08 Sep 2016

Potential Economic Effects of TTIP for the Netherlands and the EU

Hugo Rojas-Romagosa

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Author: Hugo Rojas-Romagosa

Series: CEPS Working Document No. 425    No of pp: 31

The Transatlantic Trade and Investment Partnership (TTIP) is a comprehensive preferential trade agreement that is expected to have a significant effect in EU and US bilateral trade and investment relations. As the negotiations are ongoing, this paper uses a scenario analysis to estimate the potential effects of TTIP under likely negotiated outcomes. In our main scenario, we assume a final trade deal where current tariffs are eliminated and non-tariff barriers are significantly reduced. Using a CGE model (WorldScan), we simulate the potential economic effects for the Netherlands and the EU. We find that US-Dutch bilateral trade doubles and this is translated into a positive but moderate effect on income of 1.7% for the Netherlands by the year 2030. These potential gains are higher than those for the EU and the US (both around 1%).

Keywords: TTIP,  preferential trade agreements, CGE models

JEL Classification: F13, F17, C68

Hugo RojasRomagosa is a research economist at the CPB Netherlands Bureau of Economic Policy Analysis, in the Hague.