ECIPE PRESENTATION » Natalia Macyra Trade Policy Analyst, European Centre for International Political Economy (ECIPE) Implications of the Transatlantic Trade & Investment Partnership for the Global Trading System 4th ‘Turkey - Europe Forum’, Istanbul 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 2 ‣ 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% ( )

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 6 ‣ 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: Changes in per capita income Tariff-only scenario:NTB scenario: China -0,2%China -0,4% India -2,5%India -1,7% Mexico -1,1%Mexico -7,2% Canada -0,7%Canada -9,5% Turkey – 0,3%Turkey -2,5% Brazil +0,5%Brazil +2,5%

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