Northern Lights, American Opportunity for International Trade
In the United States, the prospects for additional international trade opportunities look dim. The continuing fallout from revelations that the National Security Agency snooped through millions of pieces of European telephone data has cast a pall upon the Trans-Atlantic Trade and Investment Partnership (TTIP) talks. Additionally, the government shutdown forced the cancellation of the second ...
In the United States, the prospects for additional international trade opportunities look dim. The continuing fallout from revelations that the National Security Agency snooped through millions of pieces of European telephone data has cast a pall upon the Trans-Atlantic Trade and Investment Partnership (TTIP) talks. Additionally, the government shutdown forced the cancellation of the second round of negotiations on the pact, as well as forcing President Obama to miss the Asian Pacific Economic Cooperation summit, which squandered an opportunity to push to finalize a similar commercial agreement in Asia. Internally, past and future fiscal fights are likely to further sour the possibility of future collaborative action between President Obama and Congressional Republicans, which will be necessary to pass any trade legislation.
However, it is always darkest before the dawn, and our neighbor to the north provides a light for those interested in promoting international trade.
Canada and the European Union have come to an agreement on a bilateral trade accord that would eliminate tariffs and open new markets to companies on both sides of the Atlantic. Thanks to some shrewd politicking from Canadian Prime Minster Stephen Harper, the measure enjoys overwhelming support from the public and could be finalized by 2015, practically light speed for a trade agreement.
Economists from both sides foresee financial benefits. Canada would join a select coterie of nations that have preferential access to the United States and the European Union, the two largest markets in the world. Increased exports, particularly in the services industry, could help inject some dynamism into a sclerotic European economy.
A leaked EU analysis of the trade agreement with Canada gives the United States a leg up when it comes to negotiating with the continent. If the EU views the recent bilateral accord as a guide, America has the benefit of knowing where the box canyons and strong currents are located.
There will be plenty of challenges and debates with European negotiators, so President Obama should be doing as much as he can to limit friction over the deal at home. That will require a more hands on approach to getting Trade Promotion Authority passed through Congress. In addition to the inside game in Washington, the White House will also have to play a strong outside game with businesses and unions that may not have as much to gain from tariff reductions as other sectors of the economy. A serious breakthrough on trade could provide some spark to a second term that is losing power fast.
If enacted, TTIP has the potential to boost economic output by some $100 billion a year on each side of the Atlantic, according to trade officials. It would offer the prospect of much needed job growth and improve the ability for America and Europe to compete with emerging markets. Additionally the maneuver would go a long way towards setting a global standard for bilateral trade agreements and commerce more generally.
There’s no doubt that the task will be difficult, but the United States and Europe have worked together to slay more vicious dragons in the past. The scourge of communism was more formidable than any special interest group could ever dream of becoming.
The United States joined Europe to form the G-6 in 1975 to initiate the idea of global economic cooperation for mutual benefit. Canada followed suit a year later to make it the G-7, and today the pact has evolved into the G-20.
It is now the United States’ turn to follow Canada’s lead. If both America and Europe can break through gridlock at home and once again join hands, each side will benefit immensely, and the world economy could get a much-needed boost from the transatlantic partners who have long been the twin engines powering global prosperity.
Hon. Mark R. Kennedy (@HonMarkKennedy) leads George Washington University’s Graduate School of Political Management and is Chairman of the Economic Club of Minnesota. He previously served three terms in the U.S. House of Representatives and was Senior Vice President and Treasurer of Federated Department Stores (now Macy’s).