The Transatlantic Trade and Investment Partnership and Agriculture: A Quantitative Analysis

Abstract

The Transatlantic Trade and Investment Partnership (TTIP) is a proposed free trade agreement between the United States and the European Union (EU) that could address several important barriers facing agricultural trade, including tariffs, tariff-rate quotas (TRQs), and non-tariff measures (NTMs). TRQs and NTMs are particular relevant in a potential TTIP agreement, as there are several agricultural sectors with these trade barriers in place. Using a computable general equilibrium (CGE) model to analyze two core hypothetical market liberalization scenarios, the objective of this study is to quantify the potential effects of the TTIP agreement. Results from the first scenario, where tariffs are removed and there is a 50 percent increase in TRQ quota amounts, indicate that total U.S.-EU agricultural trade increases by $4.9 billion. The second scenario, a more expanded market access scenario that also includes the removal of NTMs, results in an increase in total U.S.-EU agricultural trade by an additional $2.1 billion; although, binding TRQs limit some of the potential gains. Across all scenarios, results indicate that expansion in agricultural exports is greater for the United States; however the EU generates larger welfare gains.