At first glance, the character of the negotiations towards a deep and comprehensive transatlantic free trade agreement appears to be a purely economically motivated effort to further reduce tariff barriers and find common ground on a broad set of regulatory policies. However, the grand strategy behind TTIP aims for more than stimulating trade, investment, and growth. Creating the largest free trade area in history carries the potential to strengthen the Euro-Atlantic geopolitical leverage by forming the decisive international economic hub of the 21st century and adding inclusive institution to the global order. Introducing the next chapter of transatlantic cooperation, TTIP would put the economic and geopolitical implications of the “Pivot to Asia” into perspective.
The Predominance of the Transatlantic Economy
In contrast to the omnipresent narrative about the “Rise of Asia,” the European Union and the United States are of unparalleled economic importance not only for their respective markets, but for the global economy. Trading goods and services worth more than $2 billion daily, the Euro-Atlantic area pools one third of worldwide trade and almost half of global GDP. Exemplifying the significance of the transatlantic economic partnership, U.S. investment in Ireland alone is higher than U.S. investments in Brazil, Russia, India and China — combined. Despite the emergence of economic powerhouses in the Asia-Pacific region, the transatlantic economy constitutes the backbone of the world economy. Even a slight reduction of the remaining tariffs and a minimum of mutually recognized regulatory policies would generate economic effects that by far exceed deep and comprehensive free trade agreements with external parties. On a societal level, prospects for growth and investment through free trade as an alternative “Marshall Plan” could restore public trust in the Western model of market economies after tumultuous year of fiscal and debt crises without aggregating huge spending deficits— especially relevant for the Southern periphery of the recession-torn eurozone. “Economic nation-building at home” is desperately needed, and TTIP provides the vehicle to do so.
Trade Rules Express Our Values
The EU-U.S. trade project focuses on more than economic benefits. Cutting redundant non-tariff barriers by setting common standards at the highest common denominator would combine consumer protection and economic gains to set the international gold standard for the global free trade system. Above all, a successfully negotiated and ratified agreement has the potential to unlock the WTO’s “Doha Round” by demonstrating the ability of a variety of parties to forge consensus on a great spectrum of regulatory aspects, despite significant differences in their respective systems. In contrast to widespread criticism, TTIP is neither a hidden agenda for deregulation, nor a neoliberal courtesy deal for big business. On the contrary, an international trade agreement would enshrine rules, define procedures, and mark limits by framing globalization in a legal context. The transatlantic best case scenario on the final nature of TTIP includes a “magnetic momentum” in which countries outside the Euro-Atlantic area consider accession negotiations towards the legal context that TTIP manifests. An expanding zone of free trade which links high consumer protection standards with low hurdles for small- and medium sized companies to trade goods, services and capital, is of vital geopolitical importance for both the European Union and the United States. In turn, a well-crafted TTIP with an accession clause or FTA-to-FTA compatibility segment would help the spread of the rules-based international order, agreed upon by liberal democracies upholding the primacy of the rule of law in global trade affairs.
Adding to Bretton Woods
In addition to mutual recognition and partial harmonization of standards, a standing court on investor-state dispute settlements (ISDS) would create an international institution by Euro-Atlantic design. A permanent court, as proposed by the European Commission, could channel the steadily rising number of cases under arbitration and ambitiously integrate the more than 3000 existing international bilateral investment treaties under a common umbrella based on rules proposed and implemented by the transatlantic alliance. In the tradition of Bretton Woods, Europe and America would underpin the existing liberal world order by adding another institutional piece to the overall international architecture. As every vacuum provokes external powers to fill the gap that Europe and America leave, it lies within the geopolitical interests of both sides of the Atlantic to continuously shape rules, norms, and institutions.
TTIP Provides Euro-Atlantic Reassurance
The ability of Europe and America to conclude grand projects would symbolize the internal cohesion of the transatlantic alliance and open a gate through which the EU and the U.S. continue to commonly further interests and values in the international arena. Both sides of the Atlantic have benefited tremendously from the existing global trade arrangement. It lies within their most vital interest to not only preserve and protect, but expand and renew the international order of their design by cooperating economically on an ever stronger scale.
This article is based on the conference paper “TTIP, Geopolitics and Public Opinion: A Strategic Agenda”, presented at the Transatlantic Policy Symposium at Georgetown University in Washington, DC, on February 6, 2015.