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Op-ed: Moving Forward on U.S.-EU Free Trade

by Sally Painter

Even in the midst of crisis, the United States and Europe are two of the most interconnected major economies in the world. While European companies represent the largest segment of foreign investors in the U.S., a country that still attracts the most foreign direct investment (FDI) in the world, U.S. companies also remain the single most desired investors in Europe. Both blocs have always relied on mutual trade cooperation and increasingly open economies.

EU Free Trade Agreement


Sally Painter is chief operating officer and co-founder of Blue Star Strategies and a board member of the Truman National Security Project.

Yet the persistence of a number of barriers to trade and investment, combined with the need to boost growth in both economies, has led to a push for a comprehensive U.S.-EU Free Trade Agreement (FTA). The so-called Transatlantic Trade and Investment Partnership, or TTIP, was a centerpiece of President Obama’s recent State of the Union address, and congressional leaders have made it clear that they will pursue Fast Track Authority legislation to streamline the negotiating process.

But as the negotiations move forward, there remain significant questions. One is whether the agreement will truly be comprehensive — or will exceptions be made for French Champagne or genetically modified crops? And perhaps an even bigger consideration is the way in which such a deal will impact existing trade relationships between the United States, the European Union and the rest of the world. It is time for countries in Latin America, Africa and Asia to think about how this agreement will impact them, and how to approach it.

At the same time, both sides also face significant institutional resistance to change. TTIP represents one of the most complex economic negotiations ever attempted. Given the unwieldy structure of the EU government, combined with the size and diversity of the United States, it will be a challenge for both sides to harmonize a complicated net of regulations and standards, knowing our different cultures and approaches to regulation. Thus, sustained top-level engagement from the White House, Congress, the European Commission and the European Parliament will be crucial for the process to move forward.

On the European side, getting the agreement through will likely be easier than achieving the super-majority needed in the U.S. Senate, as the party and voting systems of the European Parliament are structured more favorably for this type of deal. Nonetheless, all 27 member nations have hard work ahead to iron out the details on agreements covering a vast array of economic sectors — from chemicals to steel, from agriculture to intellectual property.

EU Free Trade Agreement

Photo: Larry Luxner

And what about those countries that already have a FTA with the U.S., the EU, or both? It is fair to say that those members of multilateral trade areas such as NAFTA, CAFTA, CEFTA, and AGOA — as well as those with bilateral treaties — could be dramatically affected. Sectors and major industries in small countries that rely on exports to the U.S. or EU could be curtailed or pushed out of the market completely. Free trade agreements bring benefits and increase competitiveness — but also impose heavy costs if implemented without input from all those affected.

Thus, the two negotiating parties of TTIP will need to consider their existing treaty obligations and address all of their other economic partners. To ensure such a dialogue, it will be crucial for each affected country to identify the challenges that TTIP poses, and proactively make their voice heard in Washington and in Brussels. It will also be critical to engage in this process as soon as possible, since many of the parameters of the deal will be hammered out in the initial stages, and latecomers to the conversation will lose relevance and leverage. Especially while we are still slowly emerging from the global economic crisis, it is particularly important that we work to keep smaller economies stable and on a path of growth and development.

EU Free Trade Agreement

Photo: Larry Luxner
The European Parliment in Brussels

An agreement on TTIP is likely an eventual certainty. On the positive side, such a deal will mean that the two global economic powerhouses will be able to trade and exchange goods more cheaply than they do today, boosting both economies and contributing to international economic growth. At the same time, in such a sprawling, complex negotiation, there are bound to be unintended consequences for the range of smaller countries and trade blocs that also enjoy access to the U.S. and EU markets. The time is now to lay the foundation for an economically sustainable outcome for all, and engage wholeheartedly with the process.

Sally Painter is chief operating officer and co-founder of Blue Star Strategies and a board member of the Truman National Security Project.



About the Author

Sally Painter is chief operating officer and co-founder of Blue Star Strategies and a board member of the Truman National Security Project.

 

http://washdiplomat.com/index.php?option=com_content&view=section&layout=countries&id=2&Itemid=35

 

 

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