Free Trade Debate with Constanze Picking and Bruce Stokes
The Paris office of the German Marshall Fund of the United States and the American Chamber of Commerce in France organized a private breakfast discussion with Bruce Stokes, Director of Pew Global Economic Attitudes and Non-Resident Fellow at GMF, and Constanze Picking, Senior Policy Adviser at the U.S. Chamber of Commerce's European Division and Non-Resident Fellow at GMF, on the political debate circling a US-EU Free Trade Agreement, its obstacles and potential. The discussion took place at the American Chamber of Commerce in Paris on Friday, February 22nd and was moderated by Alexandra de Hoop Scheffer, director of GMF-Paris.
Constanze Picking presented the defining elements of the project of a TransAtlantic Free-Trade Agreement (TAFTA), its history since the mid-1990s and its expected implications. She highlighted this project’s immense potential agreement in terms of growth and employment both in the U.S. and in Europe, as well as the positive spillover effect it would trigger for global economy. Indeed, transatlantic commerce relationship constitutes 30% of global trade and 70% of the global service sector today, as shown by the 2013 Transatlantic Economy Report of the Center for Transatlantic Relations. As a result, although this relationship already benefits from extremely low tariffs, a zero-tariff agreement would still result in great gains of competitiveness, and increase of real wages on both sides of the Atlantic. Large and medium-size companies would be the first to benefit from this agreement, while small companies will experience more difficulties as they will face transatlantic competition. Constanze Picking argued that transatlantic partners must differentiate a potential TAFTA from other free-trade agreements as it is being designed by two actors who already share common standards, and should embrace a step-by-step approach to prevent existing hurdles such as agricultural goods or intellectual property regulations stop the whole process. The method should therefore be very progressive (many trade-agreements failed because they were drafted as policy that should be accepted or rejected completely) but the agreement should be ambitious, and transatlantic leaders must not fear addressing energy, environment, and labor issues — although it may take a long time to reach an agreement.
In his presentation, Bruce Stokes dealt more specifically with the political aspects of this potential agreement. He argued that the increasing influence of China on transatlantic economies is the main reason why agreements like TAFTA have been the focus of recent debates. Indeed, as more American and European citizens’ have ties to the Chinese economy in the future (or even directly work for Chinese companies), it will become more difficult to achieve this project. The economic interests of the transatlantic free-trade agreement still overcome the risk of alienating China, but it is unlikely that this will remain the case in more than ten years from now. Currently, the TAFTA project benefits from a unique consensus in the U.S. between the Republican elites and the White House and will probably not be the trade-unions’ main concern as they see the TPP project as more threatening for American workers. According to Bruce Stokes, the TAFTA is more than a FTA: it is about the future of transatlantic relations. He insisted on the need for transatlantic relations to develop a new dynamic, as they have lacked a common objective since the end of the Cold War, and the construction of a $30 trillion free-trade zone could constitute this new engine for the consolidation of the transatlantic partnership. In times of economic crisis, this may constitute the only way to foster growth without paying public money. In this context, the transatlantic strategic community should work on the promotion of this agreement, and not focus too much on obstacles such as agricultural goods that constitute a minimal part (4.5%) of transatlantic trade. As for the political cost of this project, it is still difficult to assess whether public opinion will support the idea of the TAFTA or not, but opinion polls already show a strong and constant support for the establishment of common standards and the deepening of the economic partnership between Europe and the United States. Finally, he pointed out that the American time frame — the agreement is expected to be reached by the summer 2014 — is considered to be overly-optimistic by European partners, and that the effective results of this agreement should not be expected before the end of the decade.
About thirty economists, journalists and corporates were present in the attendance, along with French officials and representatives of international institutions.