by Erik Brattberg
Transatlantic ties have taken a hit over the past few years. The unfolding NSA scandal, the U.S. “pivot” to Asia, and the Eurocrisis have all frayed political, economic, and security relations between the United States and the European Union (EU). They have also highlighted the need for a re-invented and re-invigorated partnership between the two regions. One particularly promising avenue to achieve this partnership is the Transatlantic Trade and Investment Partnership (TTIP) currently being pursued by U.S. and EU officials.
The idea of a free trade agreement between two of the world’s biggest economies has existed since at least the mid-1990s, but it recently received renewed focus after President Obama announced a new push for a Transatlantic Trade and Investment Partnership (TTIP) in his February 2013 State of the Union speech. The main goal of TTIP is to promote freer and more open EU-U.S. trade and investment flows. The United States and the EU are the world’s largest trading and investment partners and although trade barriers between the two parties are relatively low, reducing them further could generate huge savings given the size of the U.S. and EU economies. According to European Commission estimates, TTIP could add as much as $130 billion a year to the U.S. economy and 119 billion euros to the EU economy.
Creating a single market for trade and investment extending from Hawaii to the Black Sea could also create hundreds of thousands of new jobs as more American and European companies expand to the other side of the Atlantic. Finally, by aligning rules and regulations to the benefit of investors and entrepreneurs alike, TTIP could also pave the way for smoother capital flows across the Atlantic.
In addition to these economic benefits, TTIP could positively affect U.S.-EU ties in other arenas in three main ways. First, TTIP would help reinforce the EU’s role as an economic superpower and create a strategic imperative for the United States to continue nurturing its relationship with the region. Additionally, the EU’s inability to put an end to the Eurocrisis once and for all has reinforced the dominant view in Washington of a weak EU. Establishing a strong economic partnership between the United States and the EU via TTIP could help change U.S. perceptions of the EU’s strategic importance.
Second, TTIP could promote greater political and security cooperation between the United States and the EU. In particular, it could counter the narrative of “U.S. abandonment” currently circulating in many EU capitals after the recent crises in Libya and Mali by creating what former Secretary of State Hillary Clinton has termed a “second anchor”—in addition to NATO—that reinforces ties between the two parties. As the United States increasingly pivots towards the Asia-Pacific region, and its interest (and ability) to patrol Europe’s neighborhood wanes, TTIP could rebuild trust in the United States’ enduring commitment to the EU. In the long run, as European GDP grows as a result of TTIP, so too would defense budgets, as long as per-capita spending on defense remains constant. This would help address a major source of U.S. criticism against Europe and may even increase European willingness to assume more responsibility for security, particularly in its own neighborhood.
Third, TTIP could help reaffirm Western values such as free trade in an increasingly multipolar world. If properly implemented, TTIP could serve as a model for the rest of the world by setting global standards for production and trade. Given the size of the combined U.S. and EU economies, TTIP would make it difficult for China and other emerging economies to adopt their own, lower standards and diminish food, health, and consumer safety. TTIP could help bring the United States and the EU together to promote a multilateral world order that seeks to set the terms of China’s integration rather than attempting to contain it.
Whether or not TTIP will pan out remains unclear. In December 2013, U.S. and EU officials completed the third round of TTIP negotiations, with the fourth round scheduled for March 2014. At this juncture, several complex issues ranging from divergent legislation, standards, and regulations remain unaddressed. The NSA scandal in particular has threatened to derail the TTIP negotiation process. Upcoming elections in both the EU and the United States could further slow negotiations, which are slated to conclude in the first half of 2015.
Given the increasingly strained nature of U.S.-EU relations, as well as the large benefits that could accrue to both parties, the stakes surrounding the current TTIP talks are high. If successful, TTIP would allow the EU to reinforce its role as a global trading superpower and demonstrate its strategic importance to Washington. In addition, it would help convince the United States that the transatlantic relationship is worth considerable time, money, and effort. Given its enormous potential, TTIP could very well be the glue that binds Europe and America together in the twenty-first century.
About the Author
Erik Brattberg is a Visiting Fellow at the Johns Hopkins School of Advanced International Studies (SAIS) in Washington, DC.