A transatlantic free trade area?

An interesting idea to start the new year off with. Razeen Sally wants us to consider the idea,

It is perhaps time to revive the idea of a transatlantic free trade area (TAFTA). This is the gist of two papers, one by ECIPE’s Fredrik Erixon and Gernot Pehnelt (http://www.ecipe.org/publications/ecipe-working-papers/a-new-trade-agenda-for-transatlantic-economic-cooperation/PDF ), the other by GEM-Sciences Po’s Patrick Messerlin and Erik van der Marel (http://www.gem.sciences-po.fr/content/publications/pdf/Messerlin-VanderMarel_services07062009.pdf ). A TAFTA initiative was floated in the 1990s, only to sink; and the Transatlantic Economic Council (TEC), established at the initiative of Chancellor Merkel to tackle regulatory barriers, has got bogged down in micro-detail and hardly made progress. Sure, political obstacles are great, but it is worth stepping back to coolly assess costs and benefits, and then decide whether to go ahead with a new initiative.

Sally's assessment of the Bush and Obama administrations on trade policy,

Trade policy has deteriorated in the United States since the Obama administration took over. The Bush administration, for all its faults, did not do a bad job on this front. Its major achievement was to contain protectionism at home, especially against China. President Obama, on the other hand, while no clear-cut protectionist, has ambivalent views on the subject and is not an instinctive free-trader. He has powerful protectionist forces inside his tent – among Congressional Democrats, the AFL-CIO, and at his Cabinet table (notably the Labour Secretary, Hilda Solis). His record to date shows a delicate balancing act, giving way to domestic protectionist forces at one moment, but cushioning their impact and maintaining open markets the next moment. But his overall approach is defensive; and trade policy is crowded out by his domestic priorities. That leaves sweet-sounding multilateralist rhetoric, but without substance. It is soft-serve ice-cream multilateralism, worthy of a Norwegian peace prize.

His conclusion:

To conclude: This is not a good time for EU and US trade policy. Both are defensive in a global economic climate that has gone from benign to turbulent. That also poses a threat to bilateral economic relations. TAFTA is worth another look, this time as a two-stage initiative: first to eliminate tariffs, and then to tackle the harder stuff.

The rest of Sally's article is available here.