Free Trade Negotiations between Europe and America Are Oriented toward Reshaping the West

Recently, the EU Commissioner for Trade announced that it grants the European Commission the right to launch negotiations for a Transatlantic Trade and Investment Partnership (TTIP) with America. The EU claimed that the aim of the negotiations is to increase bilateral trade and investment through market admission, regulation and coordination, and to build a global standard to promote employment and economic growth.

In the beginning, the public thought that it would be hard to reach agreement with the U.S. with no additional articles, as France was pulling the EU behind. The newly announced authorization does not include negotiations with the film and music industry, but the European Commission reserves the right to increase authorization and to come up with suggestions. This indirectly indicates that the TTIP is not merely an economic matter — it is a strategy. The European and U.S. economies are heavily interdependent and have a small gap between each other in terms of development. Thus, the TTIP was reached prior to the Trans-Pacific Partnership and generates strategic spillover effects. China’s attention should not be directed at America’s return to the Asia-Pacific region and the TPP. Evaluating the TTIP’s prospects and strategic influence is urgent.

The biggest strategic effect of TTIP is to reshape the West. Such trade talks between Europe and America might establish the most important trade zone area and would revive the transatlantic relations. Apart from TTIP, the EU is also opening up a full range of economic and trade negotiations with Canada. Europe and America take up nearly 50 percent of the world’s gross domestic product, a third of total global trade. Former Secretary of State Hillary Clinton also said that America was not going to shift its focus from Europe to Asia. After all, not only is the free trade agreement between the two confined to trade, it will also create an internal market with profound political influences. A series of talks will be devoted to eliminating trade barriers in the bureaucracies in both markets to promote simultaneous development in Europe and America.

During the Cold War period, it was America that chased after the EU, trying to establish a transatlantic free trade zone. Now, it is the other way around. What signals does it send?

First, the EU feels deeply unsafe in global competition, with the existence of a “tiger” (America) and a “wolf” (rising countries). Choosing to ally with the tiger will help the EU maintain existing interests. Politicians in particular count on the TTIP in order to gain political capital and thus rule the world by flaunting its powerful connections. The EU is estimated to gain $156 billion every year from this, $708 per family on average, which turns out to be the best economic stimulus plan for now. Besides economic benefits, the agreement also has relevance to the European Union’s position in the world. Europe and America have common values and belief in open trade, and thus it will shape their future.

Second, America is harvesting strategic gains from the global finical crises and the European debt crisis. Among the three carriages that pull the economy forward — investment, consumption and exports — the EU can only reply on exports, which is why it has been trying very hard to support the agreement, especially the TTIP, which is seen as the magic weapon that helps it escape economic and strategic dilemmas. The EU is too sick to look carefully for help, which necessarily corresponds with America’s “return to Asia” strategy.

Third, globalized rules are reset to raise the cost for China to get involved. Globalized rules resetting has seen three trends: The free trade agreement strategically makes the World Trade Organization a mere figurehead: It is not only confined to trade but ties itself up with investment; regionalization is developing in its entirety. The TTIP gives consideration to all three aspects. Apart from reducing and eliminating tariffs, the TTIP negotiations will emphasize solving three problems: market entry and supervising regulation, non-tariff barrier and market regulation. If reached, the TTIP will be the new basis of international trade and investment regulation. This will further affect the formulation of globalized regulations and significantly raise the cost for China to take part in globalization.