September 20, 2016
For the first installment of the Conversations on Europe series for 2016-17, our panel of experts—Dr. Alasdair Young of Georgia Tech, Dr. Elvira Fabry of Norte Europe- Jacques Delors Institute, and Dr. David Cleeton of Illinois State—discussed the debate over free trade that has gained political traction in both the EU and the U.S. of late. What are the arguments being made for or against protectionism or fair trade on both sides of the Atlantic? How do we account for the rising hostility to NAFTA and TPP here in the U.S. and to TTIP and continued economic union in Europe? What are the post-Brexit vote implications?
Anti-free trade rhetoric is resounding in the current U.S. presidential election campaigns. Ratification of TTP is also a prominent issue running concurrently with the election race. Economists today have a consensus on the benefits of opening up markets, says Dr. Cleeton. The EU has a different framework for trade than the U.S., with small open economies and a shared currency that must maintain high productivity to maintain competition--Germany would be a prime example. We see job loss or gain through competition and innovation in the economy. Slow investment in both the public and private sectors is one issue. Technology is also impacting job skills and the supply is limited as we do not provide training for the necessary skills to utilize technology. Intermediate products, not final products, are more common in the U.S. economy. Trade negotiations will be more reliant on how we give access to service providers. We have spent decades lowering tariffs and realize that this will not make a difference.
EU general trade policy is very active and conducted by the European Commission, Dr. Fabry says. A similar backlash against trade policies is occurring with elections in France and legislative elections in Germany. Criticism of trade is more intense in some countries, including Germany and Austria, as globalization is being engaged where there is a larger mix of ideas and pro or contra sentiments. The higher level of interdependence may be more widely received, especially with reflection on the refugee crisis in Europe.
In the U.S. the opposition to trade is traditional. In Europe, the opposition to TTIP is much less traditional and more about the interlinked economy and movement of people, says Dr. Young. Protests in Germany against TTIP and CETA are prevalent. These agreements, however, differ widely in their ambitions. Globalization has to do with increased competition between partner states. Some industries have come down to minimal competitive companies and supply chains. All of the agreements try to address different issues in how we undertake competition. Trade now is likely to produce more influence with higher competition. Strong interest in multi-national corporations exists, especially with potential gains and open markets. We will continue with trade pacts in this vain. We may see some major strategic changes in TPP and TTIP negotiations in Congress following the U.S. elections.
Allyson Delnore of the University of Pittsburgh moderated the discussion.