Trade Agreement with Side-Effects? European Union and United States to Negotiate Transatlantic Trade and Investment Partnership

Abstract:

At the G8 summit in Northern Ireland on June 17, the European Union and the United States kicked off the negotiations for a comprehensive Transatlantic Trade and Investment Partnership (TTIP) to reduce tariffs and non-tariff trade barriers. While the expected economic benefits for both sides would be more than welcome in an era of gloomy growth forecasts, a TTIP is not entirely without risks for global trade and the multilateral trading system.

The talks could tie up a considerable portion of EU and US negotiating capacity and divert attention from the WTO Doha Round. More broadly, potential trade-diverting effects could function to the detriment of other trading partners. Such side-effects should be avoided.

The 'high road' of international trade policy must remain the WTO, with bilateral agreements making sense only as a stepping stone to multilateral liberalisation. Alongside the TTIP talks, the Transatlantic Partners should therefore continue to push for a conclusion of the Doha Round. And the TTIP must be designed to be compatible with WTO rules.