February 19, 2013

The Public Supports a Transatlantic Trade Pact – For Now

By Bruce Stokes, Director of Global Economic Attitudes, Pew Research Center

Special to Reuters

The long-discussed free trade agreement between the United States and the European Union was formally endorsed by President Barack Obama in his State of the Union address to Congress. Obama asserted that “trade that is fair and free across the Atlantic supports millions of good-paying American jobs.” A prominent presidential endorsement will not prevent a long and disputatious negotiation, but a trade pact could yield potentially huge economic rewards — and also provoke serious political opposition on both sides.

A U.S.-EU trade and investment agreement has been talked about for two decades but never actively pursued. On both sides of the Atlantic, there has been fear that any such deal between the world’s two largest economies would disadvantage poorer nations. A U.S.-EU accord was deemed less desirable because greater economic benefits could be gained from a global trade agreement involving more countries. Trade experts worried that it would undermine the legitimacy of the World Trade Organization. Moreover, based on past bitter disputes over frozen chickens, bananas, genetically modified organisms and other food and agricultural products, a U.S.-European Union agreement was deemed too politically fraught and difficult.

Now, with Europe in recession, the United States unemployment rate stubbornly high and both regions groaning under public indebtedness, Brussels and Washington are looking for ways to stimulate jobs and growth without spending money. Liberalization of trade and investment is seen as one way to do that.

In addition, in the wake of the failed Doha Round of multilateral trade negotiations, a U.S.-EU deal is thought to pose little immediate threat to the WTO because there is no comprehensive global trade deal in the offing any time soon. Moreover, the rising competitive challenge from China has increased the incentive for both Europe and America to develop common technical and regulatory standards for a $30 trillion transatlantic market to ensure that Western-style capitalism, not Chinese state capitalism, remains the global norm.

Publics on both sides of the Atlantic appear to be receptive to the idea.

The virulent European anti-Americanism of the last decade — owing to European opposition to the Iraq war and the policies of U.S. President George W. Bush — is ancient history. More than two-thirds (69 percent) of the French had a favorable view of the United States in 2012, compared with 42 percent in 2008, the last year of the Bush administration, according to Pew Research Center surveys. Fifty-two percent of Germans held a positive opinion of America, compared with 31 percent four years earlier. And 58 percent of the Spanish were favorably disposed toward the United States, much greater than the 33 percent who held such views in 2008.

There has been a similar, if less robust, rebound in American response to the European Union. In 2012, half the country had a favorable view of the EU, compared with only 39 percent at the nadir in 2004.

Moreover, contrary to the widespread assumption that protectionist sentiments are rising in the wake of the Great Recession, 58 percent of Americans say they support increased trade with the EU. The same feeling exists across the Atlantic. Three-quarters of the Italians, nearly two-thirds of the British (65 percent) and more than half of the French (58 percent) and Germans (57 percent) believe in deepening trade and investment ties between the European Union and the United States; 63 percent of Americans agree, according to a 2007 German Marshall Fund survey.

There is also strong support for one of the thorniest challenges that lie ahead: harmonization or mutual recognition of national regulations on goods and services, everything from food standards to insurance. Overwhelmingly Italians (87 percent), British (84 percent), French (82 percent), Americans (76 percent) and Germans (71 percent) support such efforts, according to the Marshall Fund survey.

European backing may reflect a half century of experience aligning regulations while building the European Union. American enthusiasm may reflect a lack of appreciation of just how arduous that can be.

The removal of all remaining tariffs on goods traded between Europe and the United States, traditionally the core of any trade and investment agreement, has strong, if slightly less enthusiastic support, on both sides of the Atlantic. Fully 70 percent of the British and Italians, 65 percent of the Poles and 54 percent of the Germans back such an effort, according to the GMF survey. Roughly half of the French (50 percent) and Americans (48 percent) agree.

Despite this seeming goodwill, negotiating a deal in the current political environment will not be easy. Publics and their elected leaders are domestically preoccupied. In some nations, protectionism and nationalism seem to be on the rise.

Once actual trade and investment negotiations finally get under way, the bargaining is likely to be challenging. If history is any guide, inevitable frictions will erode public support as adversely affected interests complain, while those that stand to benefit are less vocal. So the ultimate public verdict on a U.S.-EU trade and investment agreement has yet to be rendered.

But on the eve of such negotiations, both Americans and Europeans seem disposed to try.