farhad emam Farhad Emam
Publish Date : 03/25/2016

TTIP and its Impact on the EU-Iran Trade

EXECUTIVE SUMMARY

Key terms

TTIP, EU-Iran trade, Armenia, Turkey, EU companies

Summary

In his article on “TTIP: Big business and US to have major say in EU trade deals, leak reveals” (Independent, March 17, 2016) Paul Gallagher explains that:

A leaked document obtained by campaign group Corporate Europe Observatory (CEO) and the Independent from the ongoing EU-US Transatlantic Trade and Investment Partnership (TTIP) negotiations reveal the unelected Commission will have authority to decide in which areas there should be cooperation with the US – leaving EU member states and the European Parliament further sidelined.

The article reveals that the main objective of TTIP is to harmonise transatlantic rules in a range of areas – including food and consumer product safety, environmental protection, financial services and banking.

This Legal Report covers the following issues:

a) What is TTIP?

b) TTIP and the American companies;

c) TTIP and the European companies;

d) TTIP and two neighbouring countries of Iran; and

e) TTIP and Iran’s economic policy.

I. What is TTIP?

The Transatlantic Trade and Investment Partnership (TTIP) is a trade agreement under negotiation between the European Union and the United States. It can be considered as a companion agreement to the Trans-Pacific Partnership (TPP). As explained on the website of the European Commission, TTIP covers the following subjects:

·         Trade in Goods and Customs Duties - Cut or scrap customs taxes on goods we export to each other;

·         Services - Make it easier to sell services and investment in US;

·         Public procurement - Let EU firms bid for US public contracts; and

·         Rules of Origin - Agree rules that determine where a product is from.

On the same website it is explained that TTIP also aims at the following goals:

1.       Influence world trade rules; and

2.       project the EU values globally.

Both of the above objectives are open to contradictory interpretations.

II. TTIP and the American companies

On the website of the Office of the United States Trade Representative, the TTIP’s impact on the US-EU trade is explained in clear terms:

The U.S. and EU economies are two of the most modern, most developed, and most committed to high standards of consumer protection in the world.  T-TIP aims to bolster that already strong relationship in a way that will help boost economic growth and add to the more than 13 million American and EU jobs already supported by transatlantic trade and investment. T-TIP will be a cutting edge agreement aimed at providing greater compatibility and transparency in trade and investment regulation, while maintaining high levels of health, safety, and environmental protection. T-TIP presents an extraordinary opportunity to strengthen the bond between vital strategic and economic partners. (emphasis added)

The US Press Statement at the end of the TTIP Round in Brussels on February 26, 2016 is lucid on the main objective of the TTIP:

We made significant advances in the regulatory area during the round.  Our goal in T-TIP – which makes it one of the most ambitious trade agreement in history – is to bridge, where possible, regulatory divergences and promote greater regulatory compatibility – all without lowering the environmental, health and safety protections that our citizens have come to expect.

What would be the mechanism to be established and developed to “bridge regulatory divergences and to promote greater regulatory compatibility”? Would it be possible to construct this bridge without devising common policies for the EU and the US in order to be applied globally? If the answer is on the positive side, how would the American and the European global economic policies get closer to each other, especially as far as international trade with countries like Iran is concerned? In the meantime, as long as this policy is not developed, what else could be expected from the European companies but to stay away from a country that is going to become subject to new and common US-EU economic policies? To verify this understanding of the impacts of the TTIP on the European companies, it is indispensable to understand the European perspective of the TTIP.

III. TTIP and the European companies

The website of the EU Commission explains the impact of the TTIP on European companies and regulatory system in the following way:

We want to cut the costs EU exporters face when:

·         standards are the same in the EU and US, but

·         EU and US rules differ.

But we're also committed to:

·         protecting our high standards

·         safeguarding EU regulators' independence

·         upholding the precautionary principle

·         ensuring governments' right to pass new laws in future to protect people.

Briefly put, the EU and the US standards, laws and policies will get closer to each other. After finalization of the TTIP, it must be applied by the EU and globally. What entity shall be responsible to implement this agreement? What is the mechanism devised or to be devised for implementation of the TTIP provisions? The website of the European Commission sheds some light on this issue by explaining that:

The Commission, or the Council in duly specified cases, acquires the necessary implementing powers, in instances where uniform conditions for implementing legally binding Union acts are needed.

The Commission's exercise of implementing powers is controlled by the Member States.

The rules are set out in Regulation 182/2011 on the control by the Member States of the Commission's exercise of implementing powers.

Article 2 of Regulation 182/2011 goes into more detail on implementation of the EU regulatory texts:

1. A basic act may provide for the application of the advisory procedure or the examination procedure, taking into account the nature or the impact of the implementing act required.

2. The examination procedure applies, in particular, for the adoption of:

(a) implementing acts of general scope;

(b) other implementing acts relating to:

(i) programmes with substantial implications;

(ii) the common agricultural and common fisheries policies;

(iii) the environment, security and safety, or protection of the health or safety, of humans, animals or plants;

(iv) the common commercial policy;

(v) taxation.

3. The advisory procedure applies, as a general rule, for the adoption of implementing acts not falling within the ambit of paragraph 2. However, the advisory procedure may apply for the adoption of the implementing acts referred to in paragraph 2 in duly justified cases.

After approval of the TTIP by the EU, the EU Commission as well as the EU Members shall put this agreement into practice.

IV. TTIP and two neighbouring countries of Iran

1. Turkey: The process of adhesion of Turkey to the EU has been going on since long time ago. An agreement between the EU and Turkey on March 18, 2016 includes a promise on the EU side to accelerate the adhesion process. As a result, Turkey will become even more attentive to respecting all EU rules and regulations (including those resulting from the TTIP), especially as far as dealing with Iran is concerned.

2. Armenia: Armenia is a member of the Council of Europe and has signed a Partnership and Cooperation Agreement (PCA) with the EU in 1996. This, however, does not stop Armenia from maintaining a solid relationship with Iran. Both sides are interested in few issues of joint concern including the New Eurasian Transport Corridor, and the Iran-Armenia gas pipeline. The impacts of the TTIP on economic policy of Armenia need to be studied separately.

V. TTIP and Iran’s economic policy

The negative effects of the TTIP provisions on expansion and promotion of international trade with Iran is too obvious to need any further explanations. One of the legal ways of dealing with these impacts is explained on the International Economic Law and Policy Blog in the following terms:

Both the EU and the TPP partners of the United States should demand clear language in these accords, cutting off at the pass the possibility that non-US business entities could be punished for dealings with Iran. Such sanctions should be prohibited where they are unilateral, and not justified by an agreed framework for responding to violations.  Since the Obama Administration has pioneered the path of diplomacy and cooperation, it could scarcely object to such a clause.

In the absence of a countervailing measure in the TTIP, American and European companies will take more distance from the Iranian market. This means that Iran will have no other choice but to get closer to China and Russia.  What would be the next steps of Iran to achieve closer synergy with the Chinese and Russian economic policies? This issue will be discussed in one of our future Legal Reports.

 

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