An Idea Whose Time Has Come
The EU and the US can at last begin working on the details of creating a true transatlantic market.
A US-EU free-trade agreement is an old idea whose time may finally have arrived. After years of rejecting such an initiative, Brussels and Washington have created a High Level Working Group to assess options for strengthening the US-EU economic relationship. The group will issue an interim report this spring and final recommendations in December.
While a free-trade agreement is just one of the options under discussion, the group is considering the nature of such an effort, its timing and what exactly will be the substantive, procedural and political stumbling blocks.
There is unprecedented support to do something to deepen and broaden the transatlantic market. But the window of opportunity to accomplish this will not remain open indefinitely. If this initiative fails, the current alignment of interests to make it happen may not be seen again.
German Chancellor Angela Merkel, British Prime Minister David Cameron and the presumptive US Republican presidential candidate Mitt Romney have all called for a US-EU free-trade agreement. Obama and Cameron discussed the issue during their White House meeting last week.
‘Barrier-free transatlantic market'
On Tuesday (20 March), business groups on both sides of the Atlantic – including the US Chamber of Commerce and Business Europe – asserted: “Now is the time to create a barrier-free transatlantic market.” They called on Obama, Herman Van Rompuy, the president of the European Council, and José Manuel Barroso, the president of the European Commission, to launch “comprehensive transatlantic trade, investment and regulatory negotiations this year”. In addition, the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) has said: “Increasing trade ties with the EU could be beneficial.” The strongest American labour endorsement of a trade deal in modern times.
And the policy community has endorsed the concept. A taskforce organised by the German Marshall Fund and the European Centre for International Political Economy recently called for a transatlantic barrier-free market. This week, a separate High Level Group convened by demosEUROPA in Warsaw, the German Marshall Fund, Notre Europe in Paris, the Stiftung Wissenschaft und Politik in Berlin and the European Policy Centre in Brussels called for a comprehensive transatlantic trade and investment accord.
With such backing, the High Level Working Group is now debating the details of such an effort. Should the goal be a classic free-trade agreement? Should the goal be more ambitious, a 21st-century deal (not unlike the Trans-Pacific Partnership now under negotiation), a Transatlantic Partnership that encompasses far more than a traditional free-trade agreement?
Should negotiations be conducted as a single undertaking, where nothing is agreed until everything is agreed – a position advocated by the Germans and the Commission. Or should negotiations on tariffs, services, regulation and so forth be conducted in parallel – a position backed by some Americans – increasing the chances of accomplishing something, but raising the possibility that the tough issues will never be resolved?
Chicken, pork and beef
Should every issue initially be on the negotiating table or should some politically charged concerns simply not be discussed? The Commission has suggested leaving out chicken, pork and beef, given past transatlantic disputes over these commodities. The White House and the US Congress flatly reject doing so. But other issues – such as public procurement, which is largely regulated at the US state level – pose real problems for Washington.
Will the Europeans demand that the Obama administration get trade negotiating authority from the Congress before proceeding with any talks? Without such authority, Congress could easily amend a deal to death.
With Washington looking to negotiate free trade with Japan through the Trans-Pacific Partnership and Brussels likely to open free-trade talks with Tokyo soon, the glaring missing link in future trade policy is an EU-US free-trade agreement. Never have the stars been so aligned to do this.
Bruce Stokes is the senior transatlantic fellow for economics at the German Marshall Fund.