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free trade deal


The Transatlantic Trade and Investment Partnership (TTIP) is a free-trade deal intending to boost the economies of the EU and the US by removing or reducing barriers to trade and foreign investment.

According to President Barack Obama said, the TTIP would promote “new growth and jobs on both sides of the Atlantic”, he said when the talks were launched. Critics reject that claim.

A study by the Centre for Economic Policy Research (CEPR) – done for the European Commission – estimated the potential gains for the EU as up to €119 billion ($134 billion) a year and €95 billion ($107 billion) for the US. However, it means that for a family of four that comes to €545 per year in the EU and €655 in the US. Wages would be higher, by 0.5% in the EU and just under 0.4% in the US.

How would TTIP work?

By eliminating almost all tariffs (taxes applied only to imported goods) on trade between the US and the EU.

However, the tariffs imposed by the US and EU are already relatively low for the most part, although there are some exceptions in (e.g. farm produce and textiles).

The bigger gains envisaged would come from reducing what are called non-tariff barriers. In particular the two sides think they can promote trade through what they call regulatory co-operation.

The European Commission says that rules in EU and the US often achieve the same level of consumer safety and product quality, but differ in their technical details and their methods for ensuring that firms have met the rules.

One of the aims of TTIP is to reduce this burden on business. One option is recognizing one another’s standards. That’s under consideration for many types of goods. They also plan to co-operate more closely on new regulation.

That basic idea is that by reducing the cost of exporting, TTIP would encourage more of it.

However, the European Commission says an agreement in the foreign investment area would prohibit discrimination against foreign investors, expropriation, denying access to the courts and arbitrary and abusive treatment.

If a foreign investor felt these rules had been violated, they would have access to a system known as investor state dispute settlement (ISDS). This is a system of tribunals that could award compensation to the investor if they had lost money as a result of a breach of the rules in the agreement.What is TTIP

TTIP controversy:


Much of the concern is about the regulatory aspect: that it would lead to lower standards of consumer and environmental protection and safety at work. A group of 170 European civil society organizations said in a statement that regulatory co-operation as envisaged in TTIP would result in “downward harmonization”.

There is also a concern that TTIP could undermine governments’ right to regulate in the public interest. They say it will also give business groups a disproportionate influence over new regulation, and therefore, they argue, it is undemocratic.


There are also questions about whether a TTIP agreement would really stimulate more investment.

ISDS has generated a lot of heated opposition. One complaint is that it will discourage governments from regulating in the public interest.

ISDS arrangements are common in international investment agreements.

However, a research by the UN Commission on Trade and Development suggests investors have made more use of the tribunal system in recent years.

TTIP timetable

A summit of European leaders in December called for a comprehensive agreement by the end of 2015, though the European Trade Commissioner Cecilia Malmström has said that is probably unrealistic.

TTIP would then have to be approved by the European Parliament and European Trade Ministers. The Ministers usually vote on trade by what is called qualified majority though unanimity might be required – that is both a legal question and a matter of political judgement.

Depending on the legal nature of the final agreement it might also need to be approved by all the EU member states, and Commissioner Cecilia Malmström has said that is likely to be necessary.

TTIP will need approval by the US Congress. President Barack Obama is struggling unsuccessfully so far – to get Congress to give him what is called Trade Promotion Authority which would make US ratification less difficult.

In the same time there is a global trade negotiation under way in the World Trade Organization (WTO). It is known as the Doha Round, because that is where it was launched – back in 2001.

Other big trade deal is the Trans Pacific Partnership (TPP), which involves 11 countries, including the US and Japan (but not China). TPP is also still under negotiation.

A massive protest against the Transatlantic Trade and Investment Partnership (TTIP), the planned free-trade deal between the EU and US, took place in Berlin on October 10.

Organizers said 250,000 people took part in the rally; police put the figure at around 100,000.

Opponents of the TTIP say it is undemocratic and threatens consumer and worker rights.

However, supporters of the deal, which lowers trade barriers, say it would boost economies and create jobs.Berlin anti TTIP protest

Hundreds of buses shuttled protesters to the demonstration in Berlin.

“We are here because we do not want to leave the future to markets, but on the contrary to save democracy,” Michael Mueller, president of the ecological organization German Friends of Nature, told AFP.

The German government supports the trade pact, with Economy Minister Sigmar Gabriel warning of “scaremongering” in a letter published in several German newspapers.

Talks on the TTIP are due to finish in 2016. If agreed it would be the biggest trade deal of its kind.


The Trans-Pacific Partnership (TPP) – the world’s biggest ever trade deal – was signed into existence on October 5.

The TPP cuts trade tariffs and sets common standards in trade for 12 Pacific rim countries, including the United States and Japan.

It marks the end of five years of often bitter and tense negotiations.

The deal covers about 40% of the world economy and was signed after five days of talks in Atlanta in the US.

Supporters say it could be worth billions of dollars to the countries involved but critics say it was negotiated in secret and is biased towards corporations.TPP trade deal reached

Despite the success of the negotiations, the deal still has to be ratified by lawmakers in each country.

For President Barack Obama, the trade deal is a major victory.

He said: “This partnership levels the playing field for our farmers, ranchers, and manufacturers by eliminating more than 18,000 taxes that various countries put on our products.”

Senator Bernie Sanders, a Democratic presidential candidate, said: “Wall Street and other big corporations have won again.”

Bernie Sanders said the deal would cost US jobs and hurt consumers and that he would “do all that I can to defeat this agreement” in Congress.

China was not involved in the agreement, and the Obama administration is hoping it will be forced to accept most of the standards laid down by TTP.

He said: “When more than 95% of our potential customers live outside our borders, we can’t let countries like China write the rules of the global economy.

“We should write those rules, opening new markets to American products while setting high standards for protecting workers and preserving our environment.”

Japan’s PM Shinzo Abe told reporters the deal was a “major outcome not just for Japan but also for the future of the Asia-Pacific” region.

The final round of talks was delayed by negotiations over how long pharmaceutical corporations should be allowed to keep a monopoly period on their drugs.

The US wanted 12 years of protection, saying that by guaranteeing revenues over a long period it encouraged companies to invest in new research.

Australia, New Zealand and several public health groups argued for five years before allowing cheaper generic or “copy-cat” into the market.

They said a shorter patent would bring down drug costs for health services and bring lifesaving medicine to poorer patients.

Even though a compromise was reached, no definitive protection period was confirmed.

Speaking at a press conference following the deal, US Trade Representative Michael Froman hailed the deal as the first to set a period of protection for patents on new drugs, which he said would “incentivize” drug producers.

However, the Washington-based Biotechnology Industry Association said it was “very disappointed” by the reports that the agreement fell short of the 12-year protections sought by the US.

The auto industry was another area of intense negotiation with countries agonizing over how much of a vehicle had to be manufactured within the TPP countries in order to qualify for duty-free status.

Agriculture proved another sticking point with countries like New Zealand wanting more access to markets in Canada, Mexico, Japan and the US.

Canada meanwhile fought to keep access to its domestic dairy and poultry markets strictly limited. The issue and its impact on rural voters is particularly sensitive ahead of the federal election in two weeks time.