TTIP and its Effects on Austria. A Critical Literature Survey

With a comprehensive Trade and Investment Agreement, called Transatlantic Trade and Investment Partnership (TTIP) the European Union and the USA aim at creating the world's largest free trade area. It should help to stimulate growth and create new jobs. All TTIP studies so far forecast positive trade, welfare and employment effects on both sides of the Atlantic (in various sizes). However, these foreseen gains are not realised now but only after a long period of adjustment. The TTIP hence is not able to overcome the current economic crisis. The estimated welfare gains vary strongly according to the method applied: CGE models come up with modest welfare gains between ½ and 1 percent of GDP; estimations with gravity equations, however, predict great gains (5 percent increase of real GDP per capita in the EU and 13.4 percent in the USA). The results for Austria (1.7 percent GDP growth in CGE models to 2.7 percent in gravity approaches) are somewhat in between these extremes. The results concerning the effects of third countries are politically explosive. Gravity studies indicate extraordinarily large losses in trade (trade diversion) and welfare. This could challenge the acceptance of TTIP at the WTO. Above all, NGOs and the interested public are increasingly sceptical about the seemingly lack of transparency of the TTIP negotiations. Therefore, the European Commission in spring 2014 paused the negotiations and launched public online consultation on investor protection in TTIP.