The “most cost-effective economic package of all time,” a “historic moment” in transatlantic partnership and “milestone for the world economy” are some of the accolades for the European Union-US free trade treaty negotiations.
The big news from the G8 summit in Enniskillen, Northern Ireland, talks due to start in July could – if successful – create the largest free trade zone in the world.
Consumers could see faster approval procedures for medicines or more favourable prices for cars and airline tickets.
Until now, companies seeking to do business in both the United States and the EU have had to comply with two separate sets of rules.
This costs time and money for both manufacturers and, ultimately, consumers.
A single safety standard for cars, for example, would provide savings that manufacturers would eventually pass along to consumers.
By EU calculations, a free trade agreement could boost the EU’s economic output by 120 billion euros ($156 billion) per year and create 400,000 new jobs. Each household would feel relief worth of 545 euros per year.
“This is the cheapest stimulus programme that one can imagine,” EU Commission President Jose Manuel Barroso gushed.
Negatives of free trade pact
But there is also criticism of the plans.
Environmental and consumer affairs advocates warn about possible negative side-effects.
Greenpeace says lobbyists for the US farm and food industries have been exerting massive pressure in Washington to assure that the negotiations remove what they see as the EU’s troublesome protective standards. Rules for labelling of genetically altered crops and EU bans on growth hormones in cattle and so-called chlorinated chickens could become points of contention.
“Fewer barriers for trade at the same time means less protection for the environment and for consumers,” Greenpeace warned.
A study by Germany’s Bertelsmann Foundation notes the potential negative effects on developing countries. An intensification of trade relations between the US and EU could leave the two economic giants buying fewer goods and services from the rest of the world. Africa and Central Asia could stand to be hardest hit.
In Europe, Germany, at least, is not fearful of US domination.
“We’re not afraid of competition,” Chancellor Angela Merkel recently told the German Chamber of Commerce and Industry in Berlin.
“Protectionism certainly is no further help for us.” At Paris’ insistence, subsidies for culture – which benefit the French film and music industries – will be excluded from the EU’s negotiating mandate, for now.
Barroso has criticised such special demands as no longer being in tune with the times. “Some say they belong to the left, but in fact they are culturally extremely reactionary,” he told the International Herald Tribune.
Free trade supporters point to the absurd effects trade barriers can have in sectors such as commercial aviation. When a plane flying from Frankfurt to Los Angeles lands first in New York, and half the passengers disembark there, the plane must then fly on only half-full because the airline is not allowed to take on new passengers.
No expectations by industry
Industry is not expecting a rapid outcome for trade negotiations.
“I believe that the many obstacles won’t permit a quick solution,” predicted Thomas Enders, chief executive of European aerospace giant EADS.
He cautioned that from his company’s point of view, even new rules governing bid tenders will not protect against possible discrimination.
His caution comes in the wake of EADS’ experience in vying for the “deal of the century” for new aerial tankers for the US Air Force.
EADS suffered a serious setback against Boeing in the deal, even though the Europeans were competing with the larger and more modern airplane.