Trans-Atlantic Trade and Investment Partnership: an opportunity or a threat to the EU textile and apparel industry?

Abstract

This study quantitatively evaluated how tariff elimination and reduction of non-tariff barriers under the Trans-Atlantic Trade and Investment Partnership (T-TIP) could affect the textile and apparel (T&A) industry in the European Union (EU). Based on the Global Trade Analysis Project (GTAP) model, the study finds that: first, T-TIP’s trade creation effect will expand the EU-U.S. intra-industry trade for textiles. Meanwhile, T-TIP will significantly expand EU’s apparel exports to the United States. Second, trade T-TIP’s trade diversion effect will affect T&A exports from non-member suppliers to the T-TIP region negatively, including Asia’s T&A exports to the U.S. and EU and Turkey’s T&A exports to the EU. Third, T-TIP will affect the intra-region T&A trade in the EU region negatively but in a limited way. Findings of this study augment our understanding of the T&A-specific sectoral impact of T-TIP and provide valuable inputs supporting the T-TIP negotiation.