ECIPE PRESENTATION » 21.11.2013

1. ECIPE PRESENTATION » 21.11.2013 Implications of the Transatlantic Trade & Investment Partnershipfor the Global Trading System Natalia Macyra Trade Policy Analyst, European Centre for International Political Economy (ECIPE) 4th ‘Turkey - Europe Forum’, Istanbul 21-22 November 2012 Session: Transatlantic Trade and Investment Partnership and Its Effect on International Economic Security and Multidimensional Relations

2. Multilateral trading system: From GATT to Doha • In 1947, GATT - post-war world governance • Cold War - maintaining security through the development of prosperous and stable economies • Changes in trade policy objective after 1989 • 1990s the technological expansion, new patterns in global production chains and emerging economies in Asia • The increase of WTO members and trade volume covered by agreements in last twenty years • Traditional production patterns replaced by trade in value added • Reduction in tariffs for goods from 20-30% to 4% (1950 - 2006) 2

3. Shifting trade priorities • From WTO impasse to bilateral FTAs • Initial worries about ”undermining the multilateral system” now expunged • Bilateral, plurilateral and regional trade agreements being a response to the gridlock in the WTO negotiations • FTAs generally negotiated much more quickly than WTO accession • Yet little economic value in small FTAs (< 0.1% of GDP); failure of India & Mercosur • Refocusing on ’big’ trading partners, plurilaterals or RTAs since 2012 • New trade issues and barriers • From manufacturing tariffs to services and NTBs • Digital economy and regulation of Internet • Increasing attempts of exporting rules to mid-sized third countries • Regulatory harmonisation vs. regulatory co-operation 3

4. Previous attempts to create transatlantic agreement failed • 1995—’New Transatlantic Agenda’, Transatlantic Business Dialogue • 1998—New Transatlantic Marketplace • 2007—Transatlantic Economic Council (TEC) • Before 2011, only resulted in “open skies” and weak co-operation agreements on IP, innovation, energy and chemicals • The impasse in multilateral negotiation • Bilateral or regional negotiations as ways to gain new market access • Incentive to trade with major trading partner bigger than with smaller economies • Ideological drift between EU/US after 9/11 • The increased growth in emerging economies in Asia 4

5. Why TTIP now? • Response to emerging markets and Asia • Relative share of EU and US GDP diminishing • Necessity to coordinate against BRICs • Liberal, free trade order replaced by priority to domestic protection or foreign policy • New era of economic statecraft • The economics back at ‘the heart of foreign policy‘ • Trade expansion as a core objective for Obama second term • Strong links to trade in the EU ‘Jobs and Growth’ policy • An answer to economic and political needs • Serving only political purposes results in a weaker commitments • A reaction to the potential economic loss • ‘Lock-in mechanism ‘ of trade agreements as an anchor for domestic trade and related policy reform 5

6. Economic impact of transatlantic agreement • Global income increase by almost US$130 billion annually • 5% of NTB reduction between the US and EU = 1% NTB reduction for the 3rd country • Improvements in market access for third countries Deep liberalization increases real income of 3,27% • Tariff-only reduction results in growth of 0,1% • Economic impact on partner countries: 6

7. Multidimensional implications of TTIP • Bringing comprehensive liberalization in transatlantic trade • Mutual interest in trade openness in both countries • Similarities in values, culture, size and structure of the economy • Possibility to improve the economic situation and recovery from the crisis • Complex impact on the world trading system • Strengthening the existing rules • Establishing a set of regulation in a new areas • An anchor for trade and related policy reforms • New areas for trade liberalization • Non-tariff barriers, investments, government procurement, IPR • Regulatory cooperation and standard harmonization, energy and environmental standards • Internet and digital economy • The ‘gold standard’ for deep and comprehensive global trade and investment integrations • Only in case of comprehensive agreement going behind tariff liberalization 7