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Thursday, August 22, 2013

Proposed Transatlantic Trade and Investment Partnership (TTIP): In Brief

Shayerah Ilias Akhtar
Specialist in International Trade and Finance

Vivian C. Jones
Specialist in International Trade and Finance

Congress has the constitutional authority to “regulate commerce with foreign nations.” Thus, it has an important legislative, oversight, and advisory role when trade agreements are being negotiated. The Transatlantic Trade and Investment Partnership (TTIP) is a proposed free trade agreement (FTA) being negotiated between the United States and the European Union (EU). Both sides envision the TTIP as a “comprehensive” and “high-standard” FTA. They seek, among other things, to increase market access through the elimination of barriers to trade and investment in goods, services, and agriculture, and enhance regulatory cooperation. The two sides also seek to use eventual TTIP commitments on the global scene: to advance trade liberalization; set rules and standards; and address challenges associated with the rising economic powers (REPs). The United States and the European Union held the first round of TTIP negotiations the week of July 8, 2013 in Washington, DC. The next round is scheduled for the week of October 7, 2013 in Brussels. 

Congressional interest.
Congress has a direct interest in the TTIP, both through influencing the Administration’s positions on issues in the negotiations and considering implementing legislation for any final TTIP agreement for it to enter into force. The 113
th Congress may consider the renewal of Trade Promotion Authority (TPA) for the TTIP. Many in Congress support liberalizing international trade, but there are divergent views among Members on the general role and direction of U.S. trade policy, as well as the costs and benefits of trade liberalization. Other Members are skeptical about trade liberalization, arguing that its costs and benefits are not equitably distributed among stakeholders. A transatlantic agreement would also likely have implications for a number of U.S. economic sectors of direct interest to Members of Congress. 

Market access.
Average U.S. and EU tariffs are already quite low. However, given the magnitude of the transatlantic relationship, further elimination and reduction of tariffs could yield significant economic gains. Certain aspects of market access negotiations may be controversial, for example, with respect to cross-border data flows. Nevertheless, most observers generally view tariffs as “low-hanging fruit” in the negotiations. 

Regulatory issues.
By contrast, regulatory issues are widely regarded by stakeholders as the core of the TTIP negotiations. Economic gains from greater regulatory compatibility could be significant. However, many observers have expressed some skepticism about whether a comprehensive agreement on regulatory issues between the two sides can be reached. There is also debate about whether financial services will be included in the scope of regulatory talks in the TTIP. 

Trade-related rules.
Broadly speaking, the United States and the European Union have more in common than differences. For instance, both sides generally have strong protections for investors, intellectual property rights, labor, and the environment. Compared to regulatory talks, negotiations of rules may not be as contentious for the two sides, although certain issues, such as investor-state arbitration and geographical indications may be highly contested. Data privacy issues also may receive greater scrutiny following the publication of classified information related to National Security Agency (NSA) surveillance activity in June 2013. To the extent that the TTIP is used as a vehicle for shaping the global rules-based trading system, debates about certain rules commitments—such as those related to state-owned enterprises and localization barriers to trade—may become more prominent.

Date of Report: July 23, 2013
Number of Pages: 14
Order Number: R43158
Price: $29.95

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