Handout 9 – US & EU Economies
Trump Election Likely to Put U.S.-EU Trade Talks On Ice
ByVIKTORIA DENDRINOU (The Wall Street Journal, Nov. 11, 2016)
BRUSSELS—Negotiations on a sweeping trade pact between the European Union and the U.S. will be put on hold for a long time following the result of the U.S. election, the bloc’s top trade official said on Friday.
Speaking after a regular meeting of trade ministers in Brussels, EU Trade Commissioner Cecilia Malmström said there was no plan to hold any further negotiations on the Transatlantic Trade and Investment Partnership, or TTIP.
“I think we should be realistic, I don’t see the resumption of any TTIP negotiations in quite a long time,” Ms. Malmström said.
The world’s two biggest economic blocs have been negotiating TTIP since 2013, and have repeatedly said they hope to conclude negotiations before the end of the Obama administration in January.
But prospects for completing the deal have suffered from weakening political support in Europe as well as growing public criticism, as anti-globalization sentiment has gained traction on both sides of the Atlantic.
The election of Donald Trump, who employed a strong antitrade rhetoric throughout his campaign, has dealt a further blow to prospects for the already struggling agreement.
“For quite some time TTIP will probably be in the freezer and what will happen when it is defrosted I think we need to wait an see,” Ms. Malmström said.
Throughout his campaign, Mr. Trump lambasted existing and planned trade deals, arguing that they hurt U.S. workers and the country’s competitiveness.
European officials have long expected that if Mr. Trump won the election, TTIP would be all but dead, given the strong opposition he voiced against to global trade deals.
But they also stressed that his views on TTIP specifically weren’t known, as his criticism was chiefly directed at the Trans Pacific Partnership, or TPP, a trade pact among the U.S., Japan, Canada, Australia and eight other countries around the Pacific.
“He has not, one single time in his election campaign, made any reference to TTIP, so we do not know what he thinks on it,” Ms. Malmström said.
In the U.S., TTIP has largely been under the public’s radar, but strong criticism by presidential candidates of the recently agreed TPP underscores the lack of appetite and possible resistance to similar deals.
Peter Ziga, the Slovakian economy minister who presided over the ministers meeting, said the EU remained open to dialogue, but that the next step in negotiations will need to be assessed once the new U.S. administration is in place.
“The ball is on the U.S. side,” he said.
But he added that, “at the moment we don’t know if we have someone on the other side of the table.”
The trans-Atlantic talks have generated more widespread disapproval in Europe than in Washington, where the Obama administration has struggled to get the TPP deal through Congress.
Britain’s vote to leave the EU has added further uncertainty for negotiators on both sides, as it means the loss of one of the bloc’s strongest trade advocates and one of the largest economies originally expected be part of the pact.
------
Trump victory could spell defeat for EU-U.S. trade deal
By Philip Blenkinsop | BRUSSELS (Reuters, Nov. 11, 2016)
A protectionist U.S. president and increased European suspicion of a Trump-led America undermine the prospects of a planned transatlantic free trade agreement between the European Union and the United States.
Trump has argued that international trade deals hurt U.S. workers and the country's competitiveness, but it is not clear to what extent Trump the president will resemble Trump the campaigner.
"If the world's biggest economy follows a protectionist course, its effects will be felt around the world. We can only hope that his words are not followed by corresponding deeds," said Thilo Brodtmann, head of Germany's VDMA engineering association.
EU and U.S. officials have for more than three years been negotiating the Transatlantic Trade and Investment Partnership (TTIP), with Brussels and Washington recognizing it will not now be completed under Barack Obama's term as earlier envisaged.
"TTIP is history," Bernd Lange, chair of the European Parliament's Committee on International Trade, told online magazine vorwaerts.de when asked about the impact of Trump's win on the negotiations.
Germany, where exporters have done well from globalization and free trade, was more cautious. Asked at a news conference if TTIP was dead, Chancellor Angela Merkel's spokesman Steffen Seibert said: "No."
EU trade chief Cecilia Malmstrom said it was too early to assess the impact of Trump's victory, but a break was inevitable whoever had won.
"How long will that break be? Impossible to say ... There's a lot of uncertainty," she said.
Anthony Gardner, U.S. ambassador to the EU, told Reuters TTIP remained important for economic and strategic reasons, recognizing that the challenge was to convince more people that free trade is an opportunity, not a risk.
Malmstrom has previously said both sides should make as much progress as possible so that the work can be quickly picked up under the next president.
However, it seems unlikely that trade will be high on Trump's list of priorities or that TTIP will be top of his trade agenda.
Trump has instead talked about getting tough with China, withdrawing from the unfinalized 12-nation Trans-Pacific Partnership (TPP) and renegotiating or scrapping the North American Free Trade Agreement.
European Commission Vice President Jyrki Katainen noted that Trump had at least not singled out TTIP for criticism.
Hosuk-Lee Makiyama, director of trade think-tank ECIPE, said U.S. presidents typically took some time to forge trade policy and in the case of Obama and George W. Bush only really pushed trade policy deep into their second terms.
"TTIP is probably one of the last agenda items and I don't think we will see a trade policy until year two or year three," he said.
Trump will likely appoint a trade representative in March or April. His choice could be key, with possible appointees ranging from the protectionist Dan DiMicco, former CEO of steelmaker Nucor Corp (NUE.N), to libertarian PayPal (PYPL.O) founder Peter Thiel.
A further problem TTIP has faced is opposition from trade unions and environmental and other protest groups, particularly in Europe, who say TTIP undermines democracy by giving multinationals the power to dictate public policy.
Critics would have an added argument in their fight against TTIP, able to paint the deal as one with a bogeyman president.
"Opposition to TTIP is strong, particularly in the light of the results of the election last night," Jeffrey Franks, director of the IMF's Europe office, told a trade conference.
(Additional reporting by Alastair Macdonald in Brussels, Georgina Prodhan in Frankfurt and Michael Nienaber in Berlin; editing by Giles Elgood)
------
Canada and E.U. Sign Trade Deal, Bucking Resistance to Globalization
By JAMES KANTER (The New York Times; OCT. 30, 2016)
BRUSSELS — The European Union and Canada signed a far-reaching trade agreement on Sunday that commits them to opening their markets to greater competition, after overcoming a last-minute political obstacle that reflected the growing skepticism toward globalization in much of the developed world.
Canada’s prime minister, Justin Trudeau, had been forced to call off an earlier trip to sign the deal after Wallonia, the French-speaking region of Belgium, used its veto to withhold Belgium’s approval of the deal. The pact required the support of all 28 European Union countries.
On Friday, Wallonia, which has been hit hard by deindustrialization and feared greater agricultural competition, withdrew its veto after concessions were made by the Belgian government, including promises to protect farmers. Hours later, the European Union announced that the deal was back on track.
Mr. Trudeau signed the pact on Sunday, joined by Donald Tusk, the president of the European Council, which represents the leaders of the member states; Prime Minister Robert Fico of Slovakia, which holds the rotating presidency of the body that runs the bloc’s ministerial meetings; and Jean-Claude Juncker, the president of the European Commission, the bloc’s executive arm.
The deal will help to demonstrate that “trade is good for the middle class and those working hard to join it,” Mr. Trudeau said at a news conference in Brussels. Mr. Trudeau said he wanted to “make sure that everyone gets that this is a good thing for our economies but it’s also a good example to the world.”
But the Walloon intransigence has underlined the extent to which trade has become politically radioactive as citizens increasingly blame globalization for growing disparities in wealth and living standards. Across Europe and the United States, opposition to trade has become a rallying point for populist movements on the left and the right, threatening to upend the established political order.
A compromise among the regions of Belgium, which persuaded Wallonia to drop its veto, called for language to clarify the handling of trade complaints brought by Canadian or European companies.
Belgium pledged to refer the arbitration system to the Court of Justice of the European Union, where judges can assess its legality.
Nonetheless, several dozen anti-trade activists held a rowdy protest on Sunday outside the building where Mr. Trudeau signed the pact, the Comprehensive Economic and Trade Agreement. The protesters splashed red paint on the forecourt of the building and condemned a planned Transatlantic Trade and Investment Partnership between Europe and the United States.
That much larger deal, known as T.T.I.P., has already stalled amid opposition from large numbers of Europeans, including many Germans and Austrians. The protesters see the Canadian deal as a warm-up for a much larger battle.
The spectacle of tiny Wallonia, with just 3.6 million people, holding up a deal that affects more than 500 million Europeans and 35 million Canadians and prompting European Union leaders to delay a summit meeting has rattled Western leaders.
“In the end, people who favor free trade survived to fight another day,” said Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Washington.
“Now that we see the Canadian deal has made it over the finish line, the Atlantic trade deal still has a fighting chance,” he said. “But it won’t be easy. T.T.I.P. could similarly threaten traditional farming interests and arouse knee-jerk European suspicions about common trans-Atlantic health and environmental standards.”
As a legal matter, the member states’ legislatures still need to ratify the Canadian agreement. That could mean more hiccups before it goes into effect.
Mr. Tusk, of the European Council, said he was cautiously optimistic that the deal would survive the ratification process and could send a positive message about globalization.
“Today’s decisions demonstrate that the disintegration of the Western community does not need to become a lasting trend,” Mr. Tusk said. “Free trade and globalization have protected hundreds of millions of people from poverty and hunger. The problem is that few people believe this.”
“The European Union is not yet in the group of hard protectionist and state-controlled economies like China or Russia,” said Hosuk Lee-Makiyama, the director of the European Center for International Political Economy, a research organization in Brussels. “Instead, the E.U. is carving out a new middle ground between those two countries and the United States.”
Europe, Mr. Lee-Makiyama said, is pivoting to a position as “neither an ally of East nor West.”
Once ratified, the Canadian deal would cut many tariffs on industrial goods and on farm and food items, according to the European Commission. The deal also would open up the services sector in areas like cargo shipping, maritime services and finance to European firms, the commission said.
The Canadian deal is also regarded by trade advocates as a template for advanced, industrial economies by making it easier for their regulators to recognize one another’s rules, and by updating the rules on how companies can make sure governments protect their investments.
If the Obama administration has its way, the next major regional trade accord to make it over the finish line will be the Trans-Pacific Partnership, which includes the United States, Canada, Japan and Vietnam.
The Pacific deal — largely because it involves a number of emerging economies — is a more traditional trade accord aimed mainly at cutting tariffs and knocking down impediments to trade.
But like the Europeans, many Americans do not want to make concessions that would lower wages or threaten jobs at home. The Asia-Pacific deal has become a hot issue in the United States presidential election; both major-party nominees, Hillary Clinton and Donald J. Trump, oppose it.
Mr. Funk Kirkegaard, the senior fellow at the Peterson Institute, said he gave the Pacific deal about a 30 percent chance of being concluded while President Obama is still in office. “Beyond January,” he said, “it’s all dependent on the results of the election and who’s the next president.”
------
Safe for Now, Canadian Dairy Farmers Fret Over E.U. Trade Deal
By Ian Austen (The New York Times; OCT. 31, 2016)
THAMES CENTRE, Ontario — On both sides of the Atlantic, many of the people who are most upset about the new free trade deal between Canada and the European Union are dairy farmers. But they have opposite worries.