Question

What does the proposed agreement between the United States and the European Union mean for U.S. companies selling to the European Union? Will consumers benefit?

Answer 1

The Transatlantic Trade and Investment Partnership is a free trade agreementbetween two of the world's largest economies. They are the United States, which produced $19.4 trillion in 2017, and the European Union, which produced $19.9 trillion. The two economies generate almost a third of the world's gross domestic product of $127 trillion. The importance of the EU is even greater for foreign direct investment. European companies accounted for $1.5 trillion, or 63 percent, of total FDI in the United States. American companies accounted for $1.7 trillion, or 50 percent, of FDI in Europe in 2009.

The advantages of the TTIP are evident. Greater growth would create jobs and prosperity for both areas. Former U.K. Prime Minister David Cameron announced it could create two million jobs. Some industries would benefit more than others would. For example, drug companies would cut costs. That's because there would be one agreed-upon drug testing program for the United States and EU. The electric car industry would profit by complying with one unified standard. American farmers could expand if the EU permitted genetically modified agricultural products. An agreement would strengthen the geopolitical standing of the Trans-Atlantic bloc against the rising economic power of China, India, and other Pacific nations, as well as the growing success of Latin America. If the United States and the EU could iron out their differences, they could stand as a united front against market threats from the rest of the world.

Many industries could suffer from the increased competition from Europe. That might result in fewer jobs for American workers. These disadvantages go with any trade agreement. For example, European agribusiness would suffer from cheaper American-made food imports. Both governments would have to stop protecting industries such as French champagne. Boeing, an American plane company, is in fierce global competition against France's Airbus. The agreement could hurt one more than the other.