This month, President Obama and European Commission President Barroso and European Council President Van Rompuy announced the embarkation by the US and the EU on an ambitious project, dubbed “the biggest trade pact of all time”. This pact, known as The Transatlantic Trade and Investment Partnership (TTIP), aims at removing trade barriers between the two blocs in a number of sectors, thereby making it easier to buy and sell goods and services between the EU and the US.
The approval of such a trade pact would create an economic force to be reckoned with on a global scale. The United States and the EU account together for 30% of world trade and nearly half of global GDP. Such a partnership has been on the agenda for many years. However, the economic crisis has precipitated discussions on forging ahead, with the setting up of a High-Level Working Group in November 2011, co-chaired by the EU Trade Commissioner and the US Trade Representative.
The Working Group has been examining the proposal in-depth and has met up with officials and stakeholders on both sides representing various key fields, including business, environment, and consumer protection. According to its final report, no less than €2 billion are traded on a daily basis between the two blocs, who have directly invested more than €2.8 trillion on both sides of the Atlantic.
The Group analysed a number of options, including the elimination of tariffs and other barriers to trade and enhancing co-operation in order to develop rules and regulations in line with pre-established economic goals. This would also have a spill-over effect, since it would in turn set the regulatory benchmark on an international level for other global economies and give EU and US manufacturers the edge in penetrating other markets. In its final report published last February, the working group recommended that both blocs should proceed with negotiations in line with their respective domestic procedures.
Such an agreement will definitely boost much-needed growth and jobs in both the United States and the European Union, with the dismantling of tariffs and other barriers to trade between the two entities. This is no easy task, since both jurisdictions have set and implemented high standards in product safety and consumer protection in their territories. In fact, as things currently stand, exporters on both sides of the Atlantic would have to satisfy two sets of rules in order to place their products for sale in both territories, thereby pushing up administrative costs and creating unnecessary bureaucracy, which acts as a barrier to trade. The pact is intended to eliminate this dual process and thereby facilitate economic growth.
What is in it for citizens of both blocs? At an economic level, the elimination of barriers would enable both American and European manufacturers to penetrate markets on both sides of the Atlantic, thereby offering a wider choice of products and cheaper prices to US and EU citizens.
According to an independent study conducted by the London-based Centre of Economic Policy Research on behalf of the EU, such a partnership should result in savings for the EU of €119 billion annually – equivalent to €545 per average EU household, and savings of €95 billion annually for the US.
Formal negotiations are scheduled to commence this summer, with the United States Trade Representative being the main negotiator on behalf of the US. On the part of the EU, the role of negotiator has been entrusted to the European Commission headed by the European Trade Commissioner. Once negotiations are concluded, the final Agreement will be subject to the approval of the EU Parliament and all EU Member States for the European Union and by the US Congress for the US.
As EU citizens, Maltese business people stand to gain from this proposed partnership which will extending their free-trade foreign export markets beyond the Atlantic. The American Chamber of Commerce in Malta (AmCham-Malta) is keen to keep its members abreast of developments and opportunities which this pact may offer and plans to participate fully at both a local and international level, through its established network. A first step is the organisation of a Seminar in Malta in October to be addressed by both local and foreign speakers. Further information will be publicized in due course. Following the Seminar and feedback from its members, the Chamber will address particular issues and look into the implications of the TTIP on particular sectors.
Members are invited to approach AmCham Malta and put forward suggestions on firstname.lastname@example.org.
Tanya Sciberras Camilleri LL.D. is currently Honorary Secretary of AmCham Malta – The American Chamber of Commerce in Malta .