By Andrew Zvirzdin
As the economic crisis continues, feelings on both sides of the Atlantic have been hurt.
Americans are accusing European countries of not doing enough to stimulate demand while Europeans are dismayed that the U.S. is unwilling to implement regulations to prevent such a crisis from happening again. I do not foresee an easy solution to these disputes. However, leaders on both sides of the Atlantic can look beyond such disagreements and focus on an area where they can make substantial progress: trade.
The Doha Trade round was initiated in 2001 to cut tariffs and other barriers to trade within the WTO framework. After a number of attempts, negotiations stalled in 2008 and there has been little progress since. The key point of disagreement is agricultural supports, particularly within the U.S. and EU. Along with the EU, some developing countries seek a significant cut in American price-distorting agricultural support while the U.S. wants a reduction in tariff barriers in the EU and developing countries. However, negotiating positions have converged in the last seven years and the major ingredient now lacking is political will.
The current strained economic environment may not seem like a prime opportunity to restart trade negotiations, but it is. Both American and EU leadership has been damaged by their inability to forge consensus or chart a clear path for the economic future. Making tough compromises and working with struggling developing countries to forge a new multilateral trade agreement would demonstrate the ability of Western leaders to think globally and be proactive. Efforts to reduce trade barriers in agriculture would combat growing protectionist sentiment, reduce prices on basic foodstuffs, and stimulate greater trade. The increase in global welfare--estimated to be as high as $574 billion--would also certainly help the current economic situation.
The European Union and the United States should collectively take leadership on global trade and be sensitive to the growing influence of the developing world. Strategic concessions by the U.S. and EU in agriculture would help improve diplomatic relations with Brazil, India, and China, which, in turn, would provide a valuable foundation for a broader reworking of the international economic system. The opposition of domestic interests groups and institutional constraints, such as the U.S. President's lack of fast-track trade authority, would be a difficult obstruction to further progress in trade liberalization. But for a U.S. president anxious to reassert its leadership and an EU struggling to maintain its coherence, a united agreement on strengthening international trade could be the needed catalyst for an improved economic and diplomatic environment.
Andrew Zvirzdin is an M.A. candidate in European Studies and Economics at the School of Advanced International Studies (SAIS) of the Johns Hopkins University, Bologna.
Email the Author | Email This Post | Del.icio.us | Digg | Facebook
The views expressed are those of the author and do not necessarily represent those of the Johns Hopkins University.
Recent Comments