Ways of alignment of NTMs between the EU and US.

Non-tariff measures constitute the main trade barriers between the EU and the US. The last two decades the EU and US negotiated about these non-tariff measures and in some areas have come closer to each other; in other areas they – however – saw divergence in regulatory systems. Since the Transatlantic Trade and Investment Partnership (TTIP) the negotiations have accelerated. However, still a lot of work has to be done. This thesis describes the current situation between the EU and US concerning NTMs, focusing on the developments in the last two decades, the institutional setting and the current NTMs. In addition, this thesis elaborates on the different ways of alignment and their different economic impacts. This leads us to indicate which way of alignment to choose in which situation. We look at five ways of alignment: mutual recognition, harmonization, equivalence, giving the problem to the private sector and elimination of all NTMs. The economic impact has been determined by making use of the Global Simulation Model (GSIM). The political, technical and social impact of the different ways of alignment has been determined by literature research. We find that all ways of alignment have positive economic effects for the EU and US economies. The higher the cost savings, the higher the positive economic effect on welfare. The country that encounters the highest cost savings will have the highest export, and therefore the highest output, producer price and thus producer surplus. In the country with which this party chose to align, the highest competition on the market exists as import has increased. Due to this competition, consumer prices decrease here and output as well. Consequently there is a high consumer surplus but a low producer surplus; the net welfare effect is still positive though. When we look at the different effects depending on the way of alignment, we find that it is difficult to recommend a certain way of alignment, as the optimal way of alignment depends on the circumstances. However, upward harmonization can be very practical when a party wants to guarantee its own standard level. MRA is recommended when the economic effect is very important, when there is trust between the parties and when the standards of the parties are quite similar. However, social aspects need to be taken into account as well when determining which way of alignment to choose.