NEGOTIATIONS ON THE TRANSATLANTIC FREE TRADE AREA. EFFECTS OF THE PROPOSED AGREEMENT ON THE ECONOMIES OF THE EUROPEAN UNION AND THE UNITED STATES OF AMERICA

Eugeniusz Gostomski,Tomasz Michałowski

doi:10.5755/j01.eis.0.9.12801

Abstract

The paper is devoted to the Transatlantic Trade and Investment Partnership (TTIP), which is also called the Transatlantic Free Trade Area (TAFTA). The problem is whether TTIP should be created, and if yes, what shape it should take, and how it will affect the economies of the European Union (EU) and the United States (US). The aim of the paper is to answer the questions: what is the essence of the TTIP agreement, what reasons for this project are and what consequences will it have? At first, the authors present a declining role of the EU and the US in the global economy. Next, they analyse trade and investment flows between the EU and the US. Then, they analyse main motives for TTIP and present the course of TTIP negotiations. In the next section, the authors discuss the main barriers to the economic relations between the EU and the US. Then, they deal with controversies around the protection of investment and with concerns and risks arising from TTIP. In the final section, the authors analyse political consequences of launching TTIP. The authors conclude that the establishment of a free trade area covering the EU and the US could contribute to economic recovery on both sides of the Atlantic. The combination of lower production costs in the US with the highest European technological potential is a prerequisite for the production of excellent products at competitive prices and their sales in international markets, which in turn can stop the trend of decline in the role of the EU and the US in the world trade. The TTIP would also strengthen transatlantic political ties and make the voice of the EU and the US more powerful in the process of searching solutions of many problems of the modern world. The authors use descriptive and analytical method of analysis based on journal articles, information obtained from the Internet and publications of international organizations.DOI: http://dx.doi.org/10.5755/j01.eis.0.9.12801

Highlights

The paper is devoted to the Transatlantic Trade and Investment Partnership (TTIP), which is called the Transatlantic Free Trade Area (TAFTA)
The problem is whether TTIP should be created, and if yes, what shape it should take, and how it will affect the economies of the European Union (EU) and the United States (US)
The analysis conducted by the authors of this study shows that the project to create TTIP / TAFTA should be considered worth implementing, both for the EU and the US

Summary

Introduction

The paper is devoted to the Transatlantic Trade and Investment Partnership (TTIP), which is called the Transatlantic Free Trade Area (TAFTA). TTIP is a proposed free trade agreement between the European Union (EU) and the United States of America (US), which is still under negotation. The European Union and the United States were the two most important host economies for FDI, accounting for 60% of global FDI inflows) (see Tables 1, 2 and 3). 44.6 38.5 39.0 39.0 31.7 31.4 positions of the United States US and the European Union as major economic powers in the BRIC. In 2013, the United States and the European Union together accounted for one third of the global GDP in terms of purchasing power parity, and their share in global merchandise imports and exports exceeded 40% (Table 1). In 2013 the US was the main trading partner for the European Union in terms of total merchandise trade (sum of exports and imports) followed by China, Russia and Switzerland. The EU’s share in US merchandise exports decreased from 21.4% to 16,7%, while the EU’s share in US

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