Not Your Parents’ Trade Politics: The Transatlantic Trade and Investment Partnership Negotiations

The Transatlantic Trade and Investment Partnership (TTIP) negotiations are the world’s most ambitious trade talks between the world’s two largest economies.  The politics associated with these significant negotiations, however, are not well captured by the existing International Political Economy (IPE) literature on trade.  First, rather than being rivals, American and European business interests are allies, adopting common positions on the talks.  Second, opposition within both the U.S. and the EU comes not primarily from firms and workers fearing increased economic competition, but from non-traditional trade actors – consumer and environmental groups and citizens – concerned about the erosion of valued regulations.  This paper argues that the misfit between the politics of TTIP and the expectations of the IPE literature has two principal sources.  First, the IPE literature focuses on arms-length trade in finished goods, while the transatlantic economy is profoundly affected by the extent of foreign direct investment.  Second, the IPE literature focuses predominantly on tariffs whereas the most important trade frictions in the transatlantic economy are associated with ‘behind-the-border’ policies.  TTIP is an extreme case in terms of the importance of regulatory difference and the extent of cross-investment.  Nonetheless, this paper argues that TTIP suggests some, increasingly important, scope conditions to the existing IPE theories of trade.