About the Author
John Worthington
Managing Director, ibt partners
The European Union (EU) Delegation to the United States just published another “EU Matters” entitled “Partners of Choice in a Complex World” looking at i) the scale of the EU-US economic relationship and ii) the many areas where the US and EU partner to confront global challenges.
Concurrently, diligently in the background, the Transatlantic Trade and Investment Partnership (TTIP )negotiation teams are preparing for the next round of negotiations, scheduled for early 2016. Cecilia Malmström, EU Trade Commissioner stated, “We want to use trade agreements to set ambitious and binding standards, to address global challenges such as protecting the environment and labour rights in a globalised world”.
Proposals are being put forward on a range of issues including collaboration with the International Labor Organization (ILO) to implement strong labor standards, combat illegal logging, fishing and other transnational environmental issues, limiting the use of antibiotics in animal production to help combat antibiotic resistance as well as the small and medium-sized enterprises (SMEs) chapter of TTIP that would establish a Committee on SME issues.
Back to the facts of the “Scale of the EU-U.S. Economic Relationship” in which size matters. As the report states, the “scale and interconnected nature of the transatlantic economic relationship is unrivalled in the world, with the EU and U.S. accounting for nearly 30% of global merchandise trade, close to 40% of world trade in services, and almost half of global GDP”. The two main metrics of size: i) foreign direct investment (FDI) and ii) trade, are reviewed with some new and useful numbers. FDI, the real driver of the transatlantic relationship in terms of growth and jobs, remains impressive with the US annually directing 50% of its FDI to the EU, while the EU provides 2/3rds of US inbound annual FDI.
Now let’s look at trade. The EU and the US remain each other’s leading trade partners. In 2014, the trade in goods was worth >$700 billion. Services are estimated to add another $500 billion, meaning that the real value of transatlantic bilateral trade is in the order of $1.2 trillion. The EU-US is the world’s #1 economic relationship, has been for many decades and looks unlikely to be superseded any time soon. TTIP is a reflection of that relationship but so are the many other instruments that already exist, keeping EU US bilateral investment and trade on track.
Presidential summits, held alternately in the EU and the US, take place regularly between the Presidents of the European Commission, the European Council and the President of the US. Other organisations include the Transatlantic Economic Council (TEC), established in 2007, bringing together government, business and consumer representative organisations with a mission to advance EU-US economic integration. Equally, the EU-US Energy Council, which focuses on energy security, sustainability and climate change, permits the EU and the US to co-operate on energy in preparation for and beyond other platforms such as the United Nations (UN). This is particularly topical at the moment given the current gathering of 150 Heads of State in Paris, for the 2015 UN Climate Change Conference, COP 21 (21st Conference of the Parties).
Then there is also the Transatlantic Business Dialogue (TABD) which develops joint policy recommendations aimed at establishing a barrier-free transatlantic market with safe and efficient regulation that will serve as a catalyst for global trade liberalization and prosperity, and the Transatlantic Business Council (TABC), a cross-sectorial business association representing global companies with headquarters in the EU and the US.
Of particular importance for businesses, the British American Business Council (BABC) is the largest transatlantic business network, with 20 chapters (chambers) and 2,000 member companies based in major business centers throughout the US and the UK. The Transatlantic Consumer Dialogue (TACD) champions the consumer perspective in transatlantic decision-making. Meanwhile the Transatlantic Legislators’ Dialogue (TLD) brings together biannually, members of the European Parliament and US Congress on specific topics of mutual concern, including: growth, jobs and trade, investment and regulatory cooperation, energy, security and defence.