Free trade has done much to advance the cause of human flourishing and improve the lives of people around the globe. The historical cooperation between Europe and North America in advancing free trade, economic opportunity, and open markets not only serves to connect our nations, but has been a force for good across the globe. It is important, therefore, to continue working toward improving our economic relationship to advance transatlantic opportunities and build a peaceful international community.
An Incremental Approach under a Common Framework
The goal of a comprehensive trade agreement between the US and the European Union (EU) should be maintained as a cornerstone of the transatlantic partnership. However, rather than advocating for a single large trade deal, we favor an incremental approach under a common framework. This approach should be reflected both in the negotiation process as well as the setup of the agreement that TTIP – or whatever the name of its next iteration may be – extends far beyond traditional bilateral trade agreements. The debates surrounding TTIP have shown that for any such agreement, there are a variety of legitimate concerns and a wide range stakeholder needs that must be addressed.
Under the proposed incremental approach, the parties would as a first step conclude a framework agreement which would, in addition to serving as a sort of “TTIP light” by slashing or eliminating the tariffs that still exist, establish common principles, processes, and structures for the negotiation of technical sub-agreements. These separate technical sub-agreements would address the more significant regulatory (or non-tariff) barriers on an industry-by-industry (or subject-by-subject) basis. These sub-agreements would eliminate horse-trading of regulatory standards (which were one of the major criticisms levelled against TTIP). This incremental approach allows the parties to build up consensus more rapidly.
For industries where full regulatory convergence seems out of reach or prohibitively costly for small businesses in the short run, the parties should strive for mutual recognition. This may even serve as the general approach, particularly in areas of first-time cooperation. The barriers to trade will effectively be removed, while the democratic responsibility will be left with each partner state, preempting the concern that TTIP might undermine the democratic process and serve as a platform for the interests of big business.
Last, but not least, an incremental approach offers the flexibility both to respond to new developments and findings as well as to easily expand the agreement to other areas connected to trade, such as digitalization, privacy, or even common efforts to fight tax evasion. The new agreement would provide the foundations for a comprehensive trade agreement, as well as one that is “living,” or evolving along with the markets.
A New and More Inclusive Narrative
In the face of growing anti-trade sentiments on both sides of the Atlantic, the proponents of free trade need a new and more inclusive narrative to market any future comprehensive trade deal between the US and the EU. The narrative should be comprised of both factual as well as emotional arguments.
Each agreement should be justified based on its own merits. Broad narratives of prosperity and the benefits of free trade are unlikely to appeal to skeptics. They also do not reflect that one of the major benefits of a comprehensive US/EU trade agreement lies in setting democratically agreed upon standards. Rather than favoring multinationals that already are able to export, it is small companies that would benefit the most from increased regulatory convergence. In this way, a comprehensive trade agreement could not only boost jobs and growth for the wider public in affected nations, but also bring about increased competition for multinationals.
To win over skeptics’ hearts, the agreement could be pitched as a first step towards “taking back control” of the globalized economy. Based on common values, partners bound by a special historical relationship would undertake to shape the world economy in line with their core values of the rule of law, human rights, free enterprise, and the responsibilities that come with it.
Such a narrative may call for a new name, so that it might be unencumbered by the baggage of the heated battles surrounding TTIP.
Commitment to an Evidence-based Review
The parties should commit to an evidence-based review of any agreement concluded under the new framework. For there to be an open public dialogue, the transatlantic partners must pro-actively assess the impacts of their actions and publish the results. Furthermore, the respective governments should unilaterally commit to establishing trade adjustment programs for workers and industries that are shown to be adversely affected by the agreement during the review process. Ultimately, the review may even serve to trigger a renegotiation (including, in the worst case, a suspension) of any sub-agreement that is shown to bring about imbalances that are unacceptable to one party. This process of review and modulation would be facilitated by the proposed modular approach.