Global Trade: A Missed Chance for the EU and the US to Set the Gold Standard?
The Comprehensive Economic and Trade Agreement (CETA), the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) have a lot of things in common:
All are regional trade and investment agreements borne out of the frustration over the stalemate at the World Trade Organization (WTO) rounds. All are considered to be a new type of agreement: More comprehensive and more advanced in their reach and ambition than any agreement that the world had seen before. And all are either between European Union (EU) and the United States (US) or with them; CETA between the EU and Canada, TPP with the US and 11 further countries in the Asia-Pacific region and TTIP between the EU and the US.
For many years, the EU and the US were on a good way to use these agreements as a tool to strengthen their economies and ties between each other; to manifest their lead in global trade over emerging economies; and to write the rules of trade that others will have to follow. As President Obama put it in 2015 in regards to TPP: “This deal would strengthen our hand overseas by giving us the tools to open other markets to our goods and services and make sure they play by the fair rules we help write”.
Within the blink of an eye that vision seems to have fallen apart. The vote of the United Kingdom (UK) to leave the EU in June took out the voice of the strongest proponent of a TTIP agreement in Europe. With the election of Donald J. Trump as US President TPP’s future is uncertain and also TTIP is less than likely to became reality any time soon given the complexities of the negotiation and the lack of public support, particularly in Europe. With this in mind, it is a miracle that CETA even made it to an approval in October 2016; but also only after a regional Belgian Parliament had almost brought it to fall.
Bilateral trade deals are now said to be favoured again by the UK and the US won’t deliver the ‘gold standard’ shaped by the EU and the US that leaders on both sides of the Atlantic had in mind when they went into the TTIP, CETA and TPP endeavours. And there is concern that China, who has never particularly liked the idea of TPP or TTIP, will seek to use the growing gap in the international trade space to its advantage and push their own regional agreements with their own rules; something TTIP and TPP had openly tried to avoid.
It is too early to make any precise assumptions about the future of global trade at this point and we will surely experience further surprises. Mr Trump is not the first President-elect who assumes office with a sceptical stance towards trade and then changed the tone; and the Brexit outcome whether a UK outside the EU would be party to EU trade deals or not is still far from being clear. At the moment, however, with the main engines of growth being in reverse, the window of opportunity for transatlantic leadership in trade is closing; and with that the EU and the US missed the chance to set the gold standard in trade as they had once aspired. The question is: Forever or for how long?