The Duck of Minerva

The Duck Quacks at Twilight

The All New, New Transatlantic Pivot – Trade

December 7, 2012

This is a guest post by Sean Kay. Professor Kay is chair of the International Studies program and professor of politics at Ohio Wesleyan University.  He is also Mershon Associate at the Mershon Center for International Security Studies at The Ohio State University.  He has written extensively on NATO and Europe, with his most recent book, Global Security in the Twenty-first Century:  The Quest for Power and the Search for Peace (2011).

In a recent Washington Post editorial, David Ignatius reported on a “big idea” that could “revitalize the U.S-European partnership for the 21st century.”  The concept focuses on an “economic NATO” – a US-European Union comprehensive agreement to free up trade in goods, service, investment, and agriculture.  Ignatius reports that this concept is advancing through the American and European bureaucracies while citing a German Marshall Fund study (PDF) showing that a 50 percent reduction in non-tariff barriers could boost GDP by $160 billion in Europe and $53 billion in the United States – higher for the US if all barriers were lifted.

The NATO motif is instructive because the foundations of the transatlantic relationship need new thinking.  NATO’s military utility is increasingly in decline – and pressures are coming for deep American troop reductions in Europe.  Yes, NATO is sending Patriots to Turkey to hedge against Syrian missiles and has embraced an innovative ballistic missile defense system.  But these deployments do not require tens of thousands, or even thousands, of American troops.  A structural legacy of European dependence on American military power was exposed in the 2011 Libya war where even “leading from behind” required a major American contribution to the air war and increased American concerns about burdensharing (already heightened over Afghanistan).

America is rightly pivoting its military priorities away from Europe to save money and focus on other global concerns.  This is logical and should be taken to the next level as part of a new transatlantic bargain.  A clear presidential statement declaring America’s goal to help the allies so they they can fight a Libya-style air war and maintain a Balkans-style peace operation without the United States can facilitate European defense cooperation which better compliments American power.  Limiting America’s role in NATO as a strategic reserve, emphasizing Article 5 collective defense commitments, will keep the foundations of the alliance alive and place Europeans rightly responsible for their own regional security concerns.

This enhanced military “pivot” only makes sense, however, if accompanied by a dramatic investment in the economic aspects of the transatlantic relationship via US-EU trade agreement – and it should proceed promptly.  There are rising anti-EU sentiments across Europe as the historical memories of its founding rationale dissipate in immediate economic anxieties.  Martin Wolf recently warned in the Financial Times of a resurgence of British standoffishness which could result in a dangerous race to the exit.  As former EU Ambassador to the United States, John Bruton, wrote (PDF) recently:  “If the EU were to break up, either because of the collapse of the euro or because a major country like the UK feels it has to exercise its right to leave the EU, and either event were to set off a breakdown of the trust that keeps the EU itself together, we would have lost a unique instrument for security building in Europe and for problem solving in the wider world.”  It is hard to see any scenario where this outcome would be good for American security or economic interests.

Europe continues to slump into extended recession and remains a drag on the American economy.  Popular frustration with austerity is on the rise in the bailout countries – and Germans are understandably tired of transferring wealth to Europe’s periphery.  Renewed American leadership on trade, building on existing strengths in the US-European relationship, can be the tonic that gets the European engine of growth moving and reassures global markets.  The risks of contagion from Europe became clear in the last few months as American exports to Europe dropped by 11.7 percent in July 2012 – and exports to Germany reached their lowest figure in two years – thus the urgency.

As the US Trade Representative office notes, Europeans employ about 7 million Americans in good, high paying jobs.  Already, the US-EU economic relationship accounts for around $3.6 billion daily.  Europe trade is about 21 percent of American total global exports and about the same amount of EU exports go to the United States.  American and Europeans have a combined transatlantic share of investment approaching $3 trillion.  Even with a downturn in exports in 2012, in the first nine months, US Europe trade totaled $485 billion in goods – greater than between the US and China. Europe bought $184 billion in American products in 2011 and total goods and services trade is about $700 billion a year across the Atlantic.

Creating a US- EU free trade zone which removes non-tariff barriers (PDF) and achieving agreed standards on regulations and customs would grow this pillar of the transatlantic relationship.  As transatlantic tariffs are already at a low 3 percent, getting an agreement on non-tariff barriers should not be difficult.  Some disputes, especially agricultural difficulties can continue to be worked on separately while a broader architecture is formalized. Standardizing testing procedures and other regulations on manufactured products like automobiles and common licensing standards for common household products, consumer safety, medical supplies, and environmental rules that add costs and delay shipping should not be a serious obstacle.  Critics assert that a US-EU trade pact would hinder global trade liberalization – but more likely it would put pressure on others, China in particular, to do more to align with deepening transatlantic standards – especially while other trade pacts like the US-South Korean and EU-South Korean deals deepen.

It is possible that the biggest barrier to the creation of a US-European free trade area could be political, and in Washington.  Republican senators just defeated a treaty advancing American standards for disabilities rights – what will they do to a transatlantic NAFTA – with the “socialist” Europeans they like to deride?  Still, Republicans in the business community will appreciate the benefits – and provide President Obama an important bipartisan initiative.  A new vision for the US-European relationship which rebalances NATO, and reinvests in the US-European economic ties could be President Barack Obama’s most important second-term foreign policy achievement and cement his place the history of America’s most important alliance relationships.

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Daniel H. Nexon is a Professor at Georgetown University, with a joint appointment in the Department of Government and the School of Foreign Service. His academic work focuses on international-relations theory, power politics, empires and hegemony, and international order. He has also written on the relationship between popular culture and world politics.