Transatlantic Trade Agreement Could Boost American Economy

by Alan Safferson, MPP 2014; for Political Institutions and Processes with Professor Christine Mahoney

With the American economy still struggling to recover from the 2008 global economic recession, a trade deal between the United States and the European Union (EU) could provide the much-needed boost our economy needs. US policymakers should immediately prioritize negotiations over the proposed Transatlantic Trade and Investment Partnership (TTIP) in order to build off current momentum and achieve sustained economic growth by creating jobs, increasing trade, and lowering the costs of doing business.  According to a report by the Center for Economic Policy Research in London, completing such a deal would add about $1,000 every year to the average American family’s disposable income. This is precisely what our economy needs to further our recovery from the recession and continue on a path of sustained economic growth.

 Free trade agreements make the United States stronger and help grow our economy. A 2010 study by the Chamber of Commerce examined the effects of 14 US free trade agreements and found that collectively, these agreements boost our GDP by $1 trillion over what it would be without these agreements. Furthermore, these agreements support 17.7 million jobs across many industries. Negotiating an agreement with Europe would play a major role in driving economic growth and ensuring continued American economic strength. The benefits from a European free trade deal would be concrete and substantial. For example, a study by the Perryman Group found that eliminating tariffs between Europe and the US would create nearly 90,000 news jobs in the state of Texas alone.

Last year, 20 senators sent a letter to President Obama in support of efforts to establish a transatlantic trade deal. Following progress in negotiations with European counterparts, President Obama announced his intention to pursue a transatlantic free trade deal in this year’s State of the Union Address. Moving quickly to capitalize on current momentum will be important. In February, the US and EU released a joint statement formally announcing intentions to negotiate a deal. United States Trade Representative Demetrios Marantis and European Trade Commissioner Karel De Gucht are expected to lead the bilateral negotiations. In a column for USA Today, British Ambassador to the United States Peter Westmacott, said that the US and EU are aiming to begin official negotiations over the substance of the deal this summer and conclude a final deal within 18 to 24 months.

Domestically, both American businesses and a wide swath of policymakers support the proposal. Myron Brillion, Executive Vice President and head of international affairs at the Chamber of Commerce publicly outlined the benefits of a deal in a blog post earlier this month. An array of prominent American businesses including Ford, Citi, IBM, FedEx and others recently organized a Business Coalition of Transatlantic Trade in order to help push for a trade deal. In addition to business interests, American labor groups have supported the initiative. TTIP has even garnered bipartisan support in Congress. European Commission President Jose Manuel Barroso strongly supports the potential trade deal.

By completing a deal, the US and EU could raise their collective Gross Domestic Product (GDP) by $180 billion in five years time according to the European Center for International Political Economy. Eighty percent of these potential gains are a result of cutting the costs resulting from regulations and bureaucracy, as well as facilitating trade in service industries. According to projections, total US exports would increase by approximately 8 percent with a trade deal. Increased exports means more jobs at home and a growing economy.

The benefits of a transatlantic trade deal are clear. The real question now is whether leaders in the US and EU can effectively come together to finalize details and execute a deal. To realize the large potential benefits, American and European negotiators must work to overcome a number of obstacles surrounding standardization and regulations. Disagreement over agricultural trade poses one of the largest threats to a comprehensive deal. France is concerned about losing its position in the sector to American competition. In 1998, French opposition successfully shut down transatlantic trade treaty talks. Furthermore, the US is hesitant to import European beef because of mad cow disease concerns, while Europe refuses to open its markets to American genetically modified agricultural products and chlorinated chickens. According to Chamber of Commerce Vice President Peter Chase, “Food safety as exemplified by GMOs (genetically-modified organisms) has been probably one of the most problematic, controversial areas of the EU-U.S. economic relationship.” Leaders on both sides of the Atlantic must keep in mind that their differences on the issue pale in comparison to the substantial benefits of successfully reaching an agreement. A Transatlantic Trade and Investment Partnership holds the potential for launching a new era of robust economic growth in both the United States and Europe.

 

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