The European Parliament has officially given the green light to begin formal talks between European and American officials toward the Transatlantic Trade and Investment Partnership.
Official talks will now begin as soon as U.S. officials start negotiations, which means discussions will likely start next month or so, according to the European Union.
EU member states also sent out a list of objectives the European Commission should follow when negotiating.
When considering an agreement, EU officials need to focus on removing tariffs and duties on industrial and agricultural goods, reconciling differences in EU and U.S. origin rules, and opening up markets, on both sides of the pond, to full investment, the EU states said. Regulatory differences between the countries are also a major hurdle that needs to be overcome. Finally, intellectual property concerns, and the sustainability and environmental aspects of trade are also important to EU member states.
EU Minister Richard Bruton, who has been working since January to jump start negotiations, has finally been able to secure a mandate from EU trade ministers to move forward with trade talks. Among the benefits of a trade-agreement, he said, are a 0.5-percent yearly boost in GDP for Europe and the addition of 400,000 jobs.
“The transatlantic trading relationship is the most significant in our global economy, accounting for more than 15 million jobs on either side of the ocean,” Bruton said in a statement. “But its full potential is far from being tapped. A new deal offers significant opportunities to indigenous firms in all sectors to export to the huge U.S. market. It will also benefit U.S. firms in Ireland who already employ over 115,000 people directly.”
Parliament’s international trade committee chair, Vital Moreira, shared Bruton’s enthusiasm for the deal, but warned that the body will only give a final consent to a deal that is in the “best interest” of European citizens.
"The European Parliament clearly welcomes the launch of trade negotiations with the U.S. and will monitor closely the entire process, which should be as transparent as possible,” he said.
Member states' concerns have been heard by parliament, and when the negotiating is complete, the states, in the guise of the European Commission, will need to approve any agreement. According to the commission, member states will also maintain an active role during the negotiations and will be allowed to submit feedback to the negotiating team.
“This deal will be about streamlining our economies where it makes sense to do so by making it easier and faster for our companies to do business together. In turn, that will have the knock-on effect of real savings for consumers as well as the creation of tens of thousands of jobs for Europeans,” EU Trade Commissioner Karel De Gucht said in a statement. “Domestic environmental, labor, privacy or safety standards, and policies to protect consumers cannot and will not be lowered as a means to promote trade and investment.”
According to Eurostat, the EU’s statistical office, more than 60 percent of the foreign direct investment coming into the EU in 2012 came from the United States, a figure reaching $132 billion. The 27 member states in the EU only sent $20.1 billion in trade to the U.S. last year.
A report released June 17 by the Bertelsmann Foundation found that the United States would achieve the greatest GDP per-capita growth from such a deal, where growth would outpace that of the average EU member state by 8.4 percent. In Europe, GDP growth would be the highest in Great Britain at 10 percent, which would still lag behind the United States’ expected rate of 13.4 percent.
The study also found that the main European beneficiaries of the agreement would be smaller, export-oriented economies. Larger economies like France and Germany would benefit less from an EU-U.S. deal.
One unintended consequence of an agreement, the study found, would be a decrease in trade from other countries around the world. U.S. trade with Canada and Mexico would likely decline by 9.5 percent and 7.2 percent, respectively, if a deal were to come to fruition. Countries in Africa and Central Asia would be losers in any transatlantic deal, the foundation found.
"A transatlantic free trade agreement would be an important tool for increased growth and employment in Europe," Bertelsmann Foundation’s chief executive officer, Aart De Geus, said in a statement. "Especially the southern Europeans, who have been shaken by crises, would benefit from this to an above-average degree. However, social welfare gains that arise for the EU and U.S. should also be an incentive to show a readiness to compromise toward the losers of the agreement in future multilateral negotiations.” - Jon Ross