Free Trade on a Tough Obstacle Course

Populists and lobbyists want to sabotage the Trans-Atlantic Trade and Investment Partnership, the free trade agreement between the European Union and the U.S. Practical and political problems should not be allowed to stop a mutually beneficial deal, according to Gunnar Jonsson.

Everyone knows that Germany is benefiting greatly from its exports. Bizarrely, the resistance against the TTIP is still growing there. Only 17 percent of Germans now think it is a good idea, as opposed to 55 percent two years ago.

Dreams of free trade agreements between the EU and U.S. have gone up in smoke before. The goal this time was for the agreement to be ready before Barack Obama leaves office at the end of the year. It is not looking good.

The arguments for the TTIP are far from rocket science. Increased trade provides higher economic growth and more jobs, and consumers get the advantage of lower prices. Trans-Atlantic tariffs are already low, which aims at abolishing other forms of red tape faced by companies and at harmonizing legislation. Testing twice makes goods more expensive without making them better. However, the power of habit is great. The EU and U.S. are both favoring their own model, and hence, the political battle continues uninterrupted. Right- and left-wing populists are riding a wave of globalization fears; some want to abolish the whole of the EU, while others have deeply rooted anti-American reflexes.

France and Germany will have their national elections next year, and the TTIP does not look like a winner. Those on the left in Obama’s party are openly protectionist, and presidential candidate Hilary Clinton has felt obliged to follow suit. At the same time, the antitrade demagogue Donald Trump seems to have become the traditionally free trade-friendly Republicans’ finalist.

On Monday, Greenpeace, openly opposed to the TTIP, published a document showing how the U.S. is trying to force the EU to remove barriers against American foods. Agriculture is a sensitive subject on both sides of the Atlantic. Two principles are conflicting. The EU will allow a product if it is proven that it doesn’t harm people and the environment. In the U.S., it must be proven that the product actually is harmful before it can be stopped. The emotional opposition in Europe toward genetically modified crops is one example of the difficulties faced.

Investment protection, a system to resolve disputes between companies and political states, is continuing to cause conflicts. Without any real proof, critics claim that corporations are using courts to overrule political decisions. To appease the opposing elements, the EU created a new type of neutral court in agreement with Canada, and essentially wants to copy this model for the TTIP. The United States sees no reason to change its own working model.

Public contracts and exceptions for certain industries are other causes of conflict. There is no doubt that there are large political and practical problems to overcome. However, such a mutually beneficial deal should be difficult to turn down.