Implications of TTIP on CEE

Impacts of the TTIP (Transatlantic Trade and Investment Partnership) on Central and Eastern Europe depend on the details of the final agreement. If it develops into a deep, comprehensive agreement, the impacts will be far bigger. In this case Central European member countries of the EU would theoretically gain a lot due to their integration into the division of labor mostly through transnational firms at different levels of their supplier chain. Had the governments of these countries pursued outward looking economic policies and improved business environment, this would attract additional foreign direct investments. However, the risk of inward looking policies in this region is intensifying, which would render the utilization of opportunities even more difficult. Regarding third countries from the region, the strategy Russia chooses to adopt seems to be the most important. The negative implications of a deep TTIP would be intense. The first impact would be related to trade diversion in the short run. The long term implication is, however, much more serious and relates to Russian energy exports that make up around 75% of Russian sales to the EU. As the TTIP would improve the market access of US energy to Europe, Russian energy exports would be seriously hit. To counterbalance these negative implications, in addition to export reorientation towards other countries, this country may want to increase its influence in other sectors through investments into European assets. In an extreme case, the TTIP may trigger stronger cooperation among large emerging countries to formulate concerted efforts to neutralize negative consequences of the agreement.