Is Europe Better Off without TTIP?
GED Project Measures Opportunity Costs of Failed Negotiations  

In our March 2014 report, Who Profits the Most from Globalization, we demonstrated that on average, the more a country increases its interconnection with the rest of the world, the greater its economic growth. In other words, more globalization translated to more growth.

Against this background one can also ask what would happen if TTIP failed.

In a recent presentation at our TTIP Reloaded Conference in Rome, Dr. Gabriel Felbermayr, Director of the Ifo Center for International Economics, previewed research commissioned by the GED Project, that for the first time looked at the cost of not doing TTIP.

Dr. Felbermayr’s research demonstrated that the EU would immediately lose about 2 percent of economic growth that TTIP would have induced in the region.

Moreover, given that other huge trade agreements such as RCEP in Asia or TPP in the pacific might be concluded soon, Europe would likely face additional costs stemming from further trade diversion effects. Thus economic growth of EU Member States could slow by a 0.2 to 0.5 percent more.

Furthermore, without TTIP it is possible that other European agreements would be compromised without this increased level of competitiveness. In an age of global negotiations, the inability to close a TTIP agreement would also take pressure off of the WTO to keep pace.

At the same time, Dr. Felbermayr noted that failed TTIP negotiations could also reduce incentives and pressure for structural reforms that would increase competitiveness in EU countries.

So stay tuned, as we will present Dr. Felbermayr’s full findings in the coming months!