A transatlantic free trade agreement (TAFTA) is an idea for a free trade agreement that would encompass North America and Europe on both sides of the Atlantic. Since the 1990s, such proposals have been made. Transatlantic Trade and Investment Partnership (TTIP) used to be the name of the TAFTA. If a deal is made and approved by both parties, the European Free Trade Association would be included in it (EFTA).
Background
The WTO’s long-standing membership as well as more recent agreements like the EU-US Open Skies Agreement and the work of the Transatlantic Economic Council have all contributed to the comparatively low trade barriers between the EU and the US. According to the European Commission, the ratification of a trans-Atlantic trade agreement could increase overall trade between the two blocs by as much as 50%. In their joint report, the White House and the European Commission forecast the economic benefits of a trade agreement. Following the failure of the Doha round of international trade negotiations, German Chancellor Angela Merkel suggested some variation of a Transatlantic Free Trade Area in the 1990s and again in 2006. Protectionism on both sides, though, can act as a roadblock to any upcoming agreements. It was initially started in 1990 when the European Community (12 countries) and the US signed the “Transatlantic Declaration,” shortly after the Cold War ended and the globe was no longer divided into two blocs. This demanded that the North Atlantic Treaty Organization continue to exist, as well as that minister of state hold meetings every two years, and that political leaders and top bureaucrats interact more frequently.
The Transatlantic Trade and Investment Partnership (TTIP)
Intending to foster trade and global economic growth, the European Union and the United States proposed the Transatlantic Trade and Investment Partnership (TTIP). The TTIP would have been the largest bilateral trade initiative ever negotiated, according to Karel de Gucht, the European Commissioner for Trade between 2010 and 2014, not only because it would have involved the two largest economies in the world but also because of its potential global impact in terms of setting an example for other partners and agreements. Donald Trump, the president of the United States, suspended the negotiations and then started a trade war with the EU. In July 2018, Trump and the EU announced a semblance of a truce and resumed negotiations that seemed to be related to TTIP.
Proposed advantages
The formal agreement sought by TTIP would liberalize one-third of international trade and result in the creation of millions of new salaried employees. According to the London-based Centre for Economic Policy Research, 80 percent of the potential economic gains from the TTIP agreement are dependent on reducing conflicts and duplications between EU and US rules on these and other regulatory issues ranging from food safety to automobile parts. This is because tariffs between the United States and the European Union are already very low. A successful plan will concentrate on industries like pharmaceuticals, agriculture, and financial trading where local laws and transatlantic trade laws frequently intersect. This will guarantee that the US and EU continue to be standard-setters rather than standard-takers in the global economy, which will then guarantee that manufacturers around the world continue to favor joint US-EU standards. According to a March 2013 economic analysis by the European Centre for Economic Policy Research, a full agreement would increase the EU’s GDP by 68–119 billion euros and the US GDP by 50–95 billion euros (about 53.5–101 billion US dollars) by 2027, respectively. According to 2013 research, a modest agreement confined to tariffs would increase the EU’s GDP by 24 billion euros and the US GDP by 9 billion euros by 2027.
Criticism of TTIP
Some unions, charities, NGOs, and environmentalists, particularly in Europe, had denounced and opposed the proposed pact. According to The Independent, TTIP is frequently criticized for lowering the regulatory hurdles to trade for large corporations, including laws governing food safety, the environment, banking, and national sovereignty. The Guardian reported on the criticism of the Trans-Pacific Partnership (TTIP), including its undemocratic nature, the influence of strong lobbyists, and its potential to undercut the democratic authority of local governments. It continued by calling it the most contentious trade agreement the EU has ever negotiated. German economist Max Otte suggested that the TTIP will harm European social models by putting European employees in direct competition with Americans. Over 3.2 million people signed a petition opposing TTIP and CETA through the European Citizens’ Initiative, an EU direct democracy mechanism that allows EU citizens to ask the European Commission directly to propose a legal act, in only one year.
