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1 European . commission . Strasbourg, SWD(2013) 68 final commission STAFF WORKING DOCUMENT. impact assessment Report on the future of EU-US trade relations Accompanying the document Recommendation for a Council Decision authorising the opening of negotiations on a comprehensive trade and investment agreement, called the Transatlantic Trade and Investment Partnership, between the European Union and the United States of America {COM(2013) 136 final}. {SWD(2013) 69 final}. EN EN. commission STAFF WORKING DOCUMENT. impact assessment REPORT. ON THE FUTURE OF EU-US TRADE RELATIONS. 1. TABLE OF CONTENTS. 1. PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES. Organisation and timing Studies, public consultations and expert evidence Studies Public consultations and expert evidence The impact assessment Board 2.

2 PROBLEM DEFINITION. Introduction The problem Bilateral trade is not fulfilling its potential Why unfulfilled trade potential is undesirable The consequences of restricted access and choice for consumers Lost labour and welfare benefits The problem drivers Tariffs Regulatory measures Limited access to the government procurement market in the US. The need for EU policy intervention 3. OBJECTIVES. General objectives Specific objectives The EU operational objectives The perceived US operational objectives Consistency of the EU operational objectives with other EU policies 4. POLICY OPTIONS. Policy Option A: No policy change (baseline scenario). Policy Option B: Tariff-only, services-only and procurement-only agreements Policy Option C: A comprehensive EU-US Free Trade Agreement 5.

3 impact ANALYSIS. Model and assumptions Policy option A: The baseline scenario Policy option B: Tariff-only, services-only and procurement-only agreements 2. Overall economic impact of a tariff-only agreement Overall economic impact of a services-only agreement Overall economic impact of a procurement-only agreement Policy option C: A comprehensive Free Trade Agreement Overall economic impact of a conservative FTA. Overall economic impact of an ambitious FTA. impact on sectoral competitiveness in the EU and the US. Sector specific analyses of the electrical machinery, insurance industry and motor vehicles sectors : Electrical machinery : Insurance services : Motor vehicle sector Economic impact on third countries impact on small and medium enterprises (SMEs).

4 Analysis of environmental impacts Analysis of the impact of the policy options on the climate and climate change resulting from CO2 emissions assessment of the potential impact of the policy options on biodiversity, natural resources and waste, and the environmental consequences for firms and consumers The social impact Overall estimation of changes in welfare in the EU and the US. Sectoral analysis of the impact on employment The impact on human rights The impact on administrative costs The impact on the budget of the European Union 6. COMPARISON OF THE DIFFERENT POLICY OPTIONS. Positive and negative effects of the policy options Summary of the effects of the different policy options in table form Identification of a preferred policy option 7.

5 MONITORING AND EVALUATION. Core indicators of progress towards meeting the objectives Monitoring and evaluation arrangements 3. ANNEXES. ANNEX 1 The initial study on NTMs (Ecorys 2009) assessing barriers to trade and investment between the EU and the US. ANNEX 2 Tables showing the economic impact of policy options (CEPR 2013). ANNEX 3 The main aspects of the Computable General Equilibrium (CGE) Model ANNEX 4 EU-US trade statistics ANNEX 5 Summary of the contributions to the "Public Consultation on: The future of EU-US trade and economic relations". 4. 1. PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES. Organisation and timing During their 28 November 2011 Summit meeting, President Jos Manuel Barroso, President Herman Van Rompuy and President Barack Obama established the High Level Working Group on Jobs and Growth (HLWG).

6 They tasked it with identifying policies and measures to increase trade and investment to support mutually beneficial job creation, economic growth, and competitiveness. From its inception, the HLWG on Jobs and Growth has proceeded at good speed based on close cooperation between the European commission and the US authorities, led by DG. TRADE and the USTR respectively. A joint work programme was established, deadlines were agreed, and a series of thematic subgroups went into details in all areas The HLWG has been intended to give both sides reassurance that trade negotiations, if launched, would produce results that are likely to fall within a mutually acceptable range of outcomes.

7 By June 2012, the HLWG had made significant progress in analysing jointly a wide range of potential options for expanding Transatlantic trade and investment. In its interim report, the chairs of the HLWG, Commissioner Karel De Gucht and USTR Ron Kirk, reached the conclusion that a comprehensive agreement addressing a broad range of bilateral trade and investment policies as well as issues of common concern with respect to third countries could potentially provide significant benefits to both economies. This report was considered a preliminary result and in certain areas further substantive analysis was required before a definitive recommendation could be made. The HLWG continued its intensive work in the second semester 2012 with the aim of specifying the extent to which the parties agree on the scope of a potential trade initiative and the degree of shared ambition regarding their respective priorities.

8 A final report has been published on 13 February 2013. It concluded that a comprehensive agreement, which addresses a broad range of bilateral trade and investment issues, including regulatory issues, and contributes to the development of global rules, would provide the most significant mutual benefit of the various options considered. It recommended to and EU Leaders that the United States and the European Union launch, in accordance with their respective domestic procedures, negotiations on a comprehensive, ambitious agreement that addresses a broad range of bilateral trade and investment issues, including regulatory issues, and contributes to the development of global rules.

9 In its October 2012 resolution on trade and economic relations with the United States, the European Parliament called for the launch of negotiations of a comprehensive EU-US trade 1. Among the areas that were discussed at both expert and political level were: tariffs, regulatory issues (including technical barriers to trade and sanitary and phytosanitary rules), services, investment, public procurement, intellectual property rights (including geographical indications) and trade rules which cover, inter alia, trade facilitation/customs, trade-related aspects of competition and state-owned enterprises, trade-related aspects of labour and environment, horizontal provisions on small- and medium-sized enterprises, and access to raw materials and energy.

10 2. The European Parliament resolution received a majority of 526 for, 94 against and 7. abstentions: 388. 5. In view of the potential economic and social benefits, deeper Transatlantic economic integration could provide for the EU, the February 2013 European Council called upon the commission and the Council to follow up on the recommendations of the HLWG without delay during the current In advance the decision to request a negotiating mandate, the commission services have undertaken an impact assessment of a potential trade initiative with the United An impact assessment Steering Group (IASG) was created for the purpose of this impact assessment 16 May 2012 and met 30 May 2012, 7 November 2012 and 15 November 2012.