The US-Europe Free Trade Agreement: A Kiss of Death for the EU?
Published in Le Nouvel Observateur
(France) on 15 March 2013
by Cédric Laguerre (link to original)
(France) on 15 March 2013
by Cédric Laguerre (link to original)
Translated from
by Claire Durif.
Edited by Daye Lee.
The free trade agreement discussions currently taking place between the U.S. and Europe are being presented as the biggest bilateral trade deal ever negotiated. However, care must be taken to ensure that some naïve individuals do not accept a kiss of death in exchange for a few hypothetical fragments of gross domestic product to be proffered sparingly over the next decades. On closer inspection, it is clear that an agreement like this carries major risks.
It Will Not Make Our Market Any Better
First, Europe — an economic giant but a political dwarf — is already the most open trading zone in the world. All of its trading partners, who officially worship at the altar of liberalism, are the first to laud urbi et orbi, a principle that they do not apply to themselves. They sing the praises of opening up markets elsewhere, while at home they vote for laws that are more or less disguised to protect their own interests. One example is the Buy American Act.
So, whether certain idealists like it or not, such an agreement will not make our market “better,” which is to say more liberal. It will simply enable the U.S. to officially extricate itself from the recurrent complaints made to the World Trade Organization, which address the major issues that have punctuated and polluted trans-Atlantic trade relations for eons.
Europe must not be fooled by this siren song. An agreement like this will legitimize state aid to select sectors, but only the richest countries will benefit. In addition, it will not stop the U.S. from continuing to favor parallel bilateral agreements with its European allies, with the aim of driving intra-community preferences and a permanent entropy at the heart of the union in order to avert any stances which it deems too radical. The prospect of a united Europe, speaking with one voice, will be rendered even less likely.
If France, for its part, continues to focus solely on the Common Agricultural Policy, it will end up abandoning entire industrial areas to fierce and unbalanced competition. (It is said that 60 percent of sectors will be included in this agreement.) And the results will be disastrous. And what about the aeronautics industry? The defense, energy or motor industries? Information technology, finance, luxury goods … ? Under such an agreement, can Airbus be assured that its sales of planes to the U.S. will improve? It seems highly unlikely. Similarly, how will the need to harmonize rules and standards be addressed? Will they be aligned to those of the lowest bidders?
The U.S. Will Benefit Most from this Agreement
Imagining that such an agreement shows a genuine U.S. interest in the old continent, and that it will give Europe more weight in discussions with the Asian giants, is also an illusion. It is not exclusive: The U.S. and Asia are discussing a similar agreement, one that will certainly be more strategic for them.
The U.S.’ interest in placing Europe under the control of such an agreement could, in fact, be twofold. The first motivation could be to create a western zone, intended to act as a counterbalance to Asia — notably China — taking into account the economic and commercial influence that a U.S.-E.U. common market would represent (47 percent of production of global wealth and 30 percent of world trade). The second could be to weaken and eventually render obsolete the World Trade Organization, through which Europe is able to legally oppose subsidies and hidden U.S. aid to industrial sectors.
Our partners have another formidable weapon: currency. While Europe continues to advocate the German dogma of a strong euro, which can only benefit the countries that are big exporters, the U.S. and China unhesitatingly make use of fluctuations in their currencies, including disguised devaluations, in order to sustain trade. Here again, Europe will be penalized. Let us be clear — in order to make the most of free trade, we still need to have something to exchange with our partners, which is to say, something to sell, of quality, and at a competitive price.
In the end, such an agreement will benefit only hyper-reactive countries who are free from dogma — unless it is that of winning markets— and have effective tools at their disposal to increase their competitiveness. And when we compare the U.S.' crafty strategists to Europe's dogmatic technocrats, there is no doubt as to who is going to win.
The E.U. Must Adopt the Same Strategies as Its Partners
After this rather gloomy depiction of the consequences of such an agreement, and considering that such a change is inevitable, it is necessary that Europe finally calls itself into question if it hopes to have any chance of survival. It must decide, once and for all, to implement the same strategies as its partners.
This will inevitably require much soul searching. Strategic sectors of the agreement need to be safeguarded — areas such as defense, sovereignty and others with high added value. The creation of a “Buy European Act,” a carbon copy of the Buy American Act, is essential in order for Europe to be on equal footing with the U.S. and to defend the interests of our businesses. We need to accept that the euro serves the economy, not the other way around.
The notion of fair play does not exist in business. Europe must either adapt to survive or accept its gradual decline, which will leave it with just one industry, comprising solely of foreign subsidiaries and a market inundated with imported products. Europe will then become a discount commercial zone, the world’s cash cow. It is doubtful that, 60 years ago, the founders of “Europe” had such a reductive vision. Maybe it is time to follow in their footsteps.
It Will Not Make Our Market Any Better
First, Europe — an economic giant but a political dwarf — is already the most open trading zone in the world. All of its trading partners, who officially worship at the altar of liberalism, are the first to laud urbi et orbi, a principle that they do not apply to themselves. They sing the praises of opening up markets elsewhere, while at home they vote for laws that are more or less disguised to protect their own interests. One example is the Buy American Act.
So, whether certain idealists like it or not, such an agreement will not make our market “better,” which is to say more liberal. It will simply enable the U.S. to officially extricate itself from the recurrent complaints made to the World Trade Organization, which address the major issues that have punctuated and polluted trans-Atlantic trade relations for eons.
Europe must not be fooled by this siren song. An agreement like this will legitimize state aid to select sectors, but only the richest countries will benefit. In addition, it will not stop the U.S. from continuing to favor parallel bilateral agreements with its European allies, with the aim of driving intra-community preferences and a permanent entropy at the heart of the union in order to avert any stances which it deems too radical. The prospect of a united Europe, speaking with one voice, will be rendered even less likely.
If France, for its part, continues to focus solely on the Common Agricultural Policy, it will end up abandoning entire industrial areas to fierce and unbalanced competition. (It is said that 60 percent of sectors will be included in this agreement.) And the results will be disastrous. And what about the aeronautics industry? The defense, energy or motor industries? Information technology, finance, luxury goods … ? Under such an agreement, can Airbus be assured that its sales of planes to the U.S. will improve? It seems highly unlikely. Similarly, how will the need to harmonize rules and standards be addressed? Will they be aligned to those of the lowest bidders?
The U.S. Will Benefit Most from this Agreement
Imagining that such an agreement shows a genuine U.S. interest in the old continent, and that it will give Europe more weight in discussions with the Asian giants, is also an illusion. It is not exclusive: The U.S. and Asia are discussing a similar agreement, one that will certainly be more strategic for them.
The U.S.’ interest in placing Europe under the control of such an agreement could, in fact, be twofold. The first motivation could be to create a western zone, intended to act as a counterbalance to Asia — notably China — taking into account the economic and commercial influence that a U.S.-E.U. common market would represent (47 percent of production of global wealth and 30 percent of world trade). The second could be to weaken and eventually render obsolete the World Trade Organization, through which Europe is able to legally oppose subsidies and hidden U.S. aid to industrial sectors.
Our partners have another formidable weapon: currency. While Europe continues to advocate the German dogma of a strong euro, which can only benefit the countries that are big exporters, the U.S. and China unhesitatingly make use of fluctuations in their currencies, including disguised devaluations, in order to sustain trade. Here again, Europe will be penalized. Let us be clear — in order to make the most of free trade, we still need to have something to exchange with our partners, which is to say, something to sell, of quality, and at a competitive price.
In the end, such an agreement will benefit only hyper-reactive countries who are free from dogma — unless it is that of winning markets— and have effective tools at their disposal to increase their competitiveness. And when we compare the U.S.' crafty strategists to Europe's dogmatic technocrats, there is no doubt as to who is going to win.
The E.U. Must Adopt the Same Strategies as Its Partners
After this rather gloomy depiction of the consequences of such an agreement, and considering that such a change is inevitable, it is necessary that Europe finally calls itself into question if it hopes to have any chance of survival. It must decide, once and for all, to implement the same strategies as its partners.
This will inevitably require much soul searching. Strategic sectors of the agreement need to be safeguarded — areas such as defense, sovereignty and others with high added value. The creation of a “Buy European Act,” a carbon copy of the Buy American Act, is essential in order for Europe to be on equal footing with the U.S. and to defend the interests of our businesses. We need to accept that the euro serves the economy, not the other way around.
The notion of fair play does not exist in business. Europe must either adapt to survive or accept its gradual decline, which will leave it with just one industry, comprising solely of foreign subsidiaries and a market inundated with imported products. Europe will then become a discount commercial zone, the world’s cash cow. It is doubtful that, 60 years ago, the founders of “Europe” had such a reductive vision. Maybe it is time to follow in their footsteps.
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