIP general impact according to studies
• Though does not give a country specific estimate, for the region (“Other Northern and
Western Europe”) it predicts a 2.07% decrease in net exports, 0.50% decrease in
GDP, -4848 Euros of per capita income per employee, and a 1.33% increase in
dependency ratio. (Capaldo)
• Long-term effects on welfare depending on scenario taken: +0.35 to 6.20% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 4.3 billion $, 0.75% of GDP
• Export: 10.3 billion $, 1.79% of GDP
• Total: 2.54% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Machinery, Except Electrical (2,702,306)
• Transportation Equipment (1,413,989)
• Chemicals (970,707)
• Computer & Electronic Products (917,863)
• Primary Metal Mfg (836,151)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Chemicals (787,606)
• Transportation Equipment (747,371)
• Computer & Electronic Products (636,451)
• Machinery, Except Electrical (569,202)
• Special Classification Provisions, Nesoi (225,231)
3.28. TTIP’s possible effects on United Kingdom
Country factsheet
• GDP/capita: 39366$ (2014) (http://countryeconomy.com/)
• GDP: 2523216 Mill. $ (2014)
• 3rd
biggest economy in 2013 in Europe, 6th
biggest economy in the world (UN)
• Unemployment in 2014: 5.9% (EuroStat)
TTIP general impact according to studies
• +0.4% GDP by 2025, changes in exports between +0.6% and +5.5%, changes in real
incomes between 0% and 0.4% depending on the scenario taken (CEPII)
• +0.37% employment, -0.34% change in the unemployment rate in percentage points
and +1.72% in real wages if only tariffs are reduced; +1.38% employment gains, -
1.27% change in the unemployment rate and +6.60% change in real wages under
“deep liberalization” (Bertelsmann/ifo)
• -0.95 net exports (% of GDP), -0.07 percentage points of GDP growth, 3000 jobs
destroyed, -4245 EUR income per employee, -0.39 tax revenue (as % of GDP),
dependency ratio up by 0.01 percentage points (total population / employed
population) (Capaldo)
60
• Long-term effects on welfare depending on scenario taken: +0.43 to 7.05% (CESifo)
Trade with the US (US Census Bureau)
Trade with the US in 2014:
• Import: 53.9 billion $, 2.13% of GDP
• Export: 54.6 billion $, 2.16% of GDP
• Total: 4.30% of GDP
5 product categories exported at biggest value to US (2014 value, thousand $)
• Transportation Equipment (11,367,733)
• Chemicals (9,011,091)
• Machinery, Except Electrical (6,030,282)
• Petroleum & Coal Products (5,410,056)
• Goods Returned (exports For Canada Only) (4,336,539)
5 product categories imported at biggest value from US (2014 value, thousand $)
• Transportation Equipment (12,131,907)
• Chemicals (6,430,593)
• Computer & Electronic Products (5,502,556)
• Primary Metal Mfg (4,509,394)
• Machinery, Except Electrical (3,974,621)
Other impact assessments
• A separate study has been carried out by CEPR to predict TTIP outcomes for the UK.
The study projects 0.14-0.27% increase in GDP, 1.22-2.21% growth in exports, 1.03-
1.87% increase in imports. Real national income is expected to grow between 0.13-
0.26%. Real wages of the less and more skilled both will grow between 0.21-0.38%.
(CEPR, 2013)
61
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65
Appendix
Appendix: Non-Trade Barriers in US-EU trade
In this Appendix we give a short summary of the non-trade barriers to trade identified in
the Ecorys study (Berden et al. 2009) and highlight which of those are subject to controversy in
the TTIP debate.
Aerospace industry
Table 1 NTMs from the EU perspective
Rank NTM or Diverging Regulation Trend
Trade measures
1 US support to Boeing (aeronautics) Constant
2 Restrictions on foreign launching services (space) Increasing
3 US support to aircraft engine manufacturers (aeronautics) Increasing
4 Very limited access of foreign companies to US government support
programmes (e.g. Technology Innovation Programme) Increasing
5 International Traffic in Arms Regulations (ITAR) (space sector) Increasing
6 Buy American Act Increasing
7 US product standards which differ from international standards Constant
8
On-board equipment and instruments: Safety Standards for Flight
Guidance Systems and Proposed Revisions to Advisory Circular 25-
1329-1A, Automatic Pilot Systems Approval
Decreasing
Investment measures
1 Limits to investment due to national security and strategic
considerations Increasing
Table 2 NTMs from the US perspective
Rank NTM or Diverging Regulation Trend
Trade measures
1 Government support for Airbus Constant
2 Government support for Airbus Suppliers Increasing
3 Government support for Aircraft Engines producers Constant
4 Prior authorisation for sensitive product categories Constant
5 Trade measures due to technical specifications Constant
6
Double certification need caused by The European Union’s Authorized
Economic Operator (AEO) program and the US Customs-Trade
Partnership against Terrorism (C-TPAT)
Decreasing
7 EU Patent System Constant
Investment measures
1 Limits to investment due to national security and strategic
considerations Increasing
66
Automotives industry
Table 3 NTMs from the EU perspective
Rank NTM or Diverging Regulation Trend
Trade measures
1
US product standards (FMVSS) differ from the international standards
(UNECE); for instance with regards to roof crush resistance and
occupant protection in interior impact.
Constant
2 Taxation of cars with high fuel consumption (CAFE = Corporate
Average Fuel Economy) Increasing
3 Gas Guzzler Tax Increasing
4 American Automobile Labelling Act
5 Very limited access of foreign companies to US government subsidy
programmes (e.g. Technology Innovation Programme) Constant
6 Different cetane levels in diesel fuel between EU and US – leading costs
to tune engines to these different levels Constant
7
Double certification need caused by The European Union’s Authorized
Economic Operator (AEO) program and the US Customs-Trade
Partnership against Terrorism (C-TPAT)
Decreasing
8 Reporting requirement on container transport: 10+2 regulation Increasing
9 Buy American Act, which causes measures affecting access to the US
government procurement markets Increasing
10 US Intellectual property right system (with first to invent principle) Constant
Investment measures
1 State level investment regulations on tax benefits and infrastructure that
differ Constant
2
US product standards (FMVSS) differ from the international standards
(UNECE); for instance with regards to roof crush resistance and
occupant protection in interior impact
Constant
3
Civil Penalties for violations of statutes and regulations NHTSA
pertaining to motor vehicle safety, bumper standards, and consumer
information.
Constant
67
Table 4 NTMs from the US perspective
Rank NTM or Diverging Regulation Trend
Trade measures
1
EU/international product standards (UNECE) differ from US standards
(FMVSS). Constant
2 Trade measures due to numerous technical specifications. Increasing
3 REACH regulation Decreasing
4 Safety and health measures Constant
5 Different cetane levels in diesel fuel between EU and US – leading to
costs to tune engines to these different levels Constant
6 Patent system Constant
7
Double certification need caused by the European Union’s Authorized
Economic Operator (AEO) program and the US Customs-Trade
Partnership against Terrorism (C-TPAT)
Decreasing
8 Customs administration differences between EU Member States Decreasing
Investment measures
1 EU/international product standards (UNECE) differ from US standards
(FMVSS). Decreasing
2 Security related prohibitions on investments Constant
3 EU member state level differences in investment regimes (e.g. infra-
structure, taxes, training or R&D support) Decreasing
Chemicals industry
Table 5 NTMs from the EU perspective
Rank NTM or Diverging Regulation Trend
Trade measures
1 Classification and labelling requirements for chemical products
Constant -
Decreasing in
longer term
(UN GHS)
2 Threat of 100% container scanning Increasing
3 Restrictions on use of specific chemicals Constant
4 Different state level chemical security regulations Constant -
Increasing
5 Different local governments (below state level) implementing chemical
security regulations Constant
6 Evaluation and notification of new significant new uses Increasing
7 Pesticide/biocide testing and evaluation for licensing Increasing
8 Indirect effects from food safety legislation – packaging in contact with
food Increasing
Investment measures
1 Discrimination of foreign companies in public procurement Constant
2 Foreign Investment and National Security Act, which can
create excess costs for FDI Constant
3 Very limited access of foreign companies to US government support
programmes (e.g. Technology Innovation Programme) Constant
4 Tax Code Reporting Requirements applied to foreign owned companies Constant
5 US Intellectual Property Right system (with first to invent principle) Constant
6 US Accounting Standards (affected by Sarbanes-Oxley Act) Increasing
68
Table 6 NTMs from the US perspective
Rank NTM or Diverging Regulation Trend
Trade measures
1
Divergence in risk assessment requirements between REACH and
TSCA Constant
2 Classification of chemicals under the Dangerous Substances
Directive Decreasing
3 RoHS and restrictions on hazardous substances Constant -
increasing
4 Product Labelling requirements (including ecolabelling) Constant
5 Testing requirements / Risk assessment for plant protection and
biocidal products Constant
6
Double certification need caused by the European Union’s Authorised
Economic Operator (AEO) program and the US Customs-Trade
Partnership against Terrorism (C-TPAT)
Decreasing
7 Different Member State legislation on chemicals security Constant
8 Customs administration differences between EU Member States Constant
9 Pre-shipment inspections Increasing
Investment measures
1 EU Intellectual property rights definition which is less broad than
the US ones Constant
Communications services industry
Table 7 NTMs from the EU perspective
Rank NTM or Diverging Regulation Trend
Trade measures
1 ATSC technology which is not compatible with DVB-T standards in EU Constant
2 Licenses Decreasing
3 US standards differ from international standards Constant
4 Monopoly of the USPS in the US market Decreasing
5 Restricted access to high speed internet connections for foreign firms Constant
6 US Intellectual property right system (with first to invent principle) Constant
7 Transfer delays, slow custom procedures (postal) Constant
8 US Customs Refusal of “Made in EU” Constant
Investment measures
1 Restrictions in the access to local finance Constant
2 Discrimination of foreign companies in public procurement Constant
3 Limits imposed by CFIUS on the number/share of (foreign) firms Constant
4 Requirements regarding professional qualifications for foreign firms Constant
5 Very limited access of foreign companies to US government subsidy
programmes (e.g. Technology Innovation Programme) Constant
6 Tax Code Reporting Requirements applied to foreign owned
corporations Decreasing
7 Limitations on land ownership Constant
8 Buy American Act, which causes measures affecting Increasing
69
Table 8 NTMs from the US perspective
Rank NTM or Diverging Regulation Trend
Trade measures
1
Delays in implementation of opening up telecom markets in EU in
some member states Decreasing
2 ATSC technology which is not compatible with DVB-T standards in
EU Constant
3 National monopolies in the postal market Decreasing
Investment measures
1 Delays in implementing Utilities directive Decreasing
2 National monopolies in the postal markets in some EU member states Decreasing
3 Takeover directive Constant
4 Use of defensive measures against hostile takeovers Constant
5 Specific EU member legislations and practices related to utilities
investments Decreasing
Cosmetics industry
Table 9 NTMs from the EU perspective
Rank NTM or Diverging Regulation Trend
Trade measures
1 Restrictions on use of chemicals used in cosmetics Constant
2 Classification and labelling requirements for chemical products
Constant -
Decreasing
UN GHS1
3 US state level safety certifications Constant
4 Threat of 100% container scanning Increasing
5 Prior authorisation for sensitive product categories Constant
6 Restrictions on formulation changes Constant
7 Labelling differences Constant
Investment measures
1 Discrimination of foreign companies in access to government subsidy
programmes Decreasing
2 Discrimination foreign firms in public procurement Constant
3 Foreign Investment and National Security Act, which can create excess
costs for FDI Constant
4 US Intellectual Property Right system (with first to invent principle) Constant
5 US Accounting Standards (affected by SOX) Increasing
70
Table 10 NTMs from the US perspective
Rank NTM or Diverging Regulation Trend
Trade measures
1
Animal testing: a ban on animal testing of cosmetic products and on
products containing ingredients tested on animals Increasing
2 Product notifications differ from Member State to Member State Constant
3 Notification: Compulsory in EU, not in US Constant
4 Evaluation by SCCP Increasing
5 Access to information – different requirements in US Increasing
6 Use of CMR substances Constant
7 Differing requirements for labelling products Increasing
8 US non-retail products exempt from certain labelling requirements but
not in the EU Constant
Investment measures
1 A ban on animal testing of cosmetic products and on products
containing ingredients tested on animals Increasing
2 Product notifications differ from Member State to Member State. Increasing
Electronics industry
Table 11 NTMs from the EU perspective
Rank NTM or Diverging Regulation Trend
Trade measures
1 US product standards that differ from international standards Constant
2 US state level safety certifications requirements Increasing
3 3rd party testing for import products with EU declarations of conformity Constant
4 Non-transparency of standards Increasing
5 Energy Conservation Program for Commercial and Industrial Equipment
(EPCA) Increasing
6 Safety of electrical and electronics products Nonharmonized standards –
differences per State Increasing
7
Standards developed by different bodies, e.g. the Occupational Safety and
Health Administration (OSHA), and National Electric Code and Industry
Safety Standards, e. g. Underwriter’s Laboratories (UL)
Constant
8 Encryption Control Policy not in line with the Wassenaar arrangement
(new US requirements on crypto functionality). Constant
Investment measures
1 Nationality or residence requirements for staff Increasing
2 US legal liability philosophy Increasing
3 US IPR system (with first to invent principle) Increasing
4 US government aid and subsidies (e.g. Advanced tech programme),
accessible only for US companies Constant
71
Table 12 NTMs from the US perspective
Rank NTM or Diverging Regulation Trend
Trade measures
1 Restriction on Hazardous Substances (RoHS) Directive Constant
2 WEEE Decreasing
3 REACH regulation Constant
4 Several directives for energy efficiency, e.g. Framework for Energy-
using Products, Low Voltage Directive Increasing
5 EU standards in the field of information technology and
telecommunications Decreasing
6 Differences in testing standards and certification procedures Decreasing
7 Customs and border protection/controls Decreasing
8 European patent system Constant
9 Pre-shipment inspections Increasing
Investment measures
1 EU Data Protection Directive (1995/46) Constant
2 European patent system Constant
3 Local licensing requirements Constant
4 Requirement for professional qualifications for foreign firms Decreasing
Financial services industry
Table 13 NTMs from the EU perspective
Rank NTM or Diverging Regulation Trend
Trade measures
1
Discriminatory taxation of European financial institutions that
apply IFRS instead of US GAAP1
Decreasing
2
Section 319 of the PATRIOT Act that requires US correspondent
banks to maintain certain records concerning foreign banks with a
US correspondent account
Increasing
3 Tax Code Reporting Requirements applied to foreign-owned
corporations Constant
4 Registration requirements for foreign banks in the US providing
global custody and related services directly to US investors Increasing
5 Differences in the implementation of the Basle II framework for
banks Constant
6 Sarbanes Oxley Act Constant
7 Lack of convergence in the regulation of financial services across
US states Increasing
Investment measures
1 Duplicative consolidated supervision of EU Central Bank and
Federal Reserve Constant
2 Local licencing requirements Constant
3 Absence of convergence regulations in reporting standards Decreasing
4 Requirement for professional qualifications for foreign firms Decreasing
72
Table 14 NTMs from the US perspective
Rank NTM or Diverging Regulation Trend
Trade measures
1
Differences in the implementation of the Basle II framework for
banks Constant
2 Auditor oversight and lack of cooperation between EU and US
financial regulators Decreasing
3 EU intellectual property rights which are less broad than the
US ones Constant
4
US and other investment firms from non-EU countries may
operate with authorisation from Italy’s securities market
regulator, CONSOB, only.
Constant
5 Different regulatory requirements and local licensing
requirements Decreasing
6 National treatment may be applied to non-EC branches of Foreign
Credit Institutions (FCIs) on the basis of reciprocity. Constant
7 Absence of convergence between EU Member States Constant
Investment measures
1 Individual Member State authorisation and regulation applied to
direct branches of non-EU financial service institutions Constant
2 Government procurement only open to national companies Decreasing
Food & beverages industry
Table 15 NTMs from the EU perspective
Rank NTM or Diverging Regulation Trend
Trade measures
1
Direct and indirect government support by means of subsidies,
protective legislation and tax policies to US farmers Constant
2 Container Security Initiative, causing delays for all sea cargo Constant
3 US product standards which differ from international standards Constant
4 Custom surcharges Constant
5
US prohibition to register/renew a trademark or a trade name
which is identical or similar to a trademark or trade name used
in connection with a confiscated business
Constant -
increasing
6 Threat of 100% container scanning Constant
7
Double certification need caused by the European Union’s
Authorized Economic Operator (AEO) program and the US
Customs-Trade Partnership against Terrorism (C-TPAT)
Decreasing
8 US Customs Refusal of “Made in EU” Constant
Investment measures
1
Need to get a re-export license for products that contain content
of US origin and that have both commercial and military or
proliferation applications
Increasing
2 US Buy American Act Constant
3 High and different level of SPS measures Increasing
4 State-level regulations that differ across states Constant
73
Table 16 NTMs from the US perspective
Rank NTM or Diverging Regulation Trend
Trade measures
1
EU product standards (SPS) which are higher than international
standards Constant
2 Custom surcharges Constant
3 EU labelling requirement laws Increasing
4 Double certification need caused by the European Union’s AOE
program and the US C-TPAT) Decreasing
5 Direct and indirect government support by means of
protective legislation and tax policies to EU farmers Constant
6 Traceability and labelling of biotechnology foods Increasing
7 Maximum limits on mycotoxins for a variety of foodstuffs
(including cereals, fruit and nuts) Constant
8 US product requirement to classify them as “organic” Constant
Investment measures
1 Different Member State- level regulations on some food
products Constant
2 High level of food and safety standards resulting in high SPS
measures Increasing
3 Long and difficult authorisation procedures Constant
Insurance services industry
Table 17 NTMs from the EU perspective
Rank NTM or Diverging Regulation Trend
Trade measures
1
Collateral requirements (or especially US reinsurance
services) Increasing
2 Lack of federal legislation and differences in state legislation Constant
3 Federal excise tax for insurers (cascading tax) Increasing
Investment measures
1 Diverging state-level regulations Increasing
2 No operating licenses for government controlled insurance
companies Constant
74
Table 18 NTMs from the US perspective
Rank NTM or Diverging Regulation Trend
Trade measures
1
Solvency II regulations – equivalence determination and
group-wide supervision Increasing
2 Other licenses Constant
3 Lack of convergence in insurance and reinsurance regulation
in the EU Constant
4 Compulsory national services Decreasing
5 Regulatory capital requirements in reinsurance Increasing
Investment measures
1 “Reciprocal” national treatment clauses in EU banking,
insurance and investment services directives Decreasing
2 The proposed EC legislation known as Solvency II Increasing
3 Requirements regarding professional qualifications for
foreign firms Decreasing
Office Information & Communications Equipment Industry
Table 19 NTMs from the EU perspective
Rank NTM or Diverging Regulation Trend
Trade measures
1
US product standards which differ from the international
standards Constant
2 US state-level safety and power supply certifications Increasing
3 Third party testing for import products with EU declarations
of conformity Constant
4 Non-transparency of standards Increasing
5 Conformity assessment procedures Increasing
6 Threat of 100% container scanning Increasing
7 Energy efficiency programme for certain commercial and
industrial equipment Constant
8 US patent legislation Constant
Investment measures
1 Nationality or residence requirements for staff Increasing
2 US legal liability philosophy Increasing
3 US product standards which differ from the international
standards Increasing
4 Safety of electrical and electronics products, nonharmonised
standards, different from state to state Constant
5 US intellectual property rights system (with first to invent
principle) Increasing
75
Table 20 NTMs from the US perspective
Rank NTM or Diverging Regulation Trend
Trade measures
1 Waste electric and electronic equipment directive Decreasing
2 Other technical measures Decreasing
3 Customs and border protection Decreasing
4 EU standards in the field of information technology and
telecommunications Decreasing
5 European patent system Constant
6 Transfer delays, slow custom procedures
7
Council Decision 93/465/EEC concerning the modules for
the various phases of the conformity assessment
procedures
Constant
8 EU Electromagnetic Compatibility requirements Constant
Investment measures
1 Waste electric and electronic equipment directive Decreasing
2 EU Member States to adopt DVB-H as the main
technology for networks Increasing
3 Other technical measures Decreasing
4 European patent system Constant
5 Local licensing requirements Constant
76
Pharmaceuticals industry
Table 21 NTMs from the EU perspective
Rank NTM or Diverging Regulation Trend
Trade measures
1 Restrictions or bans on use of specific chemicals
Constant -
Increasing
2 Classification and labelling requirements for chemical
products
Constant -
Decreasing
3 Threat of 100% container scanning Increasing
4 FDA New Drug Approval Process Increasing
5 Drug precursor legislation Constant
6
Double certification need caused by the European
Union Authorized Economic Operator programme and
the US Customs CTPAT program
Constant
7 US state level safety certifications Constant -
Increasing
8 Prior authorization for sensitive product categories Increasing
Investment measures
1
Very limited access of foreign companies to US
government subsidy programmes (e.g. Technology
Innovation Programme)
Decreasing
2 Restricted access for foreign companies in public
procurement (especially due to BAA) Constant
3 Foreign Investment and National Security Act
(FINSA), which can create excess costs for FDI Constant
4 Long/difficult authorisation and registration procedures Increasing
5 US Intellectual Property Right system (with first to
invent principle) Constant
77
Table 22 NTMs from the US perspective
Rank NTM or Diverging Regulation Trend
Trade measures
1 EU pricing policy – Member State differences Increasing
2 Health technology assessment differences Increasing
3 Different rules in various Member States
concerning authorization of pharmaceuticals Constant
4 International reference pricing Constant
5 Therapeutic reference pricing Constant
6 Differences in the enforcement of the unified customs
system across EU Member States Decreasing
7 Parallel trade allowance Constant -
Decreasing
8 Restrictions concerning information distribution to
patients Constant
Investment measures
1 Export restraint arrangements Increasing
2 Different rules in different Member States concerning
authorization of pharmaceuticals
Decreasing -
Constant
3 Prohibitions against investment by foreign companies
(e.g. security, sensitive products, etc.) Increasing
78
Transportation services industry
Table 23 NTMs from the EU perspective
Rank NTM or Diverging Regulation Trend
Trade measures
1 Foreign ownership restrictions Constant
2
Fly American Act, which demands that all federal
government-funded flights are provided by US-flag air
carriers
Constant
3
Requirement for all items procured/owned by the
military departments be carried exclusively on US-flag
vessels
Constant
4 Proposal of 100% container scanning Increasing
5 Environmental regulations (e.g. Clean Air Act) Increasing
6 Requirement for at least 50% of all US government
generated cargos to be transported on US-flag vessels Constant
7 Security data collection (e.g. fingerprints) Constant
8
Requirement for 100% of any cargos generated by US
Government loans (i.e., commodities financed by
Export- Import Bank loans) to be carried on US flag
vessels
Constant
Investment measures
1 Foreign ownership restrictions Constant
2 Restrictions on the use of foreign temporary workers Constant
3
Requirement for US airlines to be under the majority
control of US citizens in order to be licensed for
operation.
Decreasing
4 Lack of unified state level investment legislation
across US Constant
79
Table 24 NTMs from the US perspective
Rank NTM or Diverging Regulation Trend
Trade measures
1 Restrictions on foreign ownership and control Constant
2
Double certification need caused by the European
Union’s Authorized Economic Operator (AEO)
program and the U.S. Customs
Constant
3 Differences in privacy laws vs. security
considerations Increasing
4 Introduction of ETS (future) Increasing
5 Operating restrictions at airports (access to customs,
flying times, etc.) Constant
6
Technical EU regulations (e.g. product
characteristics requirements, labelling requirements,
testing requirements, etc.)
Constant
7 Differences in the enforcement of the unified
customs system across EU member states Decreasing
Investment measures
1 Restrictions on the use of foreign temporary workers Constant
2
Lack of unified investment legislation across EU
member states. (This does not apply to air
transportation services.)
Decreasing
3 Airline investments limited due to strategic &
security concerns in the EU Constant
