EU–US: What is the real exchange in a Free Trade Agreement?

Joint press conference by José Manuel Barroso, President of the European Commission on the right, and Karel De Gucht, Member of the EC, on the Transatlantic Trade and Investment Partnership and the Free Trade Agreement. (EC Audiovisual Services).

The usually slow-moving European Commission over issues like free trade agreements, this time didn’t lose its time and President Manuel Barroso announced yesterday that, “the European Union and the United States have decided to initiate internal procedures to launch negotiations with the aim of reaching a ground-breaking free trade agreement: the Transatlantic Trade and Investment Partnership”.

Only days had passed from last week’s EU Summit, where the 27 leaders decided that, “In particular, the European Council looks forward to the report of the EU-US High Level Working Group on Jobs and Growth and its recommendations. The European Council calls upon the Commission and the Council to follow-up on these recommendations without delay during the current Presidency. It reiterates its support for a comprehensive trade agreement which should pay particular attention to ways to achieve greater transatlantic regulatory convergence.” Two days later the European dignitaries run to kick-start the procedures towards this end.

Early yesterday afternoon, a joint statement was issued by Brussels and Washington. It is quoted here below.

“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, based on recommendations from the U.S.-EU High Level Working Group on Jobs and Growth co-chaired by United States Trade Representative Kirk and European Trade Commissioner De Gucht, the United States and the European Union will each initiate the internal procedures necessary to launch negotiations on a Transatlantic Trade and Investment Partnership”.

We already trade

True, bilateral business exchanges between the two largest economic entities of the planet reach €2 billion a day and many jobs depend on that, on both sides of the Atlantic. However, the rush to start negotiations for a Free Trade Agreement (FTA) is an infallible witness that the power engines behind it are so strong like the US, Germany and Britain put together.

The European Sting tackled this matter last Monday, predicting that negotiations for an FTA between the EU and the US are imminent. This same Sting author, Maria Milouv, wrote: “The prospective drafting of a bilateral Free Trade Agreement (FTA) between the European Union and the United States is developing into a major issue”.

More than once in the past the EU and the US have tried to start negotiations for an FTA, but all those efforts were drowned in the difficult waters of the European Union’s agricultural sector. With France being the main force behind EU agriculture, everybody can understand, why a trade agreement between EU and the US was so far stuck on two issues: animal products from bovines grown with hormones and GMOs (genetically modified corn, wheat and soya). American exports to the EU of those products are banned. This issue has caused in the past decades a few trade wars over the Atlantic.

French agriculture to lose

France and a small number of other EU countries until yesterday were adamant that a full lift of barriers on trade of those products is out of question. As for the Americans, an FTA without solving those two issues has nothing to offer. Over the last few decades, on the rare occasions that the two sides had started negations for a trade agreement, France had the power within the EU, to drag them on and on. With the Americans unaccustomed to such tactics, the issue was left to decompose.

Seemingly, things are not any more at that point. Last Monday your present author also wrote: “On the other side of the fence Germany, being a great industrial exporter to the US, has a lot to gain from an FTA. The German Chancellor, Angela Merkel has repeatedly asked to start negotiations with the US for an FTA. Last week when the American Vice President, Joe Biden, was in Germany, Merkel expressed again her will to promote an FTA with US. In the same line of thinking the British Prime Minister David Cameron wants a swift conclusion of such an agreement. The old British love of free trade and the huge bilateral economic relations with the US are enough motives for the British”.

An AFT and soon, please!

Obviously, the decision of the EU Summit to impose a tight time schedule for the negotiations means a lot. Given the past experience, everybody is astonished how this time the EU Summit was driven to decide, that negotiations must start before the 30 June and be concluded in 2014? For such a huge task this is a very strict schedule. This issue must be related to the fact that those who are in favour don’t want to leave the field free for the French, to follow their same old tactics. It means also that they are able to effectively overcome the French resistance.

Now, what has changed during the last few years and made this FTA possible is not very difficult to understand. The financial and economic crisis has quelled the French political hegemony over the EU and has highlighted the German economic supremacy. Add to that the resurrection of Britain in our brave new world of the Anglo–American military interventions and all those developments lead to a totally different balance of power within the EU. France being now on the defensive.

That is why the European Union is currently ready to accept the American demands for this bilateral trade agreement and the Barroso Commission appearing only too eager to serve this purpose. 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. Rules in the US and the EU on car safety are similarly strict – as public safety is always our top priority. So, perhaps it makes sense to look together at putting in place a system of ‘mutual recognition’. This would maintain the strictest and highest safety levels for consumers but save manufacturers unnecessary double costs”. De Gucht didn’t say exactly German car exports, but who else is exporting from the EU huge numbers of cars to the US?

Actually those exports are the lifeblood of the German car manufacturers and the Americans are seemingly not ready to let them continue to gain, without pain. And the pain this time will be felt by the French agricultural producers, for whom the French Socialists don’t care too much. Paris may have exchanged this for a freer hand in Africa.

Who knows? Nobody will be surprised if the trade is in reality between the big Texan bovine growers, the German car manufacturers and the French mining industrialists. For one thing Mali is a large gold producing country. As for the European consumers, who will be forced to eat American meat with hormones and genetically modified corn, wheat and soya, let them eat what their American counterparts swallow every day and still remain alive…