Counting spillovers from the fast track EU-US free trade agreement

In a day when the US economy got good marks from the IMF for growth and the appropriate monetary easing by the Fed, last Friday 14 June the Foreign Affairs (trade) Council of the European Union also gave the green light to the European Commission to enter into formal bilateral trade negotiations with the United States of America. In this way the EU is expected to further help the US economy, and hopefully its own, to enter in a sustainable growth path in the short-term future. To this effect the mandate has a very tight time schedule. Negotiations will start before the end of this month and must be concluded within this year. For such a huge task this schedule appears rather pressing to say the least. In any case all that is not news. Last February the European Summit of the 27 EU leaders decided, reportedly unanimously, to press ahead with a far-reaching trade and investment agreement with the US. After that everything that followed was just a bureaucratic procedure. The leaders’ Council confirmed then that it “reiterates its support for a comprehensive trade agreement (with the US) which should pay particular attention to ways to achieve greater transatlantic regulatory convergence.” Only two days had passed from this 12 February 2013 statement of the EU Summit, and a joint statement was issued by Brussels and Washington. It is quoted here: “Statement from United States President Barack Obama, European Council President Herman Van Rompuy and European Commission President José Manuel Barroso. We, the Leaders of the United States and the European Union, are pleased to announce that…each (side will) initiate the internal procedures necessary to launch negotiations on a Transatlantic Trade and Investment Partnership”. According to Brussels circles the only issue that had to be clarified last Friday 14 June 2013 in the Foreign Affairs Council (before the ‘mandate’ was issued to start negations with US) was related to the French subsidies to artists! It is really deplorable if the EU bureaucracy wants us all to believe that. There is no doubt that the two sides have already covered a lot of ground in their bilateral negotiations, which are expected to further widen the multifaceted economic relations between the two North Atlantic allies, probably to the detriment of the rest of the world. €2 billion a day It must be mentioned that the trade between the EU and the US has now reached €2 billion a day. Transatlantic tariff barriers are already very low, with an average of 5.2% for the EU and 3.5% for the US (WTO estimates). Still, given the magnitude of trade between the EU and the US, tariffs still impose costs that are not negligible. The European Sting has been following this issue for many months. Given that currently the bilateral trade, financial, economic, cultural and otherwise relations between the EU and the US have attained very high levels, it’s difficult to understand why the two sides are in such a hurry to conclude this agreement. An obvious lead to this direction is that the export oriented European countries, like Germany want to exchange a further facilitation of their access to the lucrative US consumer market, against a complete disarmament of the European Union in respect to imports of American genetically modified agricultural products and hormone stuffed animal produce. Sting writer Maria Milouv on 14 February wrote: “A few words that the responsible Commissioner for trade issues, Karel De Gucht, had to say yesterday on this new brave EU initiative, were devoted to what else than the German export of cars to the US. The “competent” Commissioner said: “Just let me give you one example: the barriers faced by European car manufacturers over their exports to the US”. Undoubtedly the German exports of high value industrial goods are at the heart of this affair along with the American exports of GMOs and of animal products saturated with hormones. Some weeks ago the German Chancellor Angela Merkel received the American Foreign Secretary John Kerry in Berlin, with main item in the agenda being this EU-US free trade agreement. So no secrets there, both knew what they wanted. What about France? Until last Friday, France was the only core EU country to obstruct this agreement, while Italy seemingly hopes to gain something out of it, because this last country already has a strong export base in the US. Obviously the French objections were met with something else, because the EU Foreign Affairs Council wouldn’t have started negotiations without the French consent. It remains to be seen however how detrimental this EU-US fast track free trade agreement will be for the developing world. It goes without saying that there will be negative repercussions, mainly for the South East Asian countries.