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LLEWELLYN KING: U.S.-EU planning a free-trade zone

on October 12, 2013 8:00 AM

WASHINGTON — The casual observer may wonder why the United States and the European Union are working on a scheme to bring about a trans-Atlantic free trade zone by 2015.

The project is big. It is ambitious. It is daunting.

And it is under way.

There is no shortage of European goods in America, whether it is machinery from Finland, wine from France, cars from Germany, beer from Holland, subway cars from Italy, trains from Sweden, and cheese from all over Europe. And there is a raft of American goods, ideas and investment flowing into the European Union’s 28 member states.

In fact, 45 percent of the world’s trade is between the European Union and the United States.

Yet in the embassies and among the foreign-policy wonks in Washington, the project, known as the Trans-Atlantic Trade and Investment Partnership (TTIP), is the hot topic — after the government shutdown, of course.

There are those who believe that the bonds between the United States and Europe have been loosening since the end of the Cold War era, as has the importance on both sides of the Atlantic of the North Atlantic Treaty Organization.

The TTIP (pronounced TEE-tip) has political purposes as well as trade ones. In trade it will endeavor to remove all remaining tariffs — the average tariff is around 4 percent — and to end the practice of revenge tariffs, whereby a commodity that is not involved in a trade dispute becomes a tariff target. For example, sticking a huge tariff on olive oil because there is a dispute over how carcasses are washed down in slaughterhouses. Many of these disputes now end up before the World Trade Organization and drag on for years.

Another touchy and expensive issue is certifications. Although the European Union and the United States have high standards of safety and consumer protection, products have to be certified on both sides of the Atlantic.

Sweden’s Volvo automobiles are designed to be super-safe, but they have to be certified as street-legal in the United States.

A new study by the Bertelsmann Foundation, Europe’s largest think tank, the British Embassy and the Atlantic Council concludes that TTIP will create between 740,000 and 1 million jobs in the United States. All 50 states would see new jobs created and an average 33 percent rise in exports to the European Union by 2027, according to the study.

The political case is both sentimental and practical. European Commission President Jose Manuel Barosso has made strengthening Atlantic ties a high priority. German Chancellor Angela Merkel sees tightening the Atlantic bonds as important to her legacy.

But nobody on either side of the Atlantic needs the TTIP more than David Cameron, the beleaguered British prime minister. It may be the olive branch that will soothe the anti-Europe forces in his own Conservative Party and across Britain. Cameron has promised a referendum on whether Britain stays in the European Union or pulls out.

He wants to stay in the EU.

A new American alliance with jobs attached may just be enough to bring the pro-U.S. right wing of his own party to heel and enable the Conservatives to support continued membership in the EU.

To understand how divided Britain’s conservatives are, look no further than the U.S. House of Representatives. Political fury is not a U.S.-only phenomenon.

Supporters of the TTIP see it as against fortification against Asia, an opportunity to maybe gain back some footing in non-luxury goods, and a reassertion of Western values.

Yet the road ahead is rough.

The North American Free Trade Area was negotiated and signed by President George H.W. Bush and ratified by President Bill Clinton with Republican support, as the unions and their Democratic allies wanted nothing to do with it, although it is now regarded as a template not only for the TTIP but also for the Trans-Pacific Partnership, which would bring together the United States, Canada, Mexico and many Asian countries but excludes China.

Tyson Barker, director of European relations at the Bertelsmann Foundation, says that when both free-trade deals are concluded, the United States will be a fulcrum between the two. Sadly, at present, negotiate is a dirty word in Washington.

Email: lking@kingpublishing.com

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