I’d like to think this represents a shift in the popular mentality toward free trade, but I hesitate. To me, it seems like folks are most optimistic because economic growth is slower, and they’ll take anything that could give it a boost. Most analysts agree free trade would significantly boost output and jobs on both sides, making it quite attractive right now.
As negotiations heat up though, we could very well see some popular and political resistance. Not over lowering tariffs—transatlantic trade is already mostly cheap or tariff-free—but in doing away with subsidies, restrictions and regulations that prevent the free flow of goods and services. Truly free trade could require both sides to reduce or abandon agricultural subsidies, limit auto and airline industry bailouts (widely seen as competition-distorting subsidies), and open air travel and financial services markets—all politically sensitive issues. Equally sensitive will be efforts to lower the EU’s resistance to imports of genetically modified crops and open the US to raw milk products (like delicious French cheese) from the EU. And efforts to harmonize food, drug and other safety standards could set consumers on edge. I expect we’ll see plenty of lobbying and protesting against these compromises over the next several months.
If we all can overcome these differences though, the rewards will be great—particularly for entrepreneurs and small businesses lacking the resources to fight the tangle of red tape limiting trade today. With less regulation and bureaucracy in their way, exporting will be cheaper and easier, making it a far less costly undertaking—businesses won’t need teams or consultants dedicated to navigating regulatory mazes. This is especially true for service-oriented firms, given how closed services markets are right now. With small businesses struggling to grow on both sides of the Atlantic, free trade couldn’t come at a better time.
So here’s hoping the strong political will to complete this stays steadfast on both sides!
And, on a somewhat related note, here’s hoping the European Commission sees successful negotiations and realizes it is possible to have a fully functional multi-national marketplace without a morass of institutional bureaucracy. (Read Jeremy Warner’s excellent piece in Friday’s Telegraph, “Yes to Free Trade With the US—No to All the Other EU Guff,” for more.)