CEPR

Tiny Gains of 40 Cents Per Person, Per Day in the US Come Via Underestimating TTIP’s Costly Protections

August 13, 2015

Contact: Dan Beeton, 202-239-1460

Washington, D.C.- A new issue brief from the Center for Economic and Policy Research (CEPR) examines widely cited studies on the potential gains from the Trans-Atlantic Trade and Investment Partnership (TTIP) and finds that they would deliver just 40 cents per person per day in the U.S., and 0.2 euros per person per day in the EU. Supporters of the deal between the U.S. and EU have touted the supposed gains, but the CEPR brief notes that these gains would easily be dwarfed by losses the great majority of workers would experience due to increased inequality, and also that the original studies did not examine the costs from protections for pharmaceuticals and other non-tariff barriers (NTB).

“The projected gains from the proposed TTIP would be so small that it would take 38 TTIPs to make up for the long-term damage the U.S. economy has suffered over the last decade,” CEPR Co-Director Mark Weisbrot said.

The brief, by economist David Rosnick, looks at a widely cited study [PDF] by the Centre for Economic Policy Research in London, England (not affiliated with the D.C.-based CEPR). The London-based CEPR study estimates that by 2025, under an “ambitious” scenario, the TTIP would increase—on average—U.S. consumption by today’s equivalent of about 20-40 cents per person per day; and by 0.1-0.2 euros per person per day in the EU. Tariff reductions under the TTIP, according to the London-based CEPR, “would increase U.S. GDP by only 0.04 percent by 2027,” Rosnick notes – “raising consumption by a bit more than $1 per person per month.”

The London-based CEPR’s projections for these small gains come in part from its significant underestimating of the costs from patent protections for pharmaceuticals, copyright enforcement and other protections under the TTIP that could increase the price of a product by thousands, or tens of thousands, of percent.

Rosnick’s brief also points out that the London-based CEPR includes “indirect spillover effects” – “explicitly counting gains that go beyond the scope of the agreement” in order to project the gains from the TTIP that it does. “This, in combination with a blind eye toward patents and copyrights, suggests that the study overestimates the potential gains from the TTIP—though perhaps no more so than similar studies,” Rosnick states.

“As with similar projections made for the Trans-Pacific Partnership, the small gains most U.S. and EU workers would see from the agreement would be dwarfed by the effects of increased inequality that would result from the TTIP,” Rosnick said.

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