The impact of TTIP agreement on the European Union-United States coal trade potential

Abstract

The main aim of the paper is to assess the impact of currently negotiated TTIP agreement (Transatlantic Trade and Investment Partnership) on the use of hard coal in the EU and the US. Hard coal is the most important fuel in global electricity generation. This also applies to the United States, a leading manufacturer and exporter of this energy source. The US coal is exported to the EU market. The article presents the estimated exports of hard coal from the US to the EU. Due to the fact that price has a major impact on the size of exports, the paper presents the estimated prices, including freight costs, of power coal for the analyzed scenarios. According to one scenario, the US and European prices will be equalized (including freight costs) by 2020, while from 2025 on the comparative advantage and competitiveness of the US hard coal will decrease. Taking into account the fact that the export of coal from the United States is free from customs duties, the acceptance of TIPP should not affect the currently existing trade between the two continents and the amount of exported coal. Nevertheless, the question of hard coal economy cannot be separated from other sectors of the energy market, which can be significantly affected by the future agreement.