World trade and regional trade orientation in the context of forthcoming transatlantic trade and investment partnership

Elżbieta Czarny,Paweł Folfas

doi:10.12775/equil.2015.027

Abstract

We analyse potential consequences of the forthcoming Trade and Investment Partnership between the European Union and the United States (TTIP) for trade orientation of both partners. We do it so with along with the short analysis of the characteristics of the third wave of regionalism and the TTIP position in this process as well as the dominant role of the EU and the U.S. in the world economy – especially – in the world trade. Next, we study trade orientation of the hypothetical region created in result of TTIP. We use regional trade introversion index (RTII) to analyze trade between the EU and the U.S. that has taken place until now to get familiar with the potential changes caused by liberalization of trade between both partners. We analyze RTII for mutual trade of the EU and the U.S. Then, we apply disaggregated data to analyze and compare selected partial RTII (e.g. for trade in final and intermediate goods as well as goods produced in the main sectors of economy like agriculture or manufacturing). The analysis of the TTIP region’s orientation of trade based on the historical data from the period 1999-2012 revealed several conclusions. Nowadays, the trade between the EU and the U.S. is constrained by the protection applied by both partners. Trade liberalization constituting one necessary part of TTIP will surely help to intensify this trade. The factor of special concern is trade of agricultural products which is most constrained and will hardly be fully liberalized even within a framework of TTIP. Simultaneously, both parties are even now trading relatively intensively with intermediaries, which are often less protected than the average of the economy for the sake of development of final goods’ production. The manufactured goods are traded relatively often as well, mainly in consequence of their poor protection after many successful liberalization steps in the framework of GATT/WTO. Consequently, we point out that in many respects the TTIP will be important not only for its participants, but for the whole world economy as well. TTIP appears to be an economic and political project with serious consequences for the world economy and politics.

Highlights

We analyse the potential consequences of the forthcoming Trade and Investment Partnership between the European Union and the United States (TTIP) for trade orientation of the region containing both partners1
TTIP can be treated as a typical regional trading agreement (RTA) representing the third wave of regionalism
TTIP appears to be as the first approach of leading developed countries to cope with the growing economic and political power of developing countries

Summary

Introduction

We analyse the potential consequences of the forthcoming Trade and Investment Partnership between the European Union and the United States (TTIP) for trade orientation of the region containing both partners. TTIP can be treated as a typical regional trading agreement (RTA) representing the third wave of regionalism (two geographically distant parties located on the different continents, the expected scope of the agreement going far beyond liberalisation of trade in goods). TTIP appears to be as the first approach of leading developed countries to cope with the growing economic and political power of developing countries (especially China, in this paper presented via APTA as China belongs to this RTA). We analyse all RTAs with the constant number of members (number for year 2012). APTA is treated as containing China over all analysed period.

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