Bertelsmann Foundation investigates the consequences for 126 countries:
Losers would be traditional trading partners and developing countries.
GÜTERSLOH, Germany, June 17, 2013 /CNW/ - The US and all EU member
countries would significantly benefit from a comprehensive
transatlantic trade and investment partnership (TTIP). If it is
possible to largely eliminate not only tariffs but also non-tariff
trade barriers, real gross domestic product per capita would
significantly increase, and new jobs could be created. However, the
social welfare gains in this largest free trade zone, with over 800
million inhabitants, would stand in contrast with real income and
employment losses in the rest of the world. These are the results of a
current ifo Institute study commissioned by the Bertelsmann Foundation
and released before the visit of US President Barack Obama in Berlin.
The study shows how long-term real per capita income would change for a
total of 126 countries as a consequence of a transatlantic free trade
agreement. According to the calculations, the US would achieve the
greatest growth. There, the long-term gross domestic product per capita
would grow by 13.4 percent. Social welfare gains would also be achieved
in the entire EU region. In all 27 member countries, real income per
capita would end up almost five percent higher on average. Great
Britain would show the largest increase in income, with a real increase
in income of almost 10 percent per capita.
EU member countries that would profit more than average from a
far-reaching liberalization of trade include small export-oriented
economies such as the Baltic States and also the crisis-ridden southern
European countries, for whom imports from the US would become cheaper.
In comparison to the rest of Europe, the large economies of Germany
(4.7 percent) and France (2.6 percent) would benefit less than average
from a comprehensive free trade agreement.
However, the intensification of trade relationships between the US and
EU would result in these economies importing fewer goods and services
from the rest of the world. Such partners would thus experience a
decline in real income per capita. Traditional trading partners of the
US, such as Canada (down 9.5 percent) and Mexico (down 7.2 percent)
would be particularly affected. In Japan as well, long-term income per
capita would be reduced by almost 6 percent. Additional losers would
include developing countries, especially in Africa and central Asia.
The TTIP is not a zero sum game, however, but instead generates real
gains in public welfare due to the reduction of trade costs; in
principal, therefore, all countries can profit from this reduction.
Average per capita income throughout the world would rise by 3.3
For the EU, a far-reaching free trade agreement would result in a
significant increase in employment in the participating economies.
According to the calculations, the US and Great Britain will benefit to
a particularly large degree, with almost 1.1 million and 400,000
additional jobs, respectively. There would be an above-average impact
on employment in the crisis-ridden southern European countries as well.
While unemployment in the OECD would decline by an average of 0.45
percentage points, in the four countries in crisis, it would decrease
from 0.57 percentage points in Italy to 0.76 percentage points in
"A transatlantic free trade agreement would be an important tool for
increased growth and employment in Europe," said Bertelsmann Foundation
CEO Aart De Geus, in his presentation of the study. "Especially the
southern Europeans, who have been shaken by crises, would benefit from
this to an above-average degree. However, social welfare gains that
arise for the EU and US should also be an incentive to show a readiness
to compromise toward the losers of the agreement in future multilateral
negotiations. In this way, the transatlantic free trade agreement could
also give fresh impetus to the Doha Development Round, which has come
to a stall."
In their simulation calculations, the analysts looked at two scenarios.
Abolition of tariffs alone (Scenario 1) would barely provide for
positive effects on growth. On the other hand, if barriers to trade
were comprehensively abolished (Scenario 2), the above-calculated
effects would occur. These barriers to trade include non-tariff
measures such as quality standards, packing and labeling requirements
and information on origin, as well as technical and legal requirements
for imported products. Non-tariff trade barriers also include subsidies
of one's own exports through tax advantages or financial assistance.
SOURCE: Bertelsmann Foundation
For further information:
Dr. Ulrich Schoof, Telephone: +49(5241)81-81384
Further information is available on the internet at http://www.bertelsmann-stiftung.de.