For Transatlantic Trade This Time Is Different Bertelsmann Foundation — Volkswagen Atlantic

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For Transatlantic Trade, This Is Different

by Tyson Barker

In his of the Union address two weeks U.S. President Barack announced that Washington launch negotiations with the Union this year on a venture called the Transatlantic and Investment Partnership (TTIP). in the United States and Europe to make the TTIP the most economic agreement in the world, and any will likely go beyond the basic aspect of free — namely, the elimination of More broadly, Europe and the States can be expected to align regulations regarding manufacturing and such as finance and telecommunications. The would also address new of economic growth, including the shale gas market and online property. They also to eliminate almost all barriers to direct investment.

The elimination of alone, which average out to percent on goods traded the United States and Europe, remove a $24 billion impediment to trade. Beyond free however, the real gains the deal would come regulatory cooperation. Transatlantic would flourish, for example, if cars that passed inspections in Stuttgart also met appropriate for U.S. drivers, if and medical devices designed in one could be sold to consumers in the more quickly, and if smart-phone built for both markets be interoperable. In the highly regulated of advanced manufacturing and services, the of the U.S. and European economies, business would give side a huge boost in

The idea for such a deal is not Apart from the enlargement of and the EU to formerly communist countries, no project has captured the imaginations of and European leaders as much as the of a transatlantic marketplace. Together, the and European economies account for 50 percent of global GDP, and the investment, and commerce that between them amounts to $5 annually. The sheer size of relationship provides the logic the United States and Europe’s to set the economic rules by which the of the world abides. Bringing the two together in a free trade could unleash growth of 0.5 to two of GDP on each side of the Atlantic and as many as two million jobs in the


For all its this great economic has remained illusory. One previous the Clinton administration’s 1995 New Agenda, aimed to refocus relations on economic ties, the newly created European as the primary interlocutor. As with the negotiators then sought to a flurry of new institutions and mutual agreements that would a free trade area the United States and Europe. they tried to create a marketplace in one swift stroke. But immediate security issues in the and the admission of China to the World Organization pushed this to the wayside.

Later, in 2007, the Bush sought to revive the issue of economic cooperation, working Germany to create the Transatlantic Council. The TEC was meant to graft the and European economies more together, primarily through cooperation in areas as disparate as electric vehicles, and nanotechnology. initiative aimed at growing a marketplace by slowly breaking the regulatory barriers between the two But the effort quickly became down in technical disputes one issue: the import of chlorine-washed from the United States to

A major obstacle to such is that culture and commerce when two governments attempt to their regulatory policies, with unpredictable outcomes. In the States, the basic building of regulation is cost-benefit analysis. takes a more cautious placing the burden of proof of a safety on the innovator. In essence, the in regulatory approach can easily into the stereotypes that side harbors about the whereas the American approach the outcome, the Europeans care about the process.

Could time be different? Differences in and European agriculture policies, Europe’s more restrictive of genetically modified organisms, been insurmountable stumbling in previous rounds of U.S.-EU talks, and there are signs agriculture could play the role this time Other sectors are also to sow discord between the two sides. and the United States have ideas about how to regulate tech companies, the use of cloud and cybersecurity. These issues become the subject of highly debates throughout Europe on rights to privacy and data In general, some European believe that the American lacks adequate protections the commercialization of individuals’ personal demanding that companies as Google and Facebook respect users’ right to be forgotten.


Still, these challenges, there are a of indications that a deal can be achieved this time Europe’s desire for an agreement is and Washington knows it. In light of the crisis and larger challenges to the approach to social welfare, in the United Kingdom, the Netherlands, and are looking to rejigger the European for long-term competitiveness — and are to adopt more market-based As a result, there is now a greater to accommodate U.S. conditions for a The United States has been to leverage its position to win favorable before the negotiations begin. In Washington insisted on achieving preliminary agreements to ensure the Europeans had sufficient political to dislodge the interest groups had prevented past deals, as agricultural lobbies and smaller such as the Greens and the Pirates, and parties on the far right and the far left.

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important, the strategic calculus for a Trade and Investment Partnership to have changed. First and a U.S.-EU trade and investment could boost the slumping on both sides of the Atlantic. allure has always been in previous trade talks, but anemic U.S. economic and the eurozone recession, the need for is particularly acute these In December 2012, unemployment at 7.8 percent in the United States and at percent in the EU. Consider the potential of a deal. Today, a third of the paid by the United States go to Zeroing out tariffs could add billion to both economies. And the benefits to be gained may come deeper regulatory alignment, in both sides seek to recognize the other sides’ certifications, and safety tests for as roughly providing an equivalent of protection for their consumers.

What is more, the logic such a deal is not just — it’s also Several geopolitical developments also tip the scales in favor of the

For starters, a trade deal give logic to a transatlantic that many observers is becoming irrelevant. A budget-constrained and a Europe still battling its debt crisis may find it to take joint action on the stage. With the United increasingly looking east Asia, and the EU increasingly turning the threat of the transatlantic community pulled apart is real. But negotiations would reinvigorate the alliance. Moreover, they also help legitimize the EU in the of some euro-skeptic governments, as in London and in Prague, by providing a that would put market at the core of the EU’s global and allow their countries to their European and Atlanticist

On a grand strategic level, U.S.-European ties would enhance the West’s leverage China at a time when it is needed. As a result of China’s model, Beijing can harness its to enhance its industrial competitiveness. it selectively follows international rules, for example by restricting access to and exports of its raw materials, as rare earths, and ignoring norms about intellectual Left unchallenged, such could undermine commerce in not seen since the establishment of the Woods system. A robust and investment deal would the United States and Europe leverage in the coming decades to back against China and the liberal international order.

In and 2007, when the economic of the United States and Europe was the two sides had the luxury of putting off When the Clinton administration for a trade deal, China’s was the size of Turkey’s. By the time of the round of talks, the Chinese was the size of Germany’s. Now, the OECD predicts that will become the largest economy by 2016, giving it ability to set the terms of global As much as anything, this in the economic pecking order has the need for a U.S.-European trade

In the broadest terms, a U.S.-EU deal would allow the States and Europe to maintain sway over global governance. Both recognize their ability to set global will diminish as economic shifts to the Asia-Pacific region. In the decade, no one power will be to drive the international agenda. But if join forces, the United and Europe can channel their economic weight to keep of the reins of the global economic

In his 1901 novel Buddenbrooks . Mann describes the staid middle class, writing, The visible and tangible signs and of happiness and achievement often only when in reality is already starting to go downhill The same could be said of the relationship. The honeymoon period by the global financial crisis and the of China, during which sides may be able to make the compromises, will be short, subject to a battery of political and shifting priorities. The political who have pushed for opening now have the responsibility to ensure the current conducive climate to success.

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