A study by the Economic Studies Institute (IEE),analyzing the impact of the TTIP on the Spanish economy, calculates that in a scenario which is both long term (3 to 5 years) and ambitious (decrease of 25% in current non-tariff barriers), the Spanish GDP could increase by 0.74% annually if this agreement was signed.
The EU and USA have been negotiating this agreement since 2013. Generally speaking, it favors trade of goods and services, and investment between both sides of the Atlantic. The IEE conducted this study on the assumption that the agreement will enter into force in 2020. Between 3 to 5 years after rollout and in an ambitious scenario, the TTIP could add another 9.230 billion euros to the Spanish GDP annually.
Reduction of non-tariff barriers – the key
In the short term (1 to 2 years) and assuming that non-tariff barriers would be reduced by 25%, the IEE estimates that the agreement could result in a boost of 0.36% to the Spanish economy. However, if this reduction only reaches 10%, the GDP would increase by 0.14%.
Based on this information, the IEE believes that “the most significant element in the TTIP refers to handling non-tariff barriers, whereas the impact of removing tariffs is less important.”
As for Foreign Direct Investment, again in a long-term, ambitious scenario, a decrease in barriers on either side of the Atlantic could lead to a 0.16% increase in GDP.
Increase in employment and wages
This report states that signing and enforcing this agreement would be “positive for the Spanish economy in net terms.” And also for employment, one of the most important challenges facing Spain.
IEE calculations foresee that 83,514 new jobs could be created annually in Spain if the TTIP were to be signed. Additionally, other macro and micro economic variables in Spain would be positively affected by the agreement, e.g. private consumption expenditure could increase by up to 0.98% annually and wages by 0.72%.
Spanish exporters, major beneficiaries
One of the main beneficiaries would be imports and exports. Julián Cubero, Head Economist for Economic Scenarios at BBVA Research, believes that “export and import flows of goods and services, and accumulated direct investment stock account for 50% of U.S. GDP and over 70% of EU GDP. However, there can be additional gains between the areas since their export and import structure is complementary.”
In an ambitious scenario, exports from Spain to the USA would increase by 32% and imports would increase by 30%. According to this study, the recipe seems to be clear: “Spanish companies must go farther into the U.S. market to be able to benefit from the reduced costs which this treaty would bring about.”
As for the sectors, if they are able to increase their production as they increase their exports, they will see the highest growth from the entry into force of the TTIP. We are talking about mining, food, textile, insurance and other manufacturing sectors.
An increase in exports would raise their production and, consequently, create a “greater boost to job creation”, states the report.