By Putting Its Mark on Trade with Europe the Trump Administration Can Advance U.S. Power and Prosperity

12/13/2016

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Peter S. Rashish

President-elect Donald Trump’s “New Nationalism” in trade policy defeated Hillary Clinton’s alternative of “Progressive Engagement” on November 8th.  Prizing its sovereign independence within the international trading system, the incoming Administration will take aim at the U.S. trade deficit and proceed cautiously with a limited number of free-trade deals with individual countries rather than larger agreements involving several trading partners.
What does this new approach mean for U.S. relations with the European Union, the country’s largest commercial partner? Candidate Trump did not directly address the Transatlantic Trade and Investment Partnership launched in 2013. The European Commission does exercise important “Hamiltonian” executive powers by negotiating on behalf of the 28 member states of the EU as if it were a single country. But TTIP could also be seen as another complicated and entangling multi-country deal like the Trans-Pacific Partnership, which will be subject to a U.S. withdrawal once Trump enters the Oval Office.
 
It is thus uncertain whether the new Administration will opt to pursue its own version of TTIP  – or instead place a priority on laying the groundwork for a free-trade agreement with the United Kingdom once it exits the EU, something Trump spoke favorably about during the campaign. In either case, the decision centers on more than a calculation about trade deficits or short-term gains in sovereignty.
 
For 70 years, it has been U.S. policy to prevent the emergence of a Wild West global economy where arbitrary government interventions shape international commerce rather than mutually agreed upon rules. Successive U.S. Administrations, whether Republican or Democrat, have believed that an economy based on the rule of law like the United States would ultimately not be a winner in a world of frontier justice. It is for this reason that the U.S. took a leading role in creating the GATT and later the World Trade Organization. Yet owing to negotiating stalemates, the WTO’s rules have not been updated for more than 20 years, creating uncertainty and instability.
It is unlikely that the incoming Administration will decide that an increasingly anarchical global economy, one where state-capitalist economies like China and Russia would be able to act with fewer constraints, would better serve the U.S. national interest. In that case, it may find that a trade agreement with the European Union – the key U.S. strategic economic ally – offers the most promising avenue for strengthening the rules-based international trading system in a way that will advance the country’s long-term power and prosperity.

Peter S. Rashish is Senior Advisor for Trade and Transatlantic Relations at Transnational Strategy Group LLC, a Washington-based international business and government affairs consultancy. Before joining TSG, he served as Vice President for Europe and Eurasia at the U.S. Chamber of Commerce.
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