As the EU and US combined account for nearly half of world GDP, the potential gains from such a deal could be substantial – as much as £100bn a year to the EU and £80bn to the US according some estimates. While warning that such figures must always be treated with caution, the committee believes that a deal would provide a substantial boost to employment on both sides of the Atlantic as well as benefiting consumers by widening choice and increasing competition. This would then lead to lower prices than would otherwise have been the case.
It argues that while getting rid of the remaining tariffs on transatlantic trade is important, some 80 per cent of the potential gains will be derived from the removal of non-tariff barriers, a point of particular significance for SMEs.
The committee says that a successful TTIP will be of benefit to the rest of the world by stimulating world trade in general and encouraging progress on other multilateral trade initiatives. It suggests that this will encourage China to play a more active role in these initiatives. It also argues that TTIP should not be a closed shop and that there should be provision to allow third countries to participate.
But it warns that without more political impetus from Washington and the big EU member states and without a concerted campaign to make the public in all the countries involved more aware of the potential benefits, the opportunity could be lost. If that happens the EU and the US are unlikely to be in the same position of influence in the world economy next time around.
Chairman of the Committee
Commenting on the report, the Chairman of the Committee, Lord Tugendhat, said:
"As these negotiations were launched at the 2013 G8 summit chaired by the Prime Minister, the British government has a big interest in helping to ensure that they are brought to a successful conclusion. The best chance of achieving this will be when the new Commission, that conducts the negotiations on behalf the EU, has been installed and after the mid-term elections in the US.
A successful conclusion does not mean that everything has to be wrapped up at the same time. As with the Single Market some elements could come into immediate effect, while others are progressed within an agreed framework and according to an agreed timetable.
Our message to the UK government is clear. Building on the all-party support for TTIP in Parliament it needs to work on two fronts: on the one hand it must commit more energy to spelling out the potential benefits to the public and to small businesses in this country. On the other it must encourage other European governments to do the same and actively support the Commission’s efforts to ensure that Europe presents a united front."
Recommendations from the report include:
- The UK and the EU should not allow the opportunity to pass and with it the potential increases in employment and prosperity, the revitalization of the transatlantic relationship and the chance to re-set the terms of world trade for the 21st century.
- In a negotiation between equals it is not acceptable for one party to exclude a sector central to both economies as the US is doing with regulation of financial services. But the UK and the Commission need to build a more compelling case for why TTIP is the right vehicle for securing progress in this sector.
- Disagreements around agricultural issues such as genetically modified organisms (GMO) and geographical indications will have to be resolved if an overall agreement is to be reached, owing to the political salience of those issues in some countries.
- The government should formulate a communications strategy around the promotion of TTIP that involves ministers with sectoral responsibilities, not just trade ministers.
- Other EU governments should do more to explain the issues at stake, to address concerns, and to mobilize support for an agreement.
- The UK should continue to press all parties to ensure that that any deal is designed so that third parties can benefit.
- Other industries can learn from the way the motor industry is pressing its case on both sides of the Atlantic.