Friday, July 11, 2014

EU - US Free Trade Agreement Could See Cheaper Exports and Imports with no Customs Duty

UK Government Responds to Latest House of Lords Committee Report on Transatlantic Trade and Investment Partnership
Shipping News Feature

UK – EUROPE – US – Today the British government published its response to the House of Lords report on the proposed Transatlantic Trade and Investment Partnership (TTIP) agreement, a deal which, assuming it ever actually gets off the ground, could see a huge reduction in trade barriers and bureaucratic obstructions to free trade between EU countries and the US, with duty tariffs abolished, customs paperwork cut back and reduced export/import costs

There have so far been five rounds of TTIP negotiations, progress which the government deems ‘reasonable headway’ but admits that the deeper the two sides get into negotiations, so they are becoming ever more difficult. Given the vociferous lobby for protectionism across the water with such legislation as the infamous (or irreplaceable dependent on one’s position) Jones Act, it would seem there will be a battle ahead if the EU manages to finally establish a mutually agreed settlement.

The report says that the UK, along with the Commission and US authorities remain focused on ‘breaking the back’ of the negotiations by the end of 2014, with the goal of reaching a deal in 2015. Many will not hold their breath, particularly in view of US mid-term elections and the appointment of a new European Commission but, if attained, an open free trade alliance could prove beneficial to all concerned. The government actually states that a family of four in the UK would be better off by £400 per annum and have a wider choice of cheaper goods as a result of a satisfactory accord.

Critics of the plan are not confined to the US however and the response flatly denies accusations that there will be a flood of unacceptable imports, particularly foodstuffs such as genetically modified crops and hormone saturated meat defending the position by saying any such imports must conform to EU standards.

The House of Lords European Union Committee’s fourteenth report made forty three specific recommendations and observations, all of which are answered by the government. The Lords tone clearly warns the government not to get carried away with figures which cannot be justified, deploying them ‘with extreme caution’, as no deal has been done as yet therefore projections of benefits are meaningless. They further advise that the EU side should commission more detailed analyses of possible benefits as things progress.

The inception of a TTIP would have major political ramifications as well as economic ones, dealing as it does with two blocs which account for over half of the world’s GDP and therefore have ramifications far beyond those countries directly affected. To this end it would be beneficial to make the TTIP accessible to more countries in the future.

The Lords pressed the government to ensure that the European Commission expresses clearly what exactly are the areas for negotiation, and those that are not. They cite the examples of product safety standards (in negotiation) and employment rights (not currently being involved in negotiations). This last the Lords feel must be addressed by pressing the US to ratify the International Labour Organisation's core conventions.

The Lords identified several areas with regard to problems for investors and the imposition of ISDS mechanisms which offer such investors a degree of confidence when trading in an overseas market, but recognises the ‘hostile stance of the German government and German public’, evidencing that Europe still has difficulties presenting a united front when national standards are threatened.

One point which is raised, and brushed over by the governmental response, is that of transparency. The Council of Ministers made a conscious decision to keep the negotiating mandate out of the public domain, something which surely needs to be addressed, whilst the government has agreed to do more to engage with other EU countries to sustain support for the proposals.

Read the government’s response to the Lords comments in full HERE