THE STATE OF THE EUROPEAN UNION

THE STATE OF THE EUROPEAN UNION

was conceived to eliminate industrial and agri-

cultural tariffs, open services and public pro-

curement markets, align regulation affecting

manufacturers, the banking sector, and safety

standards, set international rules on finance,

and address similar trade issues. According to

initial estimates contained in a report prepared

by the Centre for Economic Policy Research, the

increased trade and reduced tariff barriers sup-

posed by the implementation of the agreement

would increase the EU GDP by an additional

0.5%. Given that the economies of the EU and

the US together account for 46% of global GDP,

a liberalization of trade between them would

have a positive impact on the economies other

major exporting countries as well. The TTIP

agreement would also have additional positive

side effects for other countries, although it is

not yet clear if it would reinvigorate multilateral

post-Bali trade negotiations in the WTO or be

compatible with existing cross-regional free

trade agreements such as Mercosur or the new

Transpacific Partnership (TPP) negotiations, ex-

pected to be concluded in June 2015

Interestingly, as negotiations have pro-

gressed, each succeeding round has focused

less and less on economic benefits –which fur-

ther research has considerably downgraded–

and taken on a greater

political

dimension.

Since it was first discussed in June 2013, the

proposed agreement has increasingly become a

means for the partners at the negotiating table

to affirm themselves both at home and abroad.

However, further progress towards a final agree-

ment is being hampered by geopolitical shifts,

The TTIP and the TPP openly reject the old most-favored

nation principle –a pillar of GATT and the WTO systems– by

offering concessions and enhanced access to EU and US

markets to signatory countries only. The TPP is set to elimi-

nate trade barriers between the US and eleven Asian coun-

tries. It includes Japan but not China.

an economic slowdown in emerging markets,

and, overall, domestic political and institutional

constraints.

Geopolitical change and the TTIP

negotiations

TTIP was largely conceived as a way to rebal-

ance world power between the US and Europe

as a block and the emerging powers (BRICS).

Trade has never been neutral; it has always

been “politics by other means”, a highly sensi-

tive matter in international relations. The initia-

tion of negotiations toward a transatlantic part-

nership coincided with the first signs of a fall in

the

growth of Brazil’s domestic market, the

deceleration of the Chinese and Russian econo-

mies, and the slowdown of commodities prices.

Not surprisingly, the emerging powers such as

China, Russia, and Brazil have in some way or

another attempted to overturn the existing bal-

ance of power. China’s territorial ambitions in

Asia have triggered tensions with both the US

and Japan

. Putin’s new Russia has been playing

the geopolitical card in the post-soviet area,

challenging Crimea and stoking the flames of

civil conflict in Ukraine. Dilma’s Brazil, despite

the rhetoric, has kept its distance from the US

in many areas, from world trade to the regional

politics (Mercosur, Unasur). Finally, although

the leaders of BRICS (Brazil, Russia, China, In-

dia, and South Africa) did not formally ex-

pressed their opposition to the TTIP agreement

as a block at the July 2014 Fortaleza Summit,

they have privately expressed their reservations

During the Asia Pacific Economic Cooperation (APEC)

summit held in Beijing in November 2014, President Obama

made clear that he preferred the TTP to the Free Trade Area

of the Asia Pacific (FTAAP) promoted by APEC.