ANALYSIS
The Transatlantic Trade &
Investment Partnership’s Impact
on the EU Periphery
The Transatlantic Trade and Investment Partnership
(TTIP) aims to significantly reduce both tariff and
non-tariff trade barriers still complicating trade between the United States and the European Union.
According to the EU Commission’s assessment,1 an
ambitious TTIP deal would increase the size of the EU
economy by about €120 billion and the U.S. economy
by €95 billion. This would be a permanent increase
in the amount of
Roughly 14% of corporate
wealth that the two
America’s European
economies could
generate every subworkforce is now based in
central and eastern Europe. sequent year. For
those countries on
the EU’s periphery, the agreement should also mean
good things. Trends suggest that there will be greater
economic convergence between Europe and its periphery in the decade ahead, with expanding trade
and investment flows keeping pace with rising cross
border flows of people, capital and ideas. All of this
will benefit Europe as a whole, as well as those U.S.
firms with operations across the continent.2
Much policy and investment attention has been paid
in the last decade to the economic growth taking
place in Asia, particularly to China and India. However, equally attractive opportunities lie much closer
to the EU, where many U.S. firms are already embedded. Consumers in “developing Europe”3 spend
nearly as much as consumers in China and easily outspend consumers in India. In fact, consumer spending
in China ($3 trillion in 2012) was just 15% larger than
the combined personal consumption expenditures in
developing Europe (Russia included).
1 Transatlantic Trade and Investment Partnership – The
Economic Analysis Explained, European Commission, September
2013
2 Daniel S. Hamilton and Joseph P. Quinlan, The Transatlantic
Economy 2014, Volume 2/2014: State - By - State and Country By - Country
3 Joseph P. Quinlan, The Case for Investing in Europe 2014:
Why U.S Firms Should Stay the Course
14
U.S. firms enjoy preferential and easy access to
this part of the world. Highly profitable U.S. affiliates in Europe are also extremely important to the
overall success of their parent companies and the
health of the U.S. economy. Due in part to its size,
the EU remains the most attractive foreign destination for U.S. capital. From a very low base in 1995,
U.S. investment stock in Europe’s east has expanded
greatly. This trend was motivated by a number of factors, including a strategic desire to gain access to the
region’s highly trained labor force in technology and
life sciences.
Тhe EU is a natural
Despite the shift in some investment and production to launch pad for
the periphery – with some U.S. multinational
nations losing and others operations in central
gaining U.S. investment – the and Eastern Europe.
region itself remains the favorite destination of U.S. multinationals. So far this
decade, Europe’s global share of U.S. FDI has actually increased, to 56.2% of the total, up from a
share of 55.9% over the 2000-09 period. TTIP should
only strengthen this trend and result in U.S.-based
companies seeking to capitalize on EU’s ties with
its neighbors developing nations – the source of
most global economic growth – are much deeper
and thicker than America’s. Thus, the EU is a natural launch pad for U.S. multinational operations in
central and Eastern Europe, Russia, the Middle East,
Turkey, and Africa (particularly North Africa which is
one of the largest and most dynamic regions of the
global economy). Europe’s extended periphery is
massive in size and scale with a total output slightly
larger than China’s.
Europe is an unusual blend of developed market
economies4 and developing markets5 offering some
4 The EU 15
5 Developing Europe includes EU-13 plus Albania, Armenia,
Azerbaijan, Belarus, Bosnia and Herzegovina, Georgia, Macedonia,
Moldova, Montenegro, Russia, Serbia, Turkey and Ukraine
Emerging Macedonia Summer 2014 Issue 42