The Cable

Dumped By U.S., Europe and Asia Get Together on Trade Deals

Without the United States, will the EU and Asia Pacific trade toward trading with each other?

eu-tpp

The United States, after President Donald Trump took office, nixed a big trade pact with Asia, and let another big trade accord with Europe die on the vine. Now both those jilted partners are getting together — threatening to leave the United States out in the cold as the world’s biggest economic blocs reshape their trading relationships.

“We have seen that many of the TPP [Trans-Pacific Partnership] countries are now approaching us and saying ‘we still want to do deals,’” said Cecilia Malmström, EU trade commissioner, in an interview published Tuesday in Handelsblatt Global. “We are engaged with basically all of them, either negotiating or have a deal or preparing negotiations.”

While some European countries have come to question free-trade dogma, and are rocked by the pushback against globalization, the European Union as a whole is still carrying the torch for ambitious, multilateral deals. “The big advantage of the EU” is that as far as trade deals are concerned, it works as a bloc, not as individual states, said Judy Dempsey of Carnegie Europe.

“The EU and the member states realize, ‘we’ve got to press ahead with doing deals with like-minded countries,’” Dempsey said, adding, “It’s very exciting, actually.” The EU already has free trade deals with three TPP states: Canada, Mexico, and Chile.

Warmer trade ties between Europe and the orphaned countries of the TPP could also serve as a check on China’s ambitions; Beijing is widely seen as the main beneficiary of Trump’s withdrawal from the pact. Malmström is likely “looking to avoid a situation whereby Asian countries in the Pacific individually bow to China in bilateral deals,” said Sijbren de Jong, a strategic analyst at the Hague Centre for Strategic Studies. “A China that shapes trade ties in the Pacific according to its standards on a bilateral basis is also not in our interest.”

It isn’t in Asia’s interest, either, says Dempsey. “They’re desperate to do big partnerships with the EU because they would get into the camp — a western camp that sets the trading rules, and standards, essentially. They want to be part of that club,” she said.

Malmström’s comments don’t necessarily suggest that the EU is looking to replace the United States inside the TPP; the EU could either sign some sort of treaty with the TPP as a bloc, or individual deals with some or all of the remaining 11 members of the pact.

And securing sprawling, multilateral deals requires firm and constant leadership, said Dalibor Rohac of the American Enterprise Institute. The TPP took five years of often contentious negotiations to conclude; the Transatlantic Trade and Investment Partnership promised to be even more complicated. And unwavering defense of globalization and the reigning economic order is getting harder to find as Europe suffers its own populist economic backlash, and especially in a busy election year. That makes it uncertain whether Europe can still summon that brand of leadership.

Photo credit: JOHN THYS/AFP/Getty Images

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