Getting an EU-US trade and investment deal (TTIP) will be tough. Yet if we grasp the moment, America’s first ‘Pacific President’ and his EU partners may well become best known for having re-founded the Atlantic Partnership, write Daniel Hamilton and Joseph Quinlan.
Daniel S. Hamilton and Joseph P. Quinlan are Director and Senior Fellow, respectively, at the Johns Hopkins University Center for Transatlantic Relations, and co-authors of The Transatlantic Economy 2015 (Washington, DC: Center for Transatlantic Relations, 2007)
The US-EU Transatlantic Trade and Investment Partnership (TTIP) is generating more heat than light when it comes to most European debates, which tend to cast TTIP as yet another free trade agreement. Yet TTIP is about more than trade. It is about creating a more strategic, dynamic and holistic US-EU relationship that is more confident, more effective at engaging third countries and addressing regional and global challenges, and better able to strengthen the ground rules of the international order.
To the extent that TTIP can help generate jobs, spark growth and reinvigorate the US and European economies, it promises to renew confidence among publics and elites and ameliorate some of the political dysfunction afflicting many Western societies. Greater confidence and economic vigor at home, in turn, has the potential to increase the magnetic pull of Western values elsewhere, underwrites US and EU diplomatic capacity, and enhances possibilities for strategic outreach.
TTIP can also reassure each side of the Atlantic about each other. Europeans are more likely to have greater faith in America’s security commitments if they are anchored by strong trade and investment links. TTIP would be an important US validation of EU legitimacy, while reassuring Americans that the EU is looking outward rather than inward.
TTIP can be an assertive, yet not aggressive, means to defend and advance basic values shared across the Atlantic. TTIP’s fundaments are those of democratic societies rooted in respect for human rights and the rule of law. The US and the EU are among the few entities that include basic labor, environmental and consumer protections in their trade agreements. They boast the two most sophisticated regulatory systems anywhere. An agreement that commits both parties to sustain and uphold such principles and protections, not only vis-a-vis each other but together around the world, would be a strong affirmation of common values and a powerful instrument to ensure that such standards advance globally.
Second, TTIP is important in terms of how the transatlantic partners together might best relate to rising powers. Whether those powers choose to challenge the current international order and its rules or promote themselves within it depends significantly on how the US and Europe engage, not only with them but also with each other. The stronger the bonds among core democratic market economies, the better their chances of being able to engage rising partners as responsible stakeholders in the international system. The looser or weaker those bonds are, the greater the likelihood that rising powers will challenge this order.
TTIP has particular meaning for US and EU relations with China. TTIP is lazily portrayed as an effort to confront and isolate China. Yet is less about containing China than about the terms and principles guiding China’s integration and participation in the global order. China’s burgeoning trade with both the United States and Europe attests to US and EU interest in engaging China, not isolating it. Yet Beijing has yet to embrace some basic tenets of the international rules-based order. TTIP, TPP and related initiatives are important instruments to help frame Beijing’s choices — by underscoring China’s own interests in an open, stable international system as well as the types of norms and standards necessary for such a system to be sustained.
TTIP is also important with regard to US and EU relations with Russia and Eurasia. TTIP is a values-based, rules-based initiative that is likely to strengthen Western economic and social cohesion, reinforce US commitment to Europe, strengthen transatlantic energy ties, and contribute to greater attractiveness of the Western model. TTIP would also bolster the resilience of central and east European economies, stimulate US investment and enable such countries to more easily resist Russian encroachment. These changes are likely to resonate across Wider Europe, especially Ukraine, Moldova, Georgia and even Belarus.
This is anathema to the current leadership in the Kremlin. TTIP presents a huge challenge to the Kremlin’s efforts to divide Europeans from Americans. It offers something that the Kremlin cannot match: a transparent, mutually beneficial agreement that creates a rules-based framework for international cooperation. A reinvigorated transatlantic marketplace among highly-connected, highly-competitive democracies, whose people enjoy greater economic growth and rising standards of living, would challenge the Kremlin’s version of ”managed democracy” and render Russia’s own one-dimensional natural-resource-based economic model unattractive. Greater US-EU energy cooperation would blunt Russia’s monopolistic approach to European energy markets. And if such benefits extended to non-EU neighbors, particularly Ukraine, Russians themselves are likely to ask why their own country can’t be better run.
Third, TTIP can help strengthen the international rules-based order. Europeans and Americans share an interest in extending prosperity through multilateral trade liberalization. But the Doha Round is stuck and the WTO system is under challenge. EU and US officials are using TTIP to unblock the WTO Doha negotiations, jumpstart multilateral negotiations, and extend the multilateral system it to new areas. TTIP could result in clearer, transparent rules of origin that could facilitate global trade and serve as a common public good. It could pioneer new ways to ensure high standards for consumers, workers, companies and the environment while sustaining the benefits of an open global economy. Without TTIP, Americans and Europeans could become standard-takers rather than standard-makers.
Getting a TTIP deal will be tough. Yet if we grasp the moment, America’s first ‘Pacific President’ and his EU partners may well become best known for having re-founded the Atlantic Partnership. If we do not, then issues of failing trust and confidence, so visible today, will continue to eat at the relationship like termites in the woodwork.