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The Next Big Transatlantic Project: A Free Trade Area Plus

The rising economies in Asia and South America have been hyped for many years in the US and European media. Now, finally, there is a renewed focus on transatlantic free trade because the United States and the European Union "remain the anchor of the global economy. Together, they produce more than 50 percent of the world's gross domestic product and account for almost 30 percent of global trade. Europe buys three times more U.S. products than China, and European investment in California alone is greater than all U.S. investment in China and Japan put together."

Stuart E. Eizenstat, a former deputy secretary of the Treasury, and Daniel S. Hamilton of Johns Hopkins University, describe how the new Trans-Atlantic Partnership could look like:

Continue reading "The Next Big Transatlantic Project: A Free Trade Area Plus"

Atlantica: A Threat to American Freedom

In Roland Emmerich's latest disaster movie 2012 the alignment of our solar system's planetary bodies during the winter solstice in three years will cause the Earth to topple from its axis. This leads to the end of the world.

And three years later it is likely to get even worse, because "there is a movement in the U.S. Congress to create a transatlantic free trade area by 2015." That's the impression I get from Rick Biondi's warning in The Examiner. Apparently the creation of such a free trade area will lead to a horrible "Europeanization of America:"

Europeans have always favored the rule of law and collective order over liberty. Worshippers of foreign philosophies in Congress are embarrassed by this rift, and are working hard with President Obama to reverse it through ideological capitulation.

To effectively unite Atlantica, many policymakers believe we need to meet our European friends in the middle. In essence, we must become more progressive, so our political and economic agendas can harmoniously merge on a transatlantic level. The Europeanization of America is a deliberate and calculated agenda. Once Americans are conditioned to accept and live under more socialistic ideals, a true Atlantic community can effectively be negotiated.

I find his choice of words hilarious ("Atlantica," ideological capitulation," "calculated agenda," and "conditioned to accept") and his concerns truly fascinating as they reveal such different values.

Making Transatlantic Economic Cooperation More Interesting

In reaction to a previous post about the boring, technical nature of transatlantic economic cooperation, Atlantic Review reader John in Michigan made the important point that "the political process requires an engaged citizenry to function well. Any topic or area that an ordinary citizen would rightly find dull, doesn't belong in politics".

Transatlantic economic cooperation is a process that produces winners and losers and thereby has political implications. As it deals with economic relations between the world's two largest economies by far, these implications will likely prove to be significant. The cooperation process, however, is technical to a degree where the political implications are likely to be registered late, and to lead to oblique reactions.

At the core, being 'dull but important' is a dilemma, which has to be solved by making transatlantic economic cooperation more interesting. This could for instance be done by clarifying the political implications of very technical issues like eliminating 'non-tariff barriers'. That, however, is a very difficult analysis to make, and will be contested.

Another solution is to make the issue more interesting by addressing more strategic and political issues. That is the proposal of Henning Meyer of the Social Europe Blog, in a policy paper written for the Global Policy Institute.
Continue reading "Making Transatlantic Economic Cooperation More Interesting"

Military Leaders Outline Plan for New Transatlantic Bargain

A group of European and American military leaders co-authored a report that was released last week, titled Toward a Grand Strategy for an Uncertain World, Renewing Transatlantic Partnership (PDF version available from CSIS). The top brass – all with NATO experience – argue that the Alliance remains critical to both Europe and the US:
We are convinced that there is no security for Europe without the US, but we also dare to submit that there is no hope for the US to sustain its role as the world’s sole superpower without the Europeans as allies.
The manifesto begins by arguing that many current and future threats – such as terrorism, international crime, demographic shifts, energy security, climate change, etc. – cannot effectively be addressed by any single country on its own. Instead, NATO provides the best opportunity for western countries to address new threats because it "links together a group of countries that share the most important values and convictions and that took a decision to defend those values and convictions collectively."

Continue reading "Military Leaders Outline Plan for New Transatlantic Bargain"

Transatlantic Trade: Articles Recommended by our Readers

The Atlantic Review has a new feature Tips from Our Readers: Our sidebar contains a list of the latest links to articles on transatlantic issues recommended by our readers. If you are interested in contributing to our little web 2.0 project, please read more information here.

Our readers recommended these articles about transatlantic trade issues:
• "US likes Merkel's Trans-Atlantic trade initiative -- but not now" Spiegel International.

• EU responsible for 90% of all export subsidies paid by WTO members: IHT Blog.

• "EU says US security rules hide protectionist agenda": Euractiv.

• "EU wants rest of world to adopt its rules." Financial Times.
Regarding hedge funds:
• "EU to talk to U.S. officials about hedge fund guidelines" International Herald Tribune.

•  "German deputy still targets 'locusts'" Financial Times.

Constantly updated recommendations from our readers are in the sidebar on the right.

How To Talk to Americans

Daniel Mark Harrison, a financial journalist and Englishman in New York, describes the 12 "most subtle but important mistakes English people and Europeans in particular make when they come to America. In fact, I think on many levels, these are some of the reasons for break-downs in political and business communications between the USA and the EU."
According to him, a bit more cultural awareness would
help European economies and improve transatlantic relations: "Building our trans-atlantic political and economic alliances to create a power center which is capable of doing bigger and better things is exactly what both Europe and the United States should be striving for."
1. Assume that your typically understated demeanor will be recognized and admired by your American colleagues.
2. Politely respond to the question "how are you doing?" with a brief "fine, thanks" and walk away shyly without engaging in much further dialog.
3. Try to exaggerate an overseas experience for dramatic effect. Or, for that matter, underestimate the intelligence of your American companion.
4. Seize every point an American colleague is saying in a debate by analyzing and deconstructing his/her sentence structure word-by-word and pointing out the flaws in his/her logic
5.  Hold back on sharing fairly intimate/personal stories on a first meeting.
6. Assume that anyone who is on some kind of anti-depressant or who has been on one/several is insane and that you shouldn't talk to them.
7. Assume that every American is pro-war in Iraq.
8. Assume that because wealth is greatly admired and sought after in the United States, your inherited wealth will be similarly admired.
9. Draw parallels between European pre-industrial revolution colonialism and America's post-world war II involvement in world economies and politics.
10. Make assumptions about America or American people based on what you have seen on Hollywood movies.
11. Assume that once you've been to one part of America you know it all.
12. Be afraid to ask for a pay rise.
He explains all of this Do NOT advice in detail in his blog Global Perspective. I disagree with several of his explanations and consider some of his advice obvious or not helpful, but some is quite interesting. Just my personal opinion, of course.

What is your advice? What should Europeans avoid in conversations with Americans? What should Americans avoid in conversations with Europeans?  Not the obvious stuff, but the "hidden" dangers of putting one's foot in it (ins Fettnaepfchen treten).
Or more positively put: What is the best way to impress Americans/Europeans, i.e. give a good first impression? Yeah, I know, tough question and very generalized. It all depends on the situation and the individual. Americans and Europeans have probably more in common than differences. Thus making a good impressing on an American or European is not so different. What do you think? Any tips to share?

Related: The American blogger Scot has some great advice for Germans in his blog USA Erklaert: "Warum Amerikaner (Briten, Kanadier) nicht sagen, was sie meinen."

Productivity Growth and Foreign Trade balances in the EU and the U.S.

UPDATE: Our reader Potsdam Amerikanerin has sent two links with more specific economic statistics than the data cited by the Financial Times:
Deutsche Bank Research writes that "hourly labour productivity in the euro area in 2005 was 9.1% lower than in the US. Back in 1995 the euro area had been ahead by 1%, as chart 1 illustrates. Over the past 10 years productivity has risen by 13.2% in the euro area, but 25.8% in the US." This chart also shows that France has higher labor productivity than the US. The Deutsche Bank Research paper (pdf) is full of interesting graphs and analysis, including data about productivity per employed worker and productivity per capita.
The European Union is catching up to the US: The Conference Board writes that labor productivity growth was slightly higher in the EU than in the US. There are considerable differences within the EU: Finland, Sweden and Germany had significantly higher labor productivity growth than southern EU countries and the US:
U.S. labor productivity growth in 2006, at 1.4%, was the lowest in more than a decade and, despite a strong business cycle, the enlarged European Union saw modest productivity gains of only 1.5% last year. (...) U.S. labor productivity slowed for the third consecutive year in 2006 and was well below that of the other two largest advanced economies in the world, Germany and Japan (2.5% in 2006). The latest productivity estimates, running up to the third quarter 2006, suggest that most of the U.S. slowdown comes from service sectors.
Within Europe, Germany displayed a significant acceleration in productivity growth (2% in 2006 compared to 1.3% in 2005) even though most of its economic recovery is likely to be cyclical. External factors in the form of improved export performance account for a substantial part of Germany's productivity recovery while the domestic sector, particular consumer expenditure, still remains weak. Nordic countries, in particular Finland (3.7%) and Sweden (2.8%), showed productivity growth well above the European average. In contrast, the productivity record of most Mediterranean countries, particularly Italy, Portugal and Spain, remains consistently weak at 0.1%, 0.3% and -0.5% respectively.
End of update. Original post with more information on foreign trade balances: Continue reading "Productivity Growth and Foreign Trade balances in the EU and the U.S."

Merkel's Blitzvisit and the Harmonization of Technical Standards

The American Institute of Contemporary Studies has compiled a page of links to German and American press reports regarding Chancellor Angela Merkel's extremely short visit to Washington, D.C., on January 4, 2007.
International Herald Tribune (IHT) points out that President Bush was "conspicuously silent about Merkel's bilateral trade proposal":
Merkel called on Europe and the United States to improve trade cooperation to withstand the challenge of Asian economies. She proposed harmonization in some areas, ranging from technical standards for patents to regulations governing financial markets. But some European officials were skeptical about the proposals.
"This is unlikely to get off the ground," said an official, who spoke on the customary condition of anonymity. "The Americans aren't keen on it, and creating a new free-trade area of sorts is way too ambitious."  Trans-Atlantic trade relations are in a fragile state after talks to reduce barriers to global commerce broke down in July. The United States and Europe have failed to agree on cuts in farm subsidies and industrial tariffs that are essential to concluding a World Trade Organization agreement on liberalization, known as the Doha round.
The IHT also explains the difficulties of the Doha round of trade talks and states that "efforts to clinch a trade deal could prove more difficult following the recent Congressional victory by the Democrats, who traditionally have more protectionist instincts than the Republicans."
Christoph von Marschall explains in Der Tagesspiegel (in German) that Merkel is not proposing an ambitious Transatlantic Free Trade Area (TAFTA), but common technical standards and patent laws so that European and American companies do not need to please two bureaucracies. This is expected to increase trade. Von Marshall sees the problem that the EU and the US would try to force their standards on each other for reasons of prestige and suggests that it would be better if the EU and the US would just accept each others standards: If the US considers a new child safety seat safe, then the EU should consider this seat to be safe as well and allow the import of that seat; and vice versa. How likely is that?
Related post in the Atlantic Review:
European Union Directive: American exporters must only use the metric system after January 1, 2010.
Endnote: The United States Mission to Germany has created a website about shared EU-US
trade interests, the latest US trade policy developments and the US position on the trade disputes with the EU. (The embassy also chronicles the latest developments in US-German relations.) (Photo source: White House)

Daniel W. Drezner, associate professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University, recommends these recent newspaper articles on trade issues and posts excerpts in his blog
William Overholt, "Globalization's Unequal Discontents,", December 21, 2006
Jagdish Bhagwati, "Technology, not Globalisation, Drives Wages Down," Financial Times, January 3, 2007
Susan Aaronson, "Labor Rights Not Optional,", January 5, 2007.