Region: Trans-Atlantic trade deal has its obstacles
Obama's protectionism may hinder partnership with the European Union
Posted: February 20, 2013
U.S. President Barack Obama announced in his annual State of the Union address Feb. 12 that his administration will launch talks to achieve what he described as a comprehensive Transatlantic Trade and Investment Partnership with the European Union. "Trade that is fair and free across the Atlantic supports millions of good-paying American jobs," he said. Yet Obama's own policies may prove to be the biggest hurdle to such an agreement.
Enhancing trans-Atlantic trade makes economic sense for both Europe and the United States. The two still account for half of global gross domestic product and nearly a third of the world's commerce. Investment across the Atlantic surpasses American and European investment in Asia and vice versa. Lowering investment and trade barriers should give a necessary boost to Western economies, currently struggling to recover from the 2008 financial crisis, while emerging powers in Asia and Latin America continue to grow at solid rates. The European Commission and the White House estimate abolishing tariffs and removing regulatory burdens could add half a percentage point to the national incomes of both Europe and the United States every year.
The rise of countries like Brazil, China and India also points to a strategic imperative for formalizing transatlantic trade relations. As Philip Stephens wrote in The Financial Times Feb. 15, "The economics are a means to an end." At a time when Western notions of economic and political modernity are challenged, "the reward" of a trade and investment partnership between Europe and the United States, according to Stephens, "is the advance of the liberal political order that has lately seemed in retreat." It would, in effect, create a huge marketplace that demonstrates to the rest of the world the advantages of liberal economics.
From the U.S. perspective in particular, strengthening the old bond with Europe while seeking to contain China's rise in Asia could prove critical. The United States can only be as strong a player in the Pacific as its economy allows. Enhancing investment and trade in and with the nations across the Atlantic will support "millions of good-paying American jobs," as Obama promised, and enable the country to assert itself more confidently in Asia.
But in last year's State of the Union address, the president seemed rather less sure about the benefits of freer trade. He complained about companies that moved "jobs and profits overseas" and suggested businesses that "decide to bring jobs home" should be subsidized. He said competitor nations didn't "play by the rules" and promised to crack down on China in particular.
On Sept. 27, 2012, less than two months before he was re-elected, Obama argued it was time for "a new economic patriotism" and reiterated his intent to reward companies that "invest in America, not ship jobs overseas." It seemed the president tried to tap into the frustrations of especially blue-collar workers who had seen their jobs disappear as a result of mechanization or globalization.
Such campaign rhetoric shouldn't be dismissed now that Obama has begun his second four-year term. When he took office four years ago, the Democrat was handed free trade agreements that his predecessor had negotiated with Colombia, Panama and South Korea - and took nearly three years to finalize them. In the process, his administration renegotiated the pact with Korea to protect U.S. automakers from competition and included generous compensation packages in the bill that was finally put before Congress for workers who might be displaced as a result of increased foreign trade.
Even if Obama now recognizes the benefits of boosting trans-Atlantic trade, farm lobbies in Europe and the United States will likely resist tariff reduction, labor unions are likely to be critical of regulatory reform and expanding access for foreign workers, and members of the president's Democratic Party who represent industrial districts and states will be wary about more competition from abroad. It might be quite a while before a trans-Atlantic trade deal is done.
Nick Ottens can be reached at