In the Global Economy, trade is one of the main pillars which allows countries to exchange resources and key factors of production to advance their own economic welfare and ensure high rates of development. The European Union and the United States, two of the largest economic superpowers, traded over $700 billion worth of merchandise in 2014, contributing significantly to the GDP of both continents. At the same time, members of both areas of the world believe that more can be done to facilitate the exchange of goods. This has resulted in the creation of the Transatlantic Trade and Investment Partnership, a comprehensive proposed agreement that could result in multilateral economic growth.
The TTIP proposal has the potential to provide boosts to both economic zones by eliminating much of the red tape and regulation that is already in place which currently poses restrictions on the trade of goods. Although other agreements have been passed which facilitate the trade between the EU and the US, TTIP will provide a proper framework to move forward and remove much of the clutter that currently plagues exchanges. Mainly, this rests on reducing overlaps in laws and regulation, mainly in the financial trading and agricultural sectors.
On the 7th of July, an EU Parliamentary debate was held in Strasbourg to discuss the agreement. Advocates of the agreement constantly point to the study conducted in 2013 by the European Centre for Economic Policy Research, which stated that the EU’s annual GDP growth would be raised by roughly 65-120 billion euros while annual GDP growth in the United States would increase by 52-96 billion euros by 2027.
Nevertheless, the proposed pact faces significant criticism which was voiced during the European Parliamentary debate. Namely, scepticism surrounding the core benefits of the agreement remains. Some Members of Parliament believe that the opposite case will happen, where there will be a net loss of GDP as European jobs and the production of goods move overseas. This could be attributed to the US’ superior craftsmanship and ability to manufacture high-quality goods for solid prices.
Overall, such an agreement would not only strengthen the European Union and the United States’ competitiveness, but the increase in GDP would result in the creation of millions of new jobs, according to supporters of the agreement. Depending on the time frame by which the agreement is implemented, it could tremendously benefit the European economy, alleviate certain growth concerns and provide a boost to the labour market.
Although, in general, the talks on the Transatlantic Trade and Investment Partnership were successful, there still remains significant barriers before this legislation can be put into effect. It still faces scrutiny from respective legislative bodies, both the European Parliament and the United States Congress have to vote on the issue. Undoubtedly, an agreement that could result in economic growth for both blocs is favourable. However, concerns over whether indeed it would benefit these superpowers equally remains the focus of the debate.