The Geopolitics of TAFTA

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Slowly but surely a project is gaining traction that could have a revolutionary effect on the relationship between the United States and Europe: the Transatlantic Free Trade Area (TAFTA). For decades, TAFTA was the step-child of Western politics. Too big to even think about, too laden with tricky issues—for example genetically modified foodstuffs or protectionism in niche markets—too complicated in the details. But fear of marginalization in the “Asian century,” and the possibilities of globalized business have infused the idea with so much energy that it is now the talk of the town from Washington to Brussels to Davos. German Chancellor Angela Merkel has supported the project for years, and the Transatlantic Economic Council, set up in 2007 by Merkel, former U.S. president George W. Bush, and EU Commission President José Manuel Barroso, is expected to come out shortly with a report strongly supporting the project.

Basically no one doubts the enormous economic benefits an unhindered flow of goods and services across the Atlantic could bring about. Study after study shows that growth rates and employment on both sides would increase significantly. And it’s true: TAFTA would be a triumph for the liberal trade agenda. At a time of WTO paralysis, that’s no small thing. But this project has also tickled analysts’ imaginations in a different way. Almost no comment on TAFTA now gets by without attaching great geopolitical value to the project. U.S. Secretary of State Hilary Clinton allegedly called TAFTA an “economic NATO”, and many observers believe that the project would be the right kind of signal to China and the rest of BRICS that there is still life in the good old nations of the West.

What makes a trade deal geopolitical? Naturally, all trade relations between nations and continents have some basic geopolitical value. International commerce “flattens” the world by shrinking distances and creating common interests between partners that are not geographic neighbors.

But when attaching the “geopolitics” label to TAFTA, pundits have a bigger picture in mind. They hope that transatlantic trade will re-invigorate the Western partnership beyond its economic dimension. They believe that it could somehow tilt the global balance of power back to the West. They think that it would be a forceful proclamation of will power by what seems to be an exhausted, conflict-stricken, crisis-ridden Western civilization. At the very minimum, proponents of TAFTA expect it to send the world a strong signal “on the value of rules-based systems, the benefits of free trade, and the protection of investments and property rights,” as a business lobbyist in Brussels put it the other day.

I myself am guilty of such sweet hopes. On closer inspection though, it is not clear whether TAFTA can fulfill such huge strategic potential. TAFTA would have to create enormous political momentum to deliver all that the strategy junkies expect from it. Whether that can happen depends on the answers to two sets of questions. The first one is about political spill-over: would a greatly expanded trade agenda also generate more intense cooperation elsewhere, especially in military affairs that have become worrisomely sclerotic? Would a new “economic NATO” strengthen the old military NATO? Would it help Europe and the United States to find a common stance on big international issues such as banking regulation or climate change? Would it create more unified U.S.-European positions in the UN Security Council and in the G20?

The second set of questions is about the effects TAFTA would have on the rest of the planet: would it stimulate similar activities elsewhere in the world, most importantly in the Pacific, where various free trade ideas exist but don’t seem to gain substantial momentum? How would the BRICS react, especially Russia with its seemingly ambitious idea of a Eurasian Union? Could the WTO benefit from a transatlantic blood transfusion? Would TAFTA increase competition with other players, or would it motivate those players to join the club?

And these are just some of the questions that might arise in the wake of TAFTA. It is very clear that there is a lot of geopolitical juice in the project. But it is equally clear that there is a risk of overburdening the project with expectations. Before it can have any meaningful impact anywhere, thousands of legal and regulatory issues will have to be resolved. The worries of beef farmers and car producers, of unions, environmentalists, and health activists, to name just a few, will have to be listened to and addressed.

The big geopolitics of TAFTA stands and falls by these details. On balance, it seems that risk of failure for TAFTA is probably still much bigger than the chances for success, so I guess it is time for some geopolitical humility—if there is such a thing—on this front. The worst outcome would be if the transatlantic partners infused the project with too many high hopes, only to fail at the first hurdle. The geopolitical symbolism of such an outcome would be disastrous.

 

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