The Strategist

TTIP can be put into cold storage

11/11/2016 - 15:01

Fate of Transatlantic Trade and Investment Partnership, TTIP, is in the hands of future US administration, said German State Secretary of the Ministry of Economy and Energy Matthias Machnig on Friday.

Garry Knight
Garry Knight
Republican Donald Trump unexpectedly won the United States presidential elections. Experts say that this is casting doubt on possibility of reaching an agreement on TTIP. They are pointing to anti-globalization rhetoric of Trump, and indicate that the market perceives him as an enemy of free trade.

"We should wait for what will happen with the new American government, how can we proceed on TTIP, whether we will continue to TTIP. This decision, of course, depends on the new US administration. We want free trade, but based on good agreements, "- he said.

"If the US government wants, we can continue the negotiations, but now it rests on the US administration to decide on TTIP", - added Machnig.

Earlier on Friday, European Commissioner for Trade Cecilia Malmström acknowledged that negotiations on the TTIP probably will not be a top priority for the new US administration. In late October, Malmström said that the European Union will resume discussion of TTIP with a new American administration. After election of Trump, she noted that it isn’t possible to predict length of pause in the negotiations.

The EU and US have been in talks on the TTIP from July of 2013. The US plan was to conclude the negotiations before presidency of Barack Obama ends, namely, in November this year. Essentially, the agreement is about creating the world's largest free trade zone with a consumer market of about 820 million people. In addition to the US and EU countries, the project will include Canada, Mexico, Switzerland, Liechtenstein, Norway and Iceland, as well as candidate countries for EU membership.

During the campaign, Donald Trump has made a sufficient number of protectionist statements. In particular, he urged the country to "economic independence" using example of the UK, which citizens decided to "take control of their country back." 

"The factories continue to close, the boundaries continue to be opened abroad funneling billions of dollars and millions of jobs. This administration takes us from one economic disaster to another", - said Trump, speaking on his economic program.
He added that it was "it’s stupid to exempt foreign products from taxes. As a result, we have become dependent on other countries like never before." 

"Our brothers in the UK decided to take control of their country back," - said Trump. Against this background, he urged to vote for him to return "economic independence" to the United States.

The Republican called another even more full trade agreement on the Trans-Pacific Partnership (TTP) "a monstrous deal" with a "back door" for China. However, as the US President Barack Obama assured, the agreement was intended to counter growth of China. Besides the US, Canada, Mexico, the agreement involved Peru, Chile, Japan, Malaysia, Brunei, Singapore, Vietnam, Australia and New Zealand.

Head of the International Monetary Fund (IMF) Christine Lagarde noted that such protectionism may damage the world economy: "We believe that any protectionism is counterproductive in terms of economic growth, and leads to slower growth," - she said at a meeting with journalists.