Transatlantic Trade: Whither Partnership, Which Economic Consequences?

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The Transatlantic Trade and Investment Partnership (TTIP) is much more than another preferential trade agreement project: it 

aims to link the world’s two biggest economic entities. The initiative seems motivated by the stalemate in multilateral negotiations, 

the competition between trade agreements, and the willingness of the two partners to retain their leading positions in world trade, 

or at least to limit their loss of infl uence.

Given the limited average level of the import tariffs – 2% in the US and 3% in the EU – these duties in most cases are not the 

most important stake (exceptions are a few sensitive products, mainly some dairy products, some clothing and footwear, and 

some steel items for the US, and meat products in the EU). Much more signifi cant at the macroeconomic level are negotiations 

on non-tariff measures, regulation in services, public procurement, geographical indications, and investment, all of which are 

contentious. 

We fi rst review the main issues at stake in each case and then use a computable general equilibrium model to assess the 

economic impacts of an agreement. Not all aspects of the negotiations can be incorporated in the model but it does account for 

the restrictive impact of non-tariff measures on trade in goods and of regulatory measures on trade in services. The corresponding 

levels of protection provided by the non-tariff measures are much higher on average than those provided by the tariffs, and they 

differ signifi cantly across sectors, confi rming their sensitivity in these negotiations. Our central scenario combines progressive but 

complete phasing-out of tariff protection accompanied by an across-the-board 25% cut in the trade restrictiveness of non-tariff

measures, for both product and service sectors with the exception of public and audiovisual services. 

We fi nd that trade between the two signing regions in goods and services would approximately increase 50% on average, including 

an upsurge of 150% for agricultural products. Eighty percent of the expected trade expansion would stem from lowered non-tariff

measures. Both partners to the proposed agreement would reap non-negligible GDP gains, in the long run, corresponding to an 

annual increase in national income of $98bn for the EU and of $64bn for the US.