Friday, June 21, 2013

High Time for a US-EU Trade Agreement

This article originally appeared on The Truman Doctrine on 20 June 2013.

Despite our differences, many of which have come to a head in recent years over the War on Terror, the United States and its allies in the European Union share overwhelming common interests. Beyond shared values, culture, and military and political systems, these interests are also the result of diplomatic design and modern history. The U.S.-EU free trade negotiations recently announced at the G8 summit in Enniskillen are a natural progression of this relationship and are an important step for both blocs in responding not only to today’s problems, but tomorrow’s problems as well.

WWII left the European continent devastated for the second time in only 30 years. The labour force was decimated, production had ground to a halt and national treasuries were empty, with crushing inflation and debt. Determined that European states should never go to war with each other again over resources or ‘balance of power’ politics, European leaders formed the European Coal and Steel Community, which evolved into the European Union of today. The EU is the world’s largest common market for goods and services. Though often misunderstood and even demonized, the EU is in great measure responsible for the continental peace that has followed its creation. Economic integration has created overriding mutual interests among EU states. Those who trade together, stay together.

The Marshall Plan helped to rebuild Western Europe’s economy. Continuing cooperation between intelligence agencies has been vital to both sides of the Atlantic. The joint military structure of NATO ensured that the U.S. and Europe remained engaged in each other’s national security. NATO is still a vital tool through which America and Europe engage with the world in the post-Cold War, post-9/11 era. The U.S. and its western European allies recognized the need for intelligence and military cooperation to confront the Soviet Union and the spread of communism during the Cold War and again in the fight against terrorism.

But an over-arching agreement on transatlantic trade has been missing for many decades due to national protectionist instincts that often kick in on both sides. Many Americans blame ‘globalization’ and trade agreements such as NAFTA for the loss of jobs. Many Euro-sceptics wrongly blame the EU for the same. Britain often finds itself at odds with the EU, most memorably in relation to weights and measurements when Imperial units became a nationalist rally point. France has been guilty of setting emissions standards that strangely only Peugeots and Citroens could pass. Even in this most recent agreement announced at Enniskillen an exception, pushed for in France and Poland, was made for the European film industry, which fears it would be driven to extinction by Hollywood blockbusters.

A bilateral U.S.-EU trade agreement would give American and European businesses access to millions of new customers for goods and services. The increased competition and elimination of tariffs should lead to better prices for consumers on both sides. The opening of new markets will create new jobs, something sorely needed in both Europe and America. It will also help cut through a lot of the red tape for importers and exporters already in the transatlantic trade.

But there are also bigger strategic reasons to hail such an agreement. Both sides of the Atlantic have suffered attacks and face the continuing threat of international terrorism. The 2008 economic downturn was fuelled by questionable lending policies by major banks in both America and Europe and are where the effects have been most acutely felt. U.S. and EU governments have faced similar struggles regarding foreclosures, government austerity, ‘bailouts’, bonuses and tax evasion. Both the U.S. and Europe continue to require fossil fuel energy. Despite better efforts than America to increase use of renewables, Europe must often depend upon Russia for oil and gas, giving Moscow a larger share of leverage than they may ordinarily be due. War and instability in the Middle East and Africa have shown the folly of America’s continued dependence on foreign oil, an issue the Obama administration has set out to tackle to the opposition of many in Congress. The world’s insatiable appetite for energy is growing at an even faster rate. The rise of China and India and other smaller tigers mean that the dominance the U.S. has enjoyed since the end of WWII may be challenged. This increase in global competition for energy resources may lead to conflict sometime in the near future.

This is no time for the EU or the U.S. to call ‘every man for himself’ and turn to their own tasks. The two blocs face the same challenges and the success or failure of one side is of great consequence for the other. China and India did not grow themselves in a vacuum. American and European consumers, investors and business out-sourcing have fuelled their growth. The same capital employed there could have flowed back and forth between American and European states, but the want of cheap labour and materials, less or non-existent regulation and reduced government red tape caused it to flow eastward instead. The U.S. and EU have been fuelling the growth of their own competitors at a time when both are in dire need of economic growth.

Hopefully that will change or slow with a successful U.S.-EU trade agreement. It is high time for one.