Dubbed the biggest trade deal in history by some observers, the Transatlantic Trade and Investment Partnership (TTIP) is making headlines for all the wrong reasons again. Despite being under consideration since 2013 the passage of the agreement has been anything but smooth, dogged by objections from civil society groups, unions and politicians. The most recent minor setback has been the failure of Senate Democrats to authorize the fast-track legislation most observers agree the Obama administration will need if it is to have the negotiating freedom to sign off on an international trade agreement the size of the TTIP. That hiccup has been overcome but it leaves many observers worried that to clear Congress, any trade pact will be so diluted that many potential gains could evaporate.

So what are the actual benefits on offer for US economy if the agreement is ever ratified?

Impact

The actual impact of the TTIP on the economies of the EU and the US will depend on how comprehensive any final agreement is. Nonetheless, a commonly quoted study by the Centre for Economic Policy Research (CEPR) for the European Commission in March 2013 concluded that by 2027, an ambitious version of the TTIP would produce gains of approximately $164 billion for the EU and $131 billion for the United States. A lesser agreement that eliminated most tariffs but left other barriers in place (such as different regulatory standards) would create EU gains of $94 billion and US gains of $69 billion. A UK government source believes that the rest of the world could benefit by as much as $134 billion (£85 billion) as a result of the extra business generated by the agreement. The deal could even work as a template for a future World Trade Organization agreement, something which has been out of reach for over a decade now as members squabble over vested interests.

Since the combined GDP of the US and EU still represents around 50% of world GDP and trade between them amounts to 30% of total global trade, these numbers, while large, are only modest fractions of each bloc’s economy. Nevertheless, the TTIP would effectively set a new global standard for trade liberalization if it ever passed, meaning its greatest benefits could be indirect. In order to enter the huge new ‘Atlantic’ market, other countries’ companies would have to meet the new Western rules, making TTIP the last best chance for proactive global rule-setting on the West’s terms before the ‘rise of the rest’ rebalances economic and geopolitical influence back towards Asia.