Getting to Yes on Transatlantic Trade
THOMAS J. BOLLYKY is Senior Fellow for Global Health, Economics, and Development at the Council on Foreign Relations. ANU BRADFORD is Professor of Law at Columbia Law School.See more by Thomas J. BollykySee more by Anu Bradford
Revelations that the United States bugged EU embassies and monitored the emails and phone calls of ordinary Europeans almost ended this week’s U.S.-EU trade negotiations before they began. But prudence prevailed and EU officials withdrew their threats to postpone the talks. With U.S. economic growth still sluggish and eurozone unemployment reaching all-time highs, a transatlantic pact that could liberalize one-third of global trade and generate millions of new jobs is an opportunity neither side can afford to miss.
Still, hammering out the agreement, known as the Trans-Atlantic Trade and Investment Partnership (TTIP), won’t be easy. Beyond the traditional barriers to U.S.-EU free trade -- tariffs and quotas -- negotiators will need to address the real obstacles to transatlantic commerce: divergent or duplicative regulatory policies.
Although seemingly obscure, the fights that rage between EU and U.S. bureaucrats over such matters as the rules on chlorinated chicken, the privacy afforded to social media users, and the regulations governing derivatives trading are the central issues in the latest transatlantic trade negotiations. With tariffs between the United States and the EU already low, the United Kingdom’s Center for Economic Policy Research estimates that 80 percent of the potential economic gains from the TTIP agreement depend on reducing the conflicts and duplication between EU and U.S. rules on those and other regulatory issues, ranging from food safety to automobile parts.
It’s easy to be pessimistic about the prospects for success. Previous initiatives to improve EU-U.S. regulatory cooperation during the Clinton and Bush administrations went nowhere. Cultural attitudes on each side toward consumer safety, environmental protection, and privacy run deep, and they will not be overcome with promises of diffuse economic benefits and future job growth. High-level political leaders can bring EU and U.S. regulators to the negotiating table and prod them to resolve one-off disputes, but that is unlikely to produce the consistent regulatory interpretations and the predictable, efficient enforcement that are needed to facilitate transatlantic commerce.