Everyone seems to be getting bored with the financial crisis. Gone are the days when discussions over “bailouts”, “LIBOR” and “Grexit” dominated dinner tables, and everyone now seems to have slipped into either defending austerity, supporting spending or arguing for something in-between.
Whilst an over-simplification of the debate might allow the media and politicians to distil complex arguments into bite-sized digestible chunks, the economic issues that we continue to face are always more complex than simply following plan A or plan B.
Deep down, many European Governments know this and some have been taking a more multi-faceted approach to effect economic recovery. Among the remaining weapons in their depleted arsenals are bilateral trade liberalisation agreements with individual countries. Whilst many agreements have been mooted, perhaps the most important is the US-EU Transatlantic Trade and Investment Partnership or TTIP for short.
TTIP, according to the Economist, would “at a stroke liberalise a third of global trade ”, and boost the European economy as a whole by a whopping 0.5% GDP annually, if European Commission figures are to be believed. Given how tentative the European economy is, such an impetus could easily provide the tipping-point to turn “green-shoots” into growth.
On top of this, a deal, for once, is a realistic possibility. Whilst for many years the possibility of trade liberalisation has been suggested, chances of actual progress were slim, given vocal protectionist lobbies in both the US and the EU. However, with the start of Obama’s second term, there has been a marked shift in approach from across the pond, with the US Administration now committed to “free” and “fair” talks. This is not to say that opponents to the deal have become thin on the ground –on the contrary, many across the American political spectrum remain convinced that European trade practices are unnecessarily punitive and will increase the shift of US jobs overseas. What has changed is the willingness of Obama and his team to show them that this is not the case.
The President needs a hand. Currently, Europe has arguably more to gain from a deal than the US. The US economy is currently growing at a much faster rate than its European counterparts – and demanding more of the continent’s goods and services as a result. For the UK, the US is the largest overseas market for British exports – as it is for the European Market as a whole. Rapid liberalisation of transatlantic trade could be just what the European economy needs to help the green shoots take root. Combine this with the fact that both markets have an unprecedented opportunity to make a deal happen, progress should be a no-brainer.
As always, it’s not quite that simple. In Europe, previous attempts at a deal have derailed at red-lines such as ensuring the protection of French agricultural benefits, the strict maintenance of geographic provenance and, according to the Economist, the apparent need to ensure subsidies to “keep Flemish hip-hop on the radio”. Whilst it is of course vital that a deal is both fair and equal, there has been a reluctance from some European Member States to promote the widespread benefits of more liberalised trade to their citizens, rather than pivot to vote-winning protectionism.
Fortunately, there has been a shift in the attitudes of some European Member States. Whilst the UK and the Nordics have always been supportive, key to the potential success of the negotiations is that both France and Germany are now on board. Whilst European governments seem to understand the benefits of a deal, the same cannot be said for European citizens. The biggest splashes so far media-wise are revelations that the US has been spying on the negotiation positions of its erstwhile partners but there has been a marked lack of communication on how trade liberalisation could help shift the continent into growth.
The somewhat grubby activities of the US are not good, but they are also not unique. Europe needs to bite the bullet and not only begin talks, but also start explaining why these talks are in their citizens’ interest. Whilst the survey results at the end of this blog will be interesting to review, a quick poll of my commuting business traveller train carriage reveals no knowledge of the talks, nor of the benefits that a deal could bring. This needs to change and, in the absence of a push from Government or media, someone else needs to drive the debate on the benefits of a deal, rather than the machinations around it.
Who then? The most obvious answer is the group in society who most need the boost and who will gain from it the quickest – business. Whilst the base-line financial case is obvious, TTIP will also afford business leaders further opportunities through transatlantic collaboration, partnership and joint-innovation. The deal is a real case where the overall outcome is likely to be far greater than the sum of its parts, an end goal is clear and there are defined benefits for all.
The key will be to make sure that any push is truly pan-European; the ideal vehicles for this being the national trade associations and confederations which combine the voice of many into one. What will be vital is that European business stands together, its voice is united and truly transatlantic. What TTIP needs is a coalition of US and European multinationals to come together, kick-start the debate and my companions on the train to follow their lead…
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