The Transatlantic Trade and Investment Partnership (TTIP) currently being negotiated between the European Union and the United States has been sold by politicians on both sides as a strategic opportunity to shape globalisation to the benefit of both parties. A new research paper by Global Counsel’s Chief Economist for Chatham House finds that the risks of such an ambitious project are significant and the UK vote for Brexit increases those risks.
The primary strategic benefit of TTIP would be to enable the United States and the EU to set the ‘rules of the road’ for international trade. TTIP’s backers hope that if the EU and the United States can agree on a new set of standards, the power of their combined markets will lead other countries to adopt the same rules. TTIP also has the potential to attract other countries to align themselves economically and politically with the EU and the United States, providing strategically important countries, such as Turkey, are able to join. One of the risks is that TTIP set the bar too high for other countries to accept.
The paper argues there would be benefits to the UK, the EU and the United States if the UK were to join TTIP after the UK leaves the EU. For the UK it could provide the only real prospect of being able to influence international standards and a relatively quick means to conclude a comprehensive trade deal with the United States. For the EU and the United States, it would ensure the scale and attractiveness of TTIP is not reduced by the loss of one of the major European economies. It would also provide an immediate opportunity to establish TTIP as a plurilateral deal that is open to new members.
The most immediate risk for TTIP, however, is of failure. Despite 14 rounds of negotiations so far there is still disagreement over what should be included in the scope of the negotiations. If the negotiations break down, or a deal is reached that falls short of the ambition set for it, this would send a damaging signal to the rest of the world about the ability of the EU and the United States to work together. It could also hasten the demise of their influence. For the EU, the stakes are greater now that the UK has decided to leave the EU.
The full paper can be accessed through the Chatham House web site here.