EU-US Relations: Biggest Free Trade Agreement Ever Coming in Sight

Economic relations between the European Union and the United States are one of the most important ones in the world. Altogether, both partners account for almost half of the world’s GDP and trades in goods and services reach almost 2 billion EUR every day. Despite these facts, there are still barriers to trade on both sides of the Atlantic and therefore the announcement to start negotiations for a Transatlantic Trade and Investment Partnership (TTIP) was welcomed especially by the business community.

The estimates of GDP growth on both sides vary from 0.5 percent to very optimistic 3.5 percent; however mutual benefits are clear. The agreement should focus mainly on three areas, which are market access, regulatory issues and non-tariff barriers, and new ways of cooperation in the field of rules and principles. Although tariffs are in general very low, business community welcomes the tendency to lessen them as closest as possible to zero. Furthermore, the promise to negotiate complete opening of services market is appreciated as well.

The overall openness of both markets should also bring new job opportunities, which is one of the crucial elements for the EU. If properly done, harmonization of regulatory frameworks and removal of non-tariff barriers should reflect in annual GDP growth of more than 100 billion EUR. As TTIP has the ambition to be the biggest free trade agreement ever, the investment part will be an important part of the negotiations as well, giving the fact that together; both partners have investment stocks of more than 2 trillion EUR. However, the ambition is to further deepen the ties and attract even more foreign direct investment into the EU and vice versa.

While the business organizations welcome the initiative to start and conclude the negotiations as soon as possible, they realize that some part of TTIP will be challenging, especially in the field of non-tariff barriers, standardization, protection of IPR or access to government procurement. Despite that, they urge EU member states to swiftly adopt negotiating mandate so that the European Commission could start to strengthen economic bonds between both parties.