Hailed as the ‘biggest bilateral trade deal in history’ the upcoming trade talks between the United States and the European Union have the potential to boost global free trade like never before.
The US and the EU represent the biggest trading blocks on Earth so it is no surprise the British prime minister, David Cameron, declared that a possible deal would bring in £100 billion for the EU, £80 billion for the US and £85 billion for the rest of the world.
In this time of frail economic recovery and with many out of work and unable to find the money to provide for their families, trade deals like this could assist many in putting food on the table. Last year, EU27 exports to the US totalled nearly €300 billion, with US imports totalling just over €200 billion.
With US GDP estimated at €15.5 trillion, it is no wonder the EU has set its sights on the US market. With increasing competition from China and the other BRIC countries (Brazil, Russia & India), the US and the EU need each other.
But there are always consequences to any deal reached and we shouldn’t assume that these talks offer us a free lunch. An EU-US trade deal has the potential to stall and offer us nothing more than another unhelpful and globally retarded serving of protectionism.
There have been recent calls to exempt certain services from any negotiations. From the EU side, France has been calling for the audio-visual sector to be protected, fearing that any such deal with the US would be bad for their cultural prosperity and profit margins. Indeed, where would Europe be without the finest French cinematic masterpieces? In addition, the ongoing trade scuffles between the aircraft manufacturers Airbus and Boeing could make the negotiations mind-numbingly slow.
The real test doesn’t lie in negotiating tariff barriers – both the US and the EU enjoy relatively low tariffs when exchanging goods and services. The real challenge will come in the non-tariff barrier areas. The EU has already expressed reservations with regard to any negotiations on the agricultural sector. The issue of GMO procedural methods will stir up unease and prove a sticking point for both negotiating teams.
Above all of this though, there is a real fear that once negotiations become bogged down and newspapers and media outlets start to emphasise the failure of politicians on both sides of the Atlantic to produce a deal – expertise will give way to expediency.
This trade deal has been hyped up and talked about so much as the formidable means to rescue Western economies from stagnation that the pressure to produce an all-encompassing, revolutionary deal may become too much for either negotiating team to bear.
What we may see is a deal, stuck together hastily and ill-thought through in an attempt to salvage what little dignity remains of the whole charade. The EU and US are at risk of being privy to the biggest protectionist racket in history. If they want genuine free trade, everything must be on the table, for both sides.
After all, if free trade is king, the market must dictate – government requests to ring fence national pride and institutionalised regulation would be requests tantamount to sabotage. Washington DC has already displayed concerns that negotiations will become too narrowly focused if certain industries are exempted from the talks.
It’s time for both sides of the Atlantic to make a choice – either go for a genuine free trade deal or wallow in protectionism.