When European explorers happened upon the “new world” in the late 15th century, one thing was on their minds: commerce. The politics of conquest and empire has always been bound up with economics and trade, but the connection has a particular resonance for US-EU relations. After all, it was a tax on tea that sparked the first flames of the American Revolution, triggering America’s historic break from Europe, and signalling a seismic shift in international relations.
More than two centuries later, trade is back on the table. Tomorrow, the Irish presidency of the Council of the European Union will attempt to secure agreement among EU member states on a common position to commence trade talks with the United States.
It will be no mean feat. Attempts at formalising transatlantic trade relations have been rumbling on for decades but have always proved elusive. Initiatives such as the New Transatlantic Agenda in 1995 and the Transatlantic Economic Council in 2007 failed to deliver concrete proposals. The current attempt – the so-called Transatlantic Trade Investment Partnership – aims to harness the spirit of enthusiasm towards the proposal that appears to be in the air. Persistent economic stagnancy and rising competition from the East has pushed the two old allies closer together.
The task ahead is enormous. The biggest battle is likely to be waged over agriculture. The EU currently bans genetically modified crops and imports of certain hormone-enhanced beef. US farmers accuse Europe’s safety standards of being both protectionist and without scientific foundation.
'Non-tariff' barriers
The existence of divergent regulatory frameworks is also perceived as a serious barrier to transatlantic commerce. Tackling these "non-tariff" barriers, which include everything from testing and certification criteria to radically regulatory standards, also promises to be tricky.
But before official negotiations begin, the European Union needs to get its ducks in a row. Irish officials have been engaged in intense negotiations with member states over the past few months, trying to consolidate a common EU position. Those talks have intensified in recent days ahead of tomorrow’s meeting. The key stumbling block is France. The euro zone’s second-largest economy has dug its heels in over the “cultural exception” – the system of subsidies and other state supports that subsidise French film and radio production. It argues that these supports should be exempt from the talks.
“France defends and will defend the cultural exception to the end — that’s a red line,” France’s culture minister said this week. The key issue that has faced the Irish presidency during negotiations has been whether the audio-visual area should be excluded from the mandate, though the commission has repeatedly assured France the sector is protected under the EU treaties in any event. Whether this will be sufficient to keep France on side remains to be seen.
The US, and some EU member states, argue that no exceptions should be made at this early point. Imposing exemptions before the talks have reached the first hurdle will incentivise US negotiators to do the same, they argue, and flies in the face of the spirit of bilateral negotiation.
Pan-European position
France's intransigence on the subject, however valid its concerns, serves to highlight a recurring difficulty at the heart of the European project: the difficulty in securing a pan-European position amid competing national concerns. The EU is adept at securing consensus through compromise. Whether the EU-style compromise will be acceptable to the US will have to be taken into account in this case."
Advocates of a transatlantic trade deal on both sides of the ocean are quick to point out its potential benefits. Already, the transatlantic economy is one of the biggest in the world, with €2 billion of goods and services traded each day. While EU-US trade is already subject to relatively low tariffs, the elimination of remaining tariffs and a lifting of non-tariff barriers could lift gross domestic product in both economies by between 3.5 and 5 per cent.
But the creation of a bilateral deal between the West’s biggest economic powers raises ethical questions about its impact on emerging economies and the commitment of the two blocs to the World Trade Organisation talks.
At a time when the developing world is trying to move from an over-reliance on aid towards trade and enterprise as a means of boosting economic growth, the further liberalisation of EU and US trade is questionable. An EU-US deal may be good news for the West, but the developing world risks getting left behind.
