The world’s biggest free-trade zone

An “economic NATO” has been proposed before, but President Obama is the first leader to give it such an unequivocal endorsement.

All of Europe is fixated on just one line in Barack Obama’s State of the Union speech, said Martina Kovacova in (Slovakia). “Tonight I am announcing that we will launch talks on a comprehensive Transatlantic Trade and Investment Partnership with the European Union because trade that is free and fair across the Atlantic supports millions of good-paying American jobs,” the president said. Such an “economic NATO,” which would be the largest free-trade zone on the planet, has been proposed by both sides before, but never before has a leader given it such an unequivocal endorsement. “Translated from diplomatic parlance,” the announcement that negotiations will begin means that they are already underway and “cannot end in anything other than an agreement.” Obama said the pact should be concluded within two years, and European leaders immediately agreed.

What’s not to like here? asked The Economist. Trade between the two economic giants amounts to nearly $1 trillion each year. With that kind of volume, scrapping already low bilateral tariffs could raise Europe’s GDP by around 0.4 percent and that of the U.S. by a percentage point. Just think how much “Europe’s austerity-blighted economies could gain from more demand from abroad.” Sure, it’s going to be tough to persuade some of the entrenched lobbies on both sides. Farmers, for example, “will block anything.” The U.S. loves its special “buy American” rules for government procurements, while the French are passionate about protecting their locally specific brands, like Roquefort and Champagne.

There are far bigger stumbling blocks than those, said Nikolaus Piper in the Süddeutsche Zeitung (Germany). The two sides of the Atlantic have radically different business environments, which would have to be harmonized in a free-trade zone. “We’re talking about industrial standards, security and health regulations, environmental norms, and the relationship between the state and businesses.” Europeans are aghast at the idea of eating American genetically modified corn, or relaxing our strict data privacy laws to meet the careless U.S. standards. On the flip side, of course, the Americans recoil at the thought of adopting our obsessive labor regulations. “It’s not just the usual reservations about free trade that come up here, but also years of cultivated resentment.” They consider us socialists who resent wealth, while we see them as greedy, inhuman capitalists. “If the free-trade zone is to be a success, both sides must be able to make compromises.”

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Whether it succeeds or not, the proposal has already hurt Canada, said Thomas Walkom in the Toronto Star. Canada was supposed to have wrapped up a free-trade deal with the EU two years ago, but we got bogged down in a fight over agriculture. Of course, the EU only ever wanted a deal with Canada’s “puny” market “to demonstrate to the Americans that a trans-Atlantic free-trade pact was possible.” Now that the EU has “successfully wooed Obama” even without the Canadian precedent, it could drop our pact altogether. And Obama could well clinch a deal where our leaders failed.

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