Free Trade Negotiations: Venture for Growth

The U.S. monitors the world with PRISM; there is great anger toward Washington. Yet no one in Europe is seriously thinking of endangering the talks about a free trade zone. Open borders create economic possibilities; out of these come jobs. Europe needs this dynamic even more than the U.S. — if the crisis-shaken continent wants to remain relevant in the world economy.

First the Americans bug European diplomatic agencies, tap transatlantic fiber optic cables and comb through emails of Europeans. And in spite of this the Europeans are now negotiating an ambitious free trade treaty with the U.S. as if nothing had happened. Why?

There is a simple answer: The United States still remains the decisive strategic partner of Europe even after the revelations of whistle-blower Edward Snowden, and the citizens and the economy of the EU have more to gain from this project than the United States. No one in Brussels, much less in Berlin, ever seriously thought — with all the anger at Washington — of endangering the beginning of the free trade talks on Monday.

The negotiations about the Transatlantic Trade and Investment Partnership (TTIP) are supposed to create the biggest free trade zone in the world. Numerous studies predict how much additional economic growth the TTIP will bring; there is talk of anything from 0.9 to 3.5 percent. Yet one can safely forget these numbers; after all, no one knows today what will be in the treaty if, as hoped, it takes effect in 2015.

But even in the absence of exact numbers there is no doubt of the fact that the free trade zone will promote growth. Open borders create economic possibilities and from these, as a rule, jobs. Stagnating and crisis-shaken Europe needs this additional dynamic more than the U.S., where the economy is slowly, but reliably, growing. The most recent decline in their exports might remind the Germans that even their firms need positive stimuli from the outside.

In the new free trade zone there will be no more tariffs, whereby firms and consumers will save billions of euros or dollars. Even more important is that the EU and U.S. want to develop common standards for goods and services. That will begin with uniform plugs for electric cars, will continue with standards for 3-D printers and will not stop with procedures for the approval of new medicines. Much is controversial, especially with the European public: Will we have to eat meat from hormone-treated cattle from the U.S. in the future? Will groceries that are processed with genetically altered plants continue to be clearly marked? Will German data protection be relaxed under American pressure?

France’s president wants to ensure that his country can continue to subsidize its own film industry and thus be permitted to favor it over Hollywood. The good news here is that both sides are approaching the negotiations very pragmatically. Many things, among them the hormone-treated meat, will be excluded. The Americans will probably accept the French cultural barriers as long as there is progress in other areas with a more promising future.

However, Europe’s interest in the TTIP is not limited to greater economic growth. The project also has a political dimension: For the first time since the outbreak of the Greek crisis at the end of 2009, the EU again has a project that is concerned with chances for the future, not mainly the mistakes of the past. A success will be good for the climate in the European community.

Quite basically, for the Europeans it is also a matter of whether they want to remain relevant. The ocean of the 21st century is no longer the Atlantic, but instead the Pacific. The greatest economic dynamics are between Shanghai, Kuala Lumpur, Jakarta, the Silicon Valley and Los Angeles. Europe, in contrast, is a continent of stagnation.

Even more important for this continent is the strategic partnership with the United States. The Europeans still export twice as much to America as to China. Together with the U.S. they can determine standards for the world economy, for example for data protection and the Internet, into which one’s own values enter in. With whom else would that be possible?

The transatlantic free trade zone is a chance for Europe which will not come again so soon. The success is in no way guaranteed. U.S. President Obama and his economic team have long hesitated to get involved in this venture. The supply of mutual trust is not especially large after Edward Snowden. It is all the more important that the negotiations have begun.