Wednesday, February 27, 2013

Javier Solano looks for reasons for the EU to continue to exist - and to make a neoliberal trade deal with the US

Javier Solano in The European-American Dream Project Syndicate 02/26/2013 restates some of the standard reasons that the EU should stay together and continue the process of political and economic unification (a Spanish version of the article is available here: Europa y la modernización de España El País 26.02.2013):

... the European states are too small to compete separately in the world of the twenty-first century. It's as simple as that. By 2030, according to the World Bank, there will be two billion more people, mainly Asians, in the middle class. The pressure on the planet’s resources, commodities, water, and food will be huge, making a global rebalancing practically inevitable. And in a world marked by interdependence and constant change, Europe will find that unity is strength.

Indeed, unless Europeans work toward integration, they may find themselves surpassed by emerging countries in terms of technological development, job creation, production costs, talent, and creativity.
Sadly, his arguments sound like a ritual performance of nostalgic sentiments from a time prior to 2009, when Greece's debt problem became public knowledge and gave German Chancellor Angela "Frau Fritz" Merkel her excuse to bring down her austerity hammers on the nations of Europe, especially those under Germany's domination in the EU as it is constituted today.

He does reference a more current issue, the trade treaty being negotiated between the US and the EU:

Today, the Transatlantic Trade and Investment Partnership (TTIP) is finally on the table, promising to boost growth in the EU and the US alike. In 2012, US exports to the EU totaled roughly €206 billion ($272 billion), while EU exports to the US amounted to nearly €300 billion. Thirty million jobs in Europe (about 10% of the total work force) depend on foreign trade. The quantities are huge, which suggests that the TTIP could have an effect comparable to that of the single market for Europe.
There is plenty of money to be made, by One Percenters at least, in international trade. But if the TTIP becomes yet another vehicle for deregulation, union-busting and financial buccaneering, it will do more harm than good.

Tyson Barker of the Bertelsmann Foundation gushes about the prospective TTIP in For Transatlantic Trade, This Time Is Different Foreign Affairs 02/26/2013:

Negotiators in the United States and Europe aspire to make the TTIP the most advanced economic agreement in the world, and any deal will likely go beyond the most basic aspect of free trade -- namely, the elimination of tariffs. More broadly, Europe and the United States can be expected to align their regulations regarding manufacturing and services such as finance and telecommunications. The deal would also address new frontiers of economic growth, including the U.S. shale gas market and online intellectual property. They also hope to eliminate almost all barriers to foreign direct investment.

The elimination of tariffs alone, which average out to four percent on goods traded between the United States and Europe, could remove a $24 billion impediment to transatlantic trade. Beyond free trade, however, the real gains from the deal would come from regulatory cooperation. Transatlantic business would flourish, for example, if German cars that passed safety inspections in Stuttgart also met standards appropriate for U.S. drivers, if drugs and medical devices designed in one market could be sold to consumers in the other more quickly, and if smart-phone plugs built for both markets would be interoperable. In the highly regulated areas of advanced manufacturing and services, the backbone of the U.S. and European economies, streamlining business would give each side a huge boost in competitiveness.
It sounds like the usual neoliberal prescription of driving regulatory protections down to the lowest common denominator and giving greater latitude for massive capital flows across borders to facilitate predatory speculation and "rent seeking". Along with the usual promises of more jobs and enhanced growth. Probably flowers and ponies for everybody, too.

Barker apparently sees the dominance of Frau Fritz' austerity economics as presenting an opportunity to adopt yet another bad trade agreement that enriches the rich and screws the workers: "In light of the eurozone crisis and larger challenges to the European approach to social welfare, governments in the United Kingdom, the Netherlands, and Germany are looking to rejigger the European economy for long-term competitiveness -- and are looking to adopt more market-based stimulus." Also, our Democratic President has insisted that those pesky advocates for workers and consumers have their role in the negotiations limited or eliminated: " In particular, Washington insisted on achieving certain preliminary agreements to ensure that the Europeans had sufficient political clout to dislodge the interest groups that had prevented past deals, such as agricultural lobbies and smaller parties such as the Greens and the Pirates, and anti-globalization parties on the far right and the far left."

Also, Barker views it as a tool to combat what Argentine political theorist Jose Pablo Feinmann has called "the Beijing Consensus" to distinguish it from the neoliberal "Washington Consensus." Barker:

On a grand strategic level, closer U.S.-European ties would also enhance the West's leverage with China at a time when it is sorely needed. As a result of China's state-capitalist model, Beijing can harness its money to enhance its industrial competitiveness. Moreover, it selectively follows international economic rules, for example by restricting market access to and exports of its raw materials, such as rare earths, and ignoring international norms about intellectual property. Left unchallenged, such behavior could undermine commerce in ways not seen since the establishment of the Bretton Woods system. A robust trade and investment deal would give the United States and Europe greater leverage in the coming decades to push back against China and reaffirm the liberal international order.

... the OECD predicts that China will become the largest global economy by 2016, giving it enormous ability to set the terms of global trade. As much as anything, this change in the economic pecking order has enhanced the need for a U.S.-European trade deal.

In the broadest terms, a U.S.-EU trade deal would allow the United States and Europe to maintain their sway over global economic governance. Both recognize that their ability to set global rules will diminish as economic power shifts to the Asia-Pacific region. In the coming decade, no one power will be able to drive the international agenda. But if they join forces, the United States and Europe can channel their combined economic weight to keep control of the reins of the global economic order. [my emphasis]
It's always possible that concern for the well-being of US and European workers plays some part in these calculation. Flowers and ponies, too.

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