Daniel R. Pérez
Susan E. Dudley
Unnecessary regulatory differences between countries persist as lingering barriers to trade even as traditional barriers are declining. A study commissioned by the Commission of the European Communities finds that reducing non-tariff barriers to trade between the European Union and the United States by 50% in 2018 could lead to a 0.7% annual increase in gross domestic product (GDP) in the EU and a 0.3% increase for the U.S. The study estimates that compared to a base case of no action, this translates to an annual potential gain of €122 billion ($158 billion) in the EU and €41 billion ($53 billion) in the U.S.
According to the study, these economic gains derive from 1) consumer welfare increases due to lower prices for imported products, 2) increases in exports and production for competitive sectors, 3) lower “production costs…for companies due to more aligned regulation and lower levels of [non-tariff measures] NTMs,” and 4) increased investment flows “due to more harmonised investment regimes.” The study concludes that “NTMs and regulatory divergences are clearly more important and economically relevant than the remaining tariff levels.”
Recognizing this, the Transatlantic Trade and Investment Partnership (TTIP) between the EU and the U.S. aims to be “an ambitious and comprehensive trade agreement that significantly expands trade and investment between the United States and the EU, increases economic growth, jobs, and international competitiveness, and addresses global issues of common concern.” While recognizing that Europe and the U.S. have an “immensely successful economic relationship,” officials on both sides of the Atlantic hope to “do more to strengthen the contribution of trade and investment in fostering jobs, growth, and competitiveness in both economies.”