Dr. Werner Raza:

That depends. It has not been broken down to individual countries. If one did a trade or employment weighted disaggregation, it would perhaps translate to between 10,000 and 20,000 jobs in Ireland. Those benefits are long-term. They will accrue only over a period of ten or more years.

The press mistakenly presented TTIP as giving an economic boost to the EU in the short term. That will not happen. The implementation of the agreement will take time and the effects of the economic gains from the agreement will thus accrue only in the long term.

Second, the estimated gains depend on the reduction of non-tariff measures. The previous two speakers already mentioned that for EU and US industries, this agreement focuses on regulatory harmonisation and alignment. Since the two economic regions are already well integrated because tariff barriers are at very low levels of 2% to 3%, on average, any further economic benefit must come from the reduction of non-tariff measures. In that sense we are no longer speaking about a conventional free trade agreement but it is an agreement about regulatory change or alignment. A total of 80% of the estimated gains I have mentioned will come from the alignment of non-tariff measures, which are all kinds of laws, regulations, technical standards, licensing requirements and processes which differ in the two regions, as elaborated by the previous speakers.

In the studies the assumptions on how much those regulations can be aligned or reduced have been bold; for example, in most of the studies it is assumed that 25% to 50% of those regulations can be aligned to some common standard or harmonisation, or will be subject to mutual recognition. That is a crucial assumption. The other crucial assumption is that it has been commonly assumed in those studies that these regulations present a cost to businesses, which they do. That cost has been assessed by means of surveying company managers and receiving their assessment of the cost of certain regulations to their companies.

The other side of the coin, in terms of assessing the costs and benefits of regulations, would be to assess the social cost of a reduction or elimination of a regulation. This has not been done which in our view is a methodological flaw in most of those studies. It is well established in economic theory that regulation is welfare enhancing in so far as it corrects for market failure or in so far as it is used to secure certain public policy goals - public health, security, environmental protection, social regulation etc. If one changes regulation, either by harmonisation or by abolishing certain regulations, that will have a negative effect on the safeguarding of those public policy goals. That presents a social cost. None of these studies takes account of this. Our conclusion is that it is one-sided. It takes into account the cost savings for companies but not the potential social costs of deregulation or regulatory alignment. Policy-makers in the European Union and the member states must scrutinise it in great detail to establish how far regulatory changes, harmonisation or mutual recognition as introduced by the agreement will lead to changes in the quality of regulation. That is the third point.

The fourth point is that none of those studies takes into account macroeconomic adjustment costs. These macroeconomic adjustment costs can accrue in three areas. They can accrue in the labour market because there will be shifts in employment within sectors, and potentially also between sectors because of the agreement, resulting in unemployment and related costs. That includes long-term unemployment. These costs might be substantial, especially during the ten year transition period. Based on projected job displacement, in a study by CEPR, of between of 400,000 and 1.1. million, a rough and conservative calculation suggests implied costs of €5 billion to €14 billion in unemployment benefit, excluding costs for retraining and skills acquisition. We assume there will be temporary unemployment and that is also assumed by the studies because while some sectors will be negatively affected by the trade agreement through input competition, others will be positively affected by it because it promotes additional exports.

There will, therefore, be sectoral shifts in employment as well as a level of temporary unemployment. We also expect that there will, at least partially, be long-term unemployment as a result of the agreement. There are very different conditions in the various EU countries in terms of the labour market situation, with high levels of unemployment in some. It would be too bold to assume, as some of the studies do, that all of the temporary unemployment that will arise as a consequence of the agreement will be resolved by the persons affected finding new jobs that pay the same wage as before.

If we take that into account in the economic analysis, as we should, we can see there will be adjustment costs in the labour markets. As I said, our estimations suggest that those costs for the European Union as a whole will be between €5 billion and €14 billion in the ten year transition period. In addition, according to our estimation, forgone public income from taxes and social contributions from unemployed persons could accrue to between €4 billion and €10 billion in the same period. Another important factor is the effect of TTIP on public revenue income. We estimate that revenue losses for the EU budget as a result of tariff elimination - tariff income, after all, goes into the public budgets - could be in the order of 2%, or €2.6 billion per year.