By Dean Carroll
Imagine a free trade zone stretching across Europe and America. The largest hub of open enterprise in the world, able to compete with emerging economic giants like China on a level playing field. Well, the idea may have stepped out of the realm of fantasy. United States President Barack Obama is as keen on free trade discussions between the European Union and the United States as officials in Brussels are – despite the recent spying allegations threatening to derail talks.
Although it is unlikely that the Obama administration will actually be able to enact a free trade agreement during his time in office, at least the groundwork will have been laid for a deal at a later date. After all, you have to start somewhere. In reality, EU officials have been working on a proposal since November 2011 and unofficial discussions stretch back even further.
A comprehensive Transatlantic Trade and Investment Partnership with harmonised standards and free of tariff walls could boost gross domestic product by 2 per cent and create two million new jobs, the more optimistic economists claim. A much needed shot in the arm for the European and American economies. Currently, America and Europe conduct business worth $2.7bn every day so there is a solid history to build upon.
Other FTAs with Japan and Canada are progressing and another deal with Singapore was concluded in December 2012 – as the EU seeks alternative bilateral deals following the collapse of the Doha round of World Trade Organisation negotiations back in 2005. Although, we must keep in mind the recent progress made by the WTO at the Bali summit with an international pact of sorts.
British Liberal Democrat MEP Catherine Bearder previously stated on EU-US free trade: “The potential advantages are clear. Our exporters will gain greater access to markets of hundreds of million wealthy consumers. The tariffs on their products will be slashed and burdensome regulatory requirements will be streamlined. For European import businesses, imported parts will become cheaper – making our companies more competitive and reflective of the modern reality of global supply chains.
“For our competitive service industries, new opportunities and sectors will open up and our businesses will be able to compete for foreign procurement contracts currently denied to them. These benefits should create the jobs that we so desperately need and consumers will have greater choice and profit from cheaper products. In addition, through liberalising environmental goods and services, these free trade agreements with developed countries could also be instrumental in furthering our sustainability agenda.
“A free trade agreement with the US is the real prize. Until now, the two founding fathers of the WTO have spent the years since its inception in 1994 – bickering like children on issues such as subsidies for Boeing and Airbus, imported bananas and beef hormones – among others. Out of the ashes of Doha, this squabbling seems to have been set aside and there is now real momentum heading towards the launch of free trade negotiations.”
It is unclear at this stage just what the next step will be in the EU-US free trade saga. While MEPs want to be involved in formal negotiations, the more protectionist member states are concerned about the perceived threats to their own industries. As a result, they are demanding input and significant caveats in any deal. No matter, the gate has been opened. The truth is that, in the long term, Europe has no alternative in the evermore elusive search for economic growth.
Dean Carroll is editor of Policy Review. Follow him on Twitter @poljourno and follow Policy Review @Policyrev