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Russia’s invasion of Ukraine has reminded the US and Europe that their alliance matters. Their united response to President Vladimir Putin’s assault on the international order should alert them to something else — that resilience depends on economic and financial cooperation and not just on formal security commitments. In that light, reviving stalled talks on a free-trade agreement is more urgent than ever.
In 2013, discussions got underway to create a Transatlantic Trade and Investment Partnership (TTIP) — a process that could’ve led to a fully formed US-EU free-trade area. Negotiations made pitifully slow progress from the start and then were halted by President Donald Trump, who began a series of harebrained tariff wars, including with Europe. Sadly, President Joe Biden appears to largely agree with Trump: Far from reviving the TTIP talks, he’s left some of Trump’s barriers in place, introduced new ones of his own, and echoed much of his predecessor’s anti-trade rhetoric.
Biden visited Europe to meet Nato allies and take part in an EU summit. The allies have a security crisis to manage, so commerce won’t be front of mind. But it isn’t too soon for them to recognise
the value of closer economic
cooperation or for the US
to rediscover its enthusiasm for liberal trade.
Trump notwithstanding, tariffs between the US and the EU are mostly quite low. The main import barriers arise from differences in regulation — over food safety, environmental policy, labor protections and so forth. Grappling with different sets of rules raises costs substantially for producers and consumers alike, and holds back growth and living standards.
The TTIP talks foundered over these so-called nontariff barriers, amid legitimate concerns about economic sovereignty and the excessive secrecy that surrounded the negotiations. There’s great scope, despite those issues, for closer cooperation among essentially like-minded nations. This can be achieved partly through formal regulatory convergence, as most TTIP advocates intended. Where that’s not possible, mutual recognition can be the answer (if a product is deemed safe for sale in Europe, it can be deemed safe for sale in the US, and vice versa). The main thing is to act on the compelling common interest in greater trade and competition.
The shocks now clouding global economic prospects — first the pandemic; then the sanctions imposed on Russia, together with their possible repercussions in world markets — don’t overturn the logic of liberal trade.
—Bloomberg