The United States and the European Union (EU) are currently negotiating a proposed Transatlantic Trade and Investment Partnership (TTIP). A recent survey by the Atlantic Council and the Bertelsmann Foundation of over 300 “stakeholders” who have an interest in the TTIP talks suggests a possible strategy to jumpstart the agreement. Their survey found:
- It is unlikely that an agreement will be completed before 2016;
- The most important issue in TTIP talks, out of 19 possible options, is “elimination of tariffs or significant tariff reductions across most sectors”; and
- From those 19 possible choices, the easiest issue to negotiate is also “elimination of tariffs or significant tariff reductions across most sectors.”
Since the most important outcome in TTIP talks is also widely agreed to be the easiest to negotiate, why not simply go ahead and eliminate tariffs?
A possible agreement could read: “As of January 1, 2015, all tariffs between the United States and the EU will be reduced to zero.” That type of agreement could be concluded and approved by Congress before the NCAA basketball tournament wraps up—if President Obama and the EU both wanted it.
This would provide a significant tax cut for Americans. Imports from the EU are the second-largest source of U.S. tariff revenue, taking $4.9 billion out of the pockets of U.S. consumers in 2013. Tariff elimination would benefit U.S. exporters, too. For example, the EU imposes a 10 percent tariff on U.S.-made cars, and its average tariff on U.S. agricultural exports is 12.8 percent. Cutting tariffs would also establish momentum to help TTIP negotiators make progress toward greater economic freedom on other, more contentious issues.