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For better or worse, significance of Europe trade deal is in undecided specifics
February 19, 2013 - Mike Maneval
In President Barack Obama's 2013 State of the Union address, the president spent one sentence alluding to the potential for a trade agreement with European Union members. Thirty-seven words, by my count.
The specifics clearly were vague, as the specifics of proposals floated during many State of the Union addresses often are, and reporting by the New York Times and the Los Angeles Times didn't clearly indicate whether the deal would focus on tariffs or more broadly address regulatory oversight and agricultural subsidies as well. The Wall Street Journal's reporting leaned toward the deal including changes to regulatory climates, but acknowledged "reconciling" agricultural and regulatory laws would be a "complex challenge." As the three reports and reporting in the Christian Science Monitor indicate, the goals of U.S. negotiators in pursuit of this trade deal remain unclear. With such vagueness, it may difficult to weigh if the proposal is a step toward economic growth, insignificant, or significantly disastrous for the U.S. economy.
To be fair, a trade deal with Europe has significant differences from past trade deals, in that the parliamentary democracies of Western Europe maintain a higher quality of life for constituents and bear greater respect for individual worth than many of the beneficiaries of past trade policy. Unlike Colombia when the Bush administration negotiated a now-signed trade deal, France and Germany investigate and often solve the murders of labor activists. The New York Times and Wall Street Journal indicate labor unions would be less invigorated to oppose a deal because Europe's traditions alleviate, as the Journal's Sudeep Reddy phrased it, "fears that U.S. factory workers would be put at a competitive disadvantage by weaker labor standards or less-stringent environmental regulations."
Of course, tariffs on European goods already are at a low level — 3 percent for many, as reported by Nicholas Kulish and Jackie Calmes for the New York Times, and the volume of existing trade with Europe is great. There may be little margin for expansion left. "The transatlantic economic relationship is already the world's largest, accounting for half of global economic output and nearly $1 trillion in goods and services trade," according to a joint statement from Obama, European Council President Herman Van Rompuy and European Commission President Jose Manuel Barros, The Los Angeles Times reported Wednesday.
But, then, there is a downside to a low tariff rate that may fall lower. The revenues from tariffs, were we as an economy to move in the opposite direction, could be used for some combination of federal debt reduction and the cutting of earned income or payroll taxes to provide working American consumers budgetary relief - perhaps even, with spending cuts on other expenditures, federal grant programs to fund property tax relief for municipal and county governments. And a step toward a trans-Atlantic trade deal may signify a further cementing of the federal government's reliance on deficit spending and taxation of hard work as tariff revenues become more of a historic relic.
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