The time is now for a U.S.- Europe trade deal • Obama can’t change Cuba

A trans-at­lantic trade pact is im­por­tant to both par­ties. So enough with the pro­tracted talks

Bloomberg Businessweek (North America) - - Contents -

If the U. S. and Europe are to agree on an his­toric trade deal this year, while Pres­i­dent Barack Obama is still in of­fice and be­fore France and Ger­many are caught up in their re­spec­tive 2017 elec­tions, the talks that be­gan on Feb. 22 in Brus­sels need to be fruit­ful. That means they must ad­dress one of the main points of con­tention: how in­vestors and gov­ern­ments set­tle dis­putes.

The Euro­pean Union has put forth a plan to cre­ate a spe­cial court to set­tle in­vestor dis­putes. Such a court, how­ever, is un­work­able, both prac­ti­cally and po­lit­i­cally: Its le­gal­ity within the EU is ques­tion­able. Fur­ther­more, the chances that the U.S. Congress would al­low the court to have au­thor­ity over the U.S. are slim to none.

More im­por­tant, a new court isn’t nec­es­sary, be­cause a per­fectly good model for set­tling dis­putes is laid out in the Trans-pa­cific Part­ner­ship, the trade deal that was con­cluded last year. Among other changes, the TPP en­shrined more trans­parency and put the bur­den of proof on com­pa­nies (which ought to sat­isfy Euro­pean con­cerns that multi­na­tion­als will use the pro­ce­dures to chal­lenge na­tional pol­icy).

Ne­go­tia­tors should waste no time set­tling this is­sue so they can move on to other dis­puted ar­eas, such as agri­cul­tural tar­iffs, food safety, and reg­u­la­tory stan­dards.

A ro­bust deal this year would be a sig­nif­i­cant achieve­ment. Yes, the ne­go­ti­a­tions have seemed end­less (the talks in Brus­sels are Round 12), and they’ve grown in­creas­ingly con­tentious. But the po­ten­tial ben­e­fits for both sides are too great to let this op­por­tu­nity pass.

The trans-at­lantic econ­omy ac­counts for about half of global gross do­mes­tic prod­uct. Europe and the U.S. are each other’s pri­mary source of, and desti­na­tion for, for­eign di­rect in­vest­ment. The pact at is­sue, the Transat­lantic Trade and In­vest­ment Part­ner­ship, would cre­ate the world’s largest free­trade zone and re­sult in sev­eral mil­lion ex­port- de­pen­dent jobs. The plan to re­duce tar­iff and non­tar­iff trade bar­ri­ers is es­ti­mated to boost the GDPS of the EU and the U.S. about half a per­cent­age point.

The longer the talks drag out, the greater the chances they will be de­railed. Pro­tec­tion­ist crit­ics in Europe, un­nerved by an im­mi­gra­tion cri­sis, slow growth, and stag­nat­ing pro­duc­tiv­ity, are in­creas­ingly vo­cal. And while the EU has done a poor job sell­ing the ben­e­fits of an agree­ment, pop­ulist par­ties have en­gaged in ef­fec­tive scare­mon­ger­ing.

At a time when in­se­cu­rity— eco­nomic and oth­er­wise— threat­ens in­ter­na­tional co­op­er­a­tion gen­er­ally, a more ro­bust trans-at­lantic econ­omy can re­in­force Western val­ues, bol­ster strate­gic in­ter­ests, and serve as an ex­am­ple for other parts of the world.

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