Transatlantic Trade and the Foundations of American Power
Yesterday, President Obama and some of his European counterparts officially announced their shared intent to move forward with negotiating the Transatlantic Trade and Investment Partnership (TTIP) – a prospective free trade agreement between Washington and the EU’s 27 member states. The initiative represents the latest element in the administration’s strategy to support the economic foundations of American power and modernize U.S. national security strategy for the 21st century where competitiveness will sustain U.S. global leadership. The Partnership is intended as a high-standards agreement to help shape the norms in areas like tariff reduction, investment and complex, often burdensome regulations across markets. To make this promise a reality, TTIP negotiations will have to incorporate stakeholders from business, labor and civil society in innovative and effective ways.
High-level economic statecraft sets the foundations of American power and global leadership. In November, then-Secretary Hillary Clinton explained the rationale for the TTIP: “Perhaps the most important question in the years ahead will be whether we invest as much energy into our economic relationship as we have put into our security relationship. At a time when countries are measuring their influence as much by the size of their economies as by the might of their militaries, we have to realize the untapped potential of the transatlantic market. This is as much a strategic imperative as an economic one. After all, so many of the things we do around the world depend on our economic strength, from providing defense to investing in emerging markets, to aiding development, to responding to crises. And there may be no greater threat to our security and our transatlantic partnership than a weak economic future on one or both sides of the Atlantic.” [Hillary Clinton, 11/29/12]
The TTIP can grow the U.S. economy and prepare the transatlantic market for the 21st century.
Growing the economy: According to the U.S. Chamber of Commerce, just “eliminating transatlantic tariffs” – without reducing barriers to investment, which TTIP aims to include – “would boost U.S.-EU trade by more than $120 billion within five years. It would also generate GDP gains of $180 billion — a budget-neutral boost to the U.S. and EU economies.” [U.S. Chamber of Commerce, accessed 6/18/13]
Adding jobs by strengthening exports: The Office of the U.S. Trade Representative explains, “A successfully negotiated Transatlantic Trade and Investment Partnership would aim to boost economic growth in the United States and Europe and add to the over 13 million American and European jobs already supported by transatlantic trade and investment” by allowing more “open markets to grow the $459 billion in U.S. goods and services exports to the EU, our largest export market.” [U.S. Trade Representative, 2/13/13]
Strengthening investment norms to protect jobs: The European Commission explains that because “the EU and the US economies account together for about half the entire world GDP and for nearly a third of world trade flows,” the transatlantic relationship “defines the shape of the global economy as a whole. Either the EU or the U.S. is the largest trade and investment partner for almost all other countries in the global economy.” The TTIP therefore offers the opportunity to shape the future of trade to “Strengthen rules-based investment to grow the world’s largest investment relationship. The United States and the EU already maintain a total of nearly $4 trillion in investment in each other’s economies, supporting nearly 7 million jobs.” [European Commission, accessed 6/18/13. U.S. Chamber of Commerce, accessed 6/18/13]
The negotiations ahead will be hard and will make or break any potential agreement.
Fair inclusion of stakeholder and labor union interests: Any politically viable and ethically sound final agreement must represent the interests of stakeholders and organized labor. In practice, this will likely mean incorporating a variety of groups’ interests into negotiations early on. Already, labor unions on both sides have signaled open-mindedness and a desire to play a constructive role in shaping a final agreement. In late May, America’s largest labor union federation – the AFL-CIO – and the EU’s European Trade Union Confederation (EUTC) began talks on the TTIP: “The AFL-CIO and the ETUC officially kicked off a joint campaign to ensure that shared prosperity and sustainable growth are the driving principles in the upcoming talks on a United States – European Union trade agreement…The ETUC and the AFL-CIO both recognised that a successful trade agreement must be based on the best practices on each side of the Atlantic, in order to have positive impacts on jobs and economic growth…Both groups agreed that the goals of the TTIP should include full employment, decent work, and rising standards of living for all.” [AFL-CIO, 6/28/13]
Businesses – especially small businesses – will similarly need to be represented and have their interests included in negotiations as key stakeholders. To this end, the Small Business Administration has become involved, soliciting small business input on TTIP negotiations – a step in the right direction requiring more robust follow up.
Cultural differences are complex: EurActiv reports the complex cultural questions between and within both sides of the Atlantic that will crop up during the negotiations: “The road will be paved with obstacles though, as proved by the recent clash to protect movies and culture, a movement led by France. Paris insisted that the audiovisual sector be excluded from the negotiations. After 13 hours, a compromise was finally reached agreeing to the French demand but which also stated that the Commission could revisit the question if necessary. The long battle over the exemption of the audiovisual sector from the negotiating mandate prompted [Portuguese] president Barroso to say, in an interview with the International Herald Tribune, that those fearful of a US cultural invasion of Europe ‘have an anti-global agenda.’ Such critics have ‘no understanding of the benefits that globalisation brings also from a cultural point of view,’ he added, describing that opposition as ‘culturally extremely reactionary.’ [EurActive, 6/18/13]
Getting regulations right: Susan Ariel Aaronson of the National War College explains: “Trade diplomats from both the United States and the 27 member states of the European Union say they want to create a 21st century trade agreement. They stress that in order to achieve that goal, they must not only reduce visible barriers to trade such as tariffs, but also achieve coherence among a wide range of social and environmental regulations — everything from food safety and data protection to banking, labor, and environmental standards….So far, however, neither side has made clear whether the end goal for regulatory coherence is harmonization, convergence, or some form mutual recognition where both parties accept the other’s regulations without demanding change.” [Susan Ariel Aaronson, 6/17/13]
What We’re Reading
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The Obama administration publicly identified for the first time 46 prisoners at Guantanamo Bay whom it wants to hold indefinitely without charge or trial because it says they are too dangerous to release but cannot be prosecuted.
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Iran’s President-elect Hassan Rouhani ushered in the post-Ahmadinejad era with a sometimes extraordinary 90-minute press conference in which he stressed he would take a pragmatic and moderate approach to improve Iranian relations with the world and reduce tensions with the United States over Iran’s nuclear program.
China, the world’s biggest carbon emitter, is to launch its first carbon trading scheme as a pilot project in Shenzhen.
West African piracy poses the greatest threat to the crews of merchant ships for the first time as navies and guards reduce attacks from Somalia.
Ethiopia and Egypt cooled talk of war and agreed to more dialogue to resolve a row over a giant dam that the Horn of Africa nation is building on the Nile, on which Egyptians depend on for almost all their water.
Leaders at the G8 summit in Northern Ireland are said to be close to signing a joint statement on Syria, despite their differences.
Prime Minister Shinzo Abe and Russian President Vladimir Putin agreed that Moscow would dispatch it’s top diplomat to Japan this fall to boost political dialogue.
Commentary of the Day
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