100

The Transatlantic Trade and Investment Partnership (TTIP) would eliminate most of the remaining tariff barriers between the EU and the USA, would offer increased protection to EU or US companies investing in the other territory, and would seek to harmonize regulations which are thought to create barriers to trade. While previous trade liberalizations have had appreciable benefits, the remaining tariff barriers are so small that their elimination would only minimally increase the welfare of the two partners. Gains from investment protection and regulatory coordination are highly uncertain and are unlikely to be substantial. These two “non-tariff” aspects of the agreement also create non-negligible risks. The first is that multinational companies might be able to (ab)use the yet-undefined dispute settlement mechanism to hinder legitimate changes to national economic and social policies. There is also a concern that the “rationalization” of regulations might not stop with the elimination of “accidental” divergences between the US and the EU, but might instead create a channel through which business interests could seek to modify rules going against their own interests. The very fact that the multinational business community is so enthusiastic about a deal which, on the face of it, would not produce significant benefits for consumers or business, suggests that the proposed agreement should not be adopted until the dispute settlement mechanism and the precise scope for “harmonizing” regulations have been clarified. JEL Classification: D78, F1, F23, F6, L4, L5