Europe Looks at TPP Approval as Mostly Positive for TTIP (10/30)     Print

 By Owen Phelps, European Affairs Editorial Assistant

On the morning of October 5th, the United States and 11 Pacific Ocean nations, comprising 40% of the world’s economy, finalized a landmark free trade agreement (FTA) that has been seven years in the making.

 The Trans Pacific Partnership (TPP) – meant to streamline investment, reduce tariffs, and cut business costs – is a momentous piece of diplomacy, not only because it is the largest regional trade agreement in history, but it is further evidence of Washington’s pivot to Asia in the face of China’s growing global influence.

Despite the inevitable political headwinds that TPP faces as the agreement enters the approval process in the U.S. Congress, many leaders in the EU are hopeful that the resolution of the TPP will allow them to speed up negotiations on their own trade agreement with the United States: the Transatlantic Trade and Investment Partnership (TTIP). In a meeting in Washington with U.S. Trade Representative, Michael Froman, the European Trade Commissioner Cecilia Malmstrom said that the conclusion of TPP would help accelerate negotiations between the European Union and the United States government: “It is… good news for the trade negotiations between the U.S. and the EU because with TPP done, we will be able to approach our TTIP negotiations with even greater focus on both sides.”

In a speech before the Economic, Social and Environmental Council in Paris on October 28th, EU Commission President Jean-Claude Juncker was characteristically blunt about the stakes at hand. “If we cannot reconcile the viewpoints of Americans and our own in a balanced and symmetric way, we will be the losers in the construction of tomorrow’s global trading system. If tomorrow, we want the rules and norms of trade to be set by the United States and our Asian friends, we should abstain. But, if we want to maintain our influence on the big questions that are at the heart of the world’s future, then, we must act. “ Added Dutch MEP, and coordinator of the European Parliament’s International Trade Committee, Marietje Schaake “The conclusion of TPP should remind Europe that we will either be driving the rules and standards for global trade, or other countries will set their own standards.”

The Transatlantic Trade and Investment Partnership (TTIP) with the United States is calculated to bring in $100 billion to both economies and to help contribute an additional 0.5% to Europe’s GDP. It will also supply what the EU Commission calls, “A permanent increase in the amount of wealth that the European and American economies can produce every year.”

As the world’s largest economy, the European Union has been actively pursuing free trade agreements with with TPP countries such as Mexico, Peru, and Chile, and looks to expand trade agreements with Japan, Malaysia, Australia and New Zealand. Links between Europe and these Pacific Rim nations are crucial in offsetting any lost trade which may occur between TPP countries and the EU.

TTIP could help Europe address the possible consequences of increased trade among TPP countries. A report authored by Hosul Lee-Makiyama, the director of the European Centre for International Political Economy predicted that Europe will lose 0.1% of its aggregate income due to U.S. trade with Asia. Such losses would be balanced, at least in part, by the introduction of TTIP, Lee-Makiyama argues.

In addition, TTIP could help immunize Europe from China’s economic fluctuations. Since its meteoritic rise on the world’s economic stage, China has become Europe’s second largest trading partner behind the US, and the EU is China’s largest trading partner. Yet this relationship between the economies of Europe and China means that growth in Europe is linked to the health of China’s economy, whose GDP has fallen recently and steadied at 6.9% - the lowest in six years. Germany, China’s largest trade partner in the EU, and widely considered the economic engine of Europe, is most likely to feel the brunt as China’s economy matures and imports less from abroad.