TTIP
EXPERT ANALYSIS
Negotiating the world’s largest FTA
Stephen Jones of King & Spalding asks whether the recent US/EU shared investment principles foreshadow a potential agreement
(FTA) in history. If concluded, the agreement would replace the North American Free Trade Agreement (Nafta) as the world’s largest free trade area, with a combined GDP of over $30 trillion, or more than a third of global economic output. The combination would be even more significant with respect to investment, where each side accounts for over half of the foreign direct investment in the other.
T In the ensuing months since the talks were launched, the parties have
begun work. Although the first substantive negotiating round was post- poned by the shutdown of the US government in early October, most ob- servers continue to express optimism that a comprehensive deal can be reached within the next two years.
It may not be immediately apparent what the US and EU stand to gain
from a free trade agreement. The two sides already have the most open trade and investment regimes in the world, and the level of trade and investment between them is already significant.
But a successful agreement could have a tremendous impact on transat-
lantic investment, by further liberalising potential regulatory barriers, such as conditions for initial investment, and disciplining government measures that diminish the value of an investment. An agreement could also incor- porate an investor-state dispute settlement mechanism that would uniformly provide legal protections for investments within the bloc, in contrast to the patchwork of protections that exist today. Thus, there are strong incentives for the US and the EU to reach a comprehensive investment agreement.
WWW.IFLR.COM
he Transatlantic Trade and Investment Partnership (TTIP) negoti- ations were launched in mid-2013 amid great fanfare and optimism that the US and EU could reach the largest free trade agreement
As the TTIP negotiations get underway, it is useful to review the existing
status of US and EU policies regarding foreign investment. As discussed below, US and EU investment policies overlap in many critical respects, which suggests that an investment agreement acceptable to both sides is within reach. An important unknown at this time is the extent to which the EU’s recently concluded Comprehensive Economic and Trade Agreement (Ceta) with Canada will impact negotiations with the US.
nising the strong relationship between trade, investment, and economic growth. The TTIP negotiation’s inclusion of investment provisions within its mandate is based on a long line of precedent, beginning with Nafta in 1994. Since then, the US has included investment chapters in all of its FTAs.
member states, mainly countries in Eastern Europe that concluded BITs with the US before joining the EU. An investment chapter in the TTIP would provide US investors with uniform, BIT-like protections throughout the EU, and it would likewise provide those same protections in the US to investors from all 28 EU member states.
“ IFLR REPORT | FOREIGN DIRECT INVESTMENT 2014 13 The US has bilateral investment treaties, or BITs, with only a few EU
The two sides already have the most open trade and investment regimes in the world
US trade policy has long included investment provisions in FTAs, recog-
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