U.S. investment in the European Union is three times greater than that of the United States across the Asian continent, and EU investment in the United States is eight times greater than that of the European Union in India and China combined. It is estimated that intra-company transfers account for one third of total transatlantic trade. The United States and the European Union are the main trading partners of most other countries in the world and account for one-third of global trade flows. Given the already low customs barriers (less than 3%) the aim is to remove non-tariff barriers in order for the agreement to be successful.  The Europeans have categorically refused to include the agricultural sector, which is at odds with Washington`s wishes. The scope of the agreement is therefore not at all comparable to the TTIP project, which also included public contracts, services and a number of regulatory issues, including intellectual property and investment. This is only a piecemeal negotiation, the terms of which had already been well studied during the simplest phase of the process, in the early stages of the TTIP negotiations. For two economies of this size with such a high volume of trade, the EU and the United States inevitably face a number of trade disputes that are resolved through the WTO dispute settlement mechanism. On 15 April, the European Council approved the resumption of negotiations with the United States for a transatlantic trade agreement. Only France voted against it because it cannot negotiate with a state that does not respect the Paris agreement on climate change.
How can this vote shed light on the European Union`s trade policy? What are the differences between this new agreement and the Transatlantic Trade and Investment Partnership (TTIP) discussed since 2013? Elvire Fabry, Senior Research Fellow, Head of Trade Policy at the Jacques Delors Institute, answers our questions. The United States and the European Union together account for 60% of global GDP, 33% of world trade in goods and 42% of world trade in services. There are a number of trade disputes between the two powers, but both depend on the economic market of the other, and disputes concern only 2% of total trade. A free trade area between the two countries would potentially be the largest regional free trade agreement in history and would cover 46% of global GDP.   A structural problem with the U.S. deficit stems in particular from China`s trade distortions, starting with the lack of transparency of Chinese subsidies to state-owned enterprises. The Europeans are therefore actively holding trilateral discussions with the United States and Japan in order to obtain better notification of WTO member subsidies, strengthen multilateral subsidy rules and force China to abandon its policy of forced technology transfer.