Transatlantic Trade And Investment Partnership And The American
TTIP, the free trade agreement that is currently being
negotiated between the United States and the European Union, if
successfully concluded by both parties will create the single most
important common market in the world where more than one third of
the world economic output is already being produced in these two
sovereign blocks. A possible establishment of such a significant
common market with its specific emphasis on legal compliance across
the Atlantic between these two jurisdictions, will inevitably have
wider legal and economic consequences for several different
business sectors. The issue has already been on the agenda for the
American Defense industry which has been keeping a keen eye on the
latest developments in the TTIP negotiations.
Wider Implications for the American Defense
It is likely that the defense industry will not be part of the
negotiations between the Americans and the Europeans in TTIP
agreement. However a general impetus, brought by the initiation of
a common market, for increased cooperation in transatlantic trade
will inevitably spill over to the defense industries. As the
Defense policy analyst Steve Williams elaborated on the possible
impact of TTIP on American defense industry, "TTIP would
create a "favorable environment" from which greater
defense cooperation could emerge."
Such a free trade agreement between these two giants, will have
a boost for the transatlantic defense industries community.
Currently the EU 28 average for national defense spending stands
around 1.5% of the EU 28 GDP. The uninhibited transatlantic
economic transactions is expected to increase the defense spending
in EU by an annual USD$ 2 to 2.5 billion which the American defense
industry is well positioned to benefit.
How to Tackle the Issue of Export Control?
Despite the likely absence of defense industry in TTIP
negotiations, one of the expectations usually mentioned by the
Europeans is at least the relaxation of some export control rules
regulating the defense industry items following the official
signing of the TTIP. Pundits like Leo Michel of the Atlantic
Council states that the proponents of the TTIP especially on the
European side, "hope the TTIP will knock down various US legal
and administrative obstacles to a more balanced transatlantic
defense industrial trade and technology partnerships".
However the U.S export regime that regulates the export of
defense industry items is a stringent one that involves various
different bodies for the final authorization of the related items
which only be realized through the obtainment of the export
license. Not only the American President himself, is empowered to
wield a substantial influence on defense related exports by the
Arms Export Control Act of 1976, but also bodies like State and
Commerce Departments which are vulnerable to political influences
have an important say on the issue. Moreover International Traffic
in Arms Regulation (ITAR) imposes controls for the export of the
defense related items enumerated in the U.S Munitions List.
A possible free trade agreement between the United States and
the European Union will have serious consequences for many of the
industries in these two jurisdictions. A special emphasis has
already been put on harmonizing two economic blocs' laws. Hence
a closer cooperation between several industries across the Atlantic
is expected. However when it comes to the defense industry the
benefits like closer cooperation or removal of legal and
bureaucratic obstacles, that the TTIP is expected to bring should
be seen through the lens of the U.S export regime. Since the export
of defense related items are regarded as a sensitive issue keenly
connected with national security concerns, a stringent export
regime imposes severe legal requirements to the export of such
defense related items. Since the export of such items involve
highly sensitive issues like technology transfer to the third
parties, a relaxation of aforementioned regime or a boost for
export licenses due to the positive impact brought by TTIP seems
unlikely. However it is highly likely that an increased economic
cooperation between the United States and the European Union as a
result of a possible free trade agreement will provide the European
countries with more leeway to increase their defense spending which
will benefit the American defense industry.
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