Economic Incentives for Indirect TTIP Spillovers. CEPS Special Report No. 94/October 2014 [TTIP Series No. 2]

A deep, comprehensive and ambitious TTIP should not undermine or otherwise negatively affect the WTO and its signatories. Among other things, this means that trade diversion ought to be minimised and positive spillovers stimulated. The present CEPS Special Report provides some elementary quantification, which helps to understand the economic incentives for third countries to seek regulatory alignment with TTIP results, where relevant, and for which TTIP should be ‘open’. It focuses on ‘indirect’ spillovers and employs a rather aggregate economic approach. We find that, of three groups of countries that are important for trade with the EU and the US, the ‘closest’ neighbours (NAFTA, EEA, Switzerland and Turkey) exhibit powerful incentives to align so as to benefit from positive spillovers. This is less clear for two other groups. Of the (seven) ‘biggest traders’ (in manufactured goods, for which spillovers matter most), China turns out to have the greatest interest in alignment in selected sectors, followed by Israel, Japan and South Korea. Whereas the latter three either have or are negotiating FTAs with the US and the EU, precisely China has none and remains outside TPP as well. In terms of sectors, the chemical sector followed by electronic equipment are by far the most important, with agro-products and fish as a good third (SPS issues). However, in chemicals and electrical equipment, the TTIP negotiations so far, and recent US/EU regulatory cooperation, do not indicate an ambitious approach, which could reduce regulatory barriers to market access drastically.

Abkhazia, South Ossetia, Nagorno-Karabakh: unfrozen conflicts between Russia and the West. OSW Special Report, 9 July 2008

The Southern Caucasus is the site of three armed conflicts with separatist backgrounds, which have remained unsolved for years: the conflicts in Georgia's Abkhazia and South Ossetia, and Azerbaijan's conflict over Nagorno-Karabakh (including the areas around Nagorno-Karabakh which were seized by Armenian separatists in the course of the war). Neither Georgia nor Azerbaijan have had any control over the disputed areas since the early 1990s. Both states are simultaneously in conflict with the separatists' informal patrons, respectively Russia and Armenia. After over a decade of relative peace during which the conflicts remained frozen, tension has recently risen considerably: in the case of Abkhazia and South Ossetia, large-scale fighting may break out in the coming months, whereas in the case of Nagorno-Karabakh and the Azeri-Armenian conflict, such a threat may materialise within the next five years. The current formula for politically resolving the conflicts is ineffective and close to exhaustion, and the prospect of any alternative peace plans being developed is rather distant. The conflicts in the Southern Caucasus are of increasing concern to the West, mainly because of the Western actors' constantly growing political and economic involvement in Georgia and Azerbaijan (including support for reforms and development of the gas and oil transmission infrastructures), as well as its less intensive commitments in Armenia. An outbreak of open fighting over the separatist regions would destabilise the Southern Caucasus, largely undoing the results of the actions which the EU, NATO and the USA have taken in the region in recent years. Moreover, the situation in the Southern Caucasus, especially the separatisms themselves, have in fact become an element in the wider geopolitical game between the West and Russia. For Russia, the stakes are maintaining its influence in the region, and for the West, demonstrating its ability to effectively promote democracy and economic modernisation in the countries bordering it.

Public Procurement in the Transatlantic Trade and Investment Partnership Negotiations. Paper No. 2 in the CEPS-CTR project "TTIP in the Balance" and CEPS Special Report No. 100/February 2015

For more than 20 years, the United States and the European Union have engaged in often-contentious negotiations over access to government procurement. The EU is dissatisfied with the level of procurement that the US has opened under the WTO Government Procurement Agreement and, as a consequence, it does not give the US its most comprehensive coverage. The US has been constrained in responding to the EU’s requests for greater access, especially to state procurement, by both its federal structure of government and by domestic purchasing requirements. At the current time, neither party has proposed a way to break the impasse. This paper reviews the current state of affairs between the US and the EU on government procurement, examining the procurement that they open to one another and the procurement that they withhold. It then proposes a strategy for the two sides to use the TTIP negotiations to move forward. This strategy includes both steps to expand their current commitments in the TTIP, as well as to develop a longer-term approach by making the TTIP a ‘living agreement’. This strategy suggests that the EU and the US could find a way to expand their access to government procurement contracts and at least partially defuse the issue.

Transatlantic MRAs: Lessons for TTIP? CEPS Special Report No. 101/March 2015

It is striking that there is little or no mention in the TTIP debate so far of the US-EU Mutual Recognition Agreement (MRA) concluded in 1998. At the time, expectations of the gains from the MRA were high. One should expect the MRA to be instructive for TTIP and entail some lessons to be learned for today’s attempt to lower technical barriers to trade (TBTs) across the North Atlantic. We offer an analysis of the 1998 MRA, the difficulties in the prior negotiations and those during the implementation phase, the subsequent and present status of sectoral approaches. The MRA experience revealed clearly how difficult it is to accomplish the acceptance of all relevant aspects of conformity assessment of the trading partner for the mere purpose of testing and certifying export goods on the requirements of the importing economy. The MRA has succeeded only in a few sectors. However, the ambition in TTIP with respect to TBTs is said to go so much further. It is therefore important for all those involved or interested in TTIP to learn the lessons of this early exercise in lowering TBT costs. This paper reaches two main conclusions: i) the US-EU MRA was only partially successful and only for some one-fifth of the export flows at the time: a disappointing outcome and a far cry from the expectations of business and political leaders; and ii) the EU’s attempt to ‘balance’ the negotiations in 1995 by bringing in three relatively competitive sectors did not work out – it was precisely there that problems accumulated. It is critical that domestic regulators must be satisfied during and after the negotiations that their pursuit of health, safety, environment and consumer protection objectives will not be watered down in any way. Lessons drawn include, among others: MRAs are not about regulatory change (by definition), but if initial regulatory cleavages between trading partners are too wide, conditions become so restrictive that parties may regard them as a denial of the very purpose of the MRA. There are incentives to opt for alternatives in the market for the formalised designation of conformity assessment bodies in the MRA and these are often cheaper and faster, while equally qualified. Even in heavily regulated sectors such as medicines and medical devices, the narrow MRA has been superseded by near-global forms of effective cost-reducing cooperative (i.e. not treaty-based) regulatory alignment, a confirmation of the OECD approach that governments should think in terms of an entire spectrum of forms of regulatory cooperation.