An EU-US free trade deal
The Transatlantic Trade and Investment Partnership (TTIP) aims to boost trade and investment between the European Union (EU) and the United States of America (US).
The US and EU want growth and investment, job creation and greater prosperity, now and in the future. The deal will encourage trade by making it easier for businesses on both sides of the Atlantic to sell their goods and services in each other’s markets.
The EU and US economies account for about half of global GDP. Almost a fifth of the UK’s exports are to the US, and UK businesses invest more in the US than in any other country. Economists predict an EU-US trade deal could add up to £10 billion to the UK economy.
TTIP gives the EU and the US the chance to develop more straightforward and consistent rules and standards.
The EU and the US are discussing a deal that includes:
Cutting trade tariffs
While tariffs are already relatively low, the large volume of trade between the UK and US means that they are still a significant cost for British exporters. The UK economy could benefit by £1 billion by removing tariffs
Removing unnecessary differences in regulation
Many EU and US regulations and safety checks are slightly different but achieve the same level of quality and safety. Eliminating these unnecessary differences, while maintaining high standards, is expected to have a significant impact on trade. Consistent standards will make it easier and more profitable for businesses of all sizes to export to the US, as they have done across the EU.
Case study: Paxman, Huddersfield
Paxman, a small business based in Huddersfield, manufactures and distributes a scalp cooling device that helps prevent hair loss in patients having chemotherapy. The product has been approved for use in the EU for over 10 years and has gone through extensive safety testing. Despite this, to export to the US, the product needs to go through another lengthy and costly, almost identical set of tests. With an EU-US trade deal in place, it should be quicker and easier to bring a product such as the Paxman cooling device to the US market.
Improving market access
This includes reducing restrictions on the extent to which EU firms can invest and operate in the US and vice versa.
What isn’t part of the negotiation?
The trade agreement will not:
- remove or lower health, safety, environmental or labour standards
- give the EU or US the power to change each other’s regulations on food standards, including EU restrictions on genetically modified foods
- prevent either the EU or the US from introducing new environmental and low carbon legislation
- prevent governments regulating in the public interest, in areas such as health (including the NHS), education, labour and the environment
Benefits for businesses
The benefits to businesses include:
- better access to the US market, which is 6 times the size of the UK
- improved export opportunities for businesses of all sizes in many sectors
- less red tape means that small businesses stand to gain the most from the deal
- for businesses already exporting it will be easier and more profitable
- knock on benefits for those that supply to exporting businesses
Benefits for consumers
More competition between US and EU firms will mean shoppers can expect to see a wider choice of products on sale online and on the high street.
The removal of tariffs on American products such as electronics, food and drink, cars, clothing and shoes will mean that some prices will fall.
An EU-US trade deal should improve the purchasing experience for shoppers. For example, by:
- limiting postal delays
- enabling parcel tracking across borders
- making prices more transparent by ensuring the final price includes VAT and other charges
The wider economic benefits of a successful trade deal will also benefit individuals. It is likely to create new jobs, and it is predicated the average household will benefit by up to £400 a year.