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CIAO DATE: 06/07
European Affairs
Economy and Trade
TAFTA Could Work Like an “Economic NATO”
Gabor Steingart
War for Wealth: We Global Grab for Power and Prosperity is a best-seller in Germany that has reportedly caught the attention of Chancellor Angela Merkel. The author, Gabor Steingart, 44, heads the Berlin office of the German news weekly, Der Spiegel and ranks among Germany’s top economic writers. SPIEGEL ONLINE is publishing a series of excerpts from the book in English, from which this selection is taken with the publisher’s permission.
The role NATO played in an age of military threat could be played by a Transatlantic free-trade zone in today’s age of economic confrontation. The two economic zones – the European Union and the United States (perhaps with the addition of Canada) – could stem the dwindling of Western market power by joining forces. Together the Europeans and the Americans are still a force to be reckoned with. Representing about 13 percent of the total world population and 60 percent of today’s global economic power, they stand ready to act as producers and consumers not only of goods, but also of values.
There are three reasons the idea is particularly attractive, and the first is political. Such cooperation would lead Americans and Europeans closer together again. The temptation to childishly score points off each other – dangerous in light of the Asian challenge – would be removed. And while there may be plenty of reasons to oppose U.S. President George W. Bush, there are few reasons to be against America. From an economic point of view, there are many tangible reasons that it makes sense to work together with the West’s leading power.
The military alliance which was forged in the Cold War could be carried over into the global economic war. The aim of maintaining freedom and increasing prosperity would remain – only the methods of pursuing those aims would change. A free-trade zone would inevitably lead to a convergence of the two economic systems. Europe would become more Americanized and the U.S. would become more European, albeit slowly in a process which would last decades.
Countries that remove all trade barriers and unify accounting standards, technical norms, copyright laws and stock market practices would also ensure that their financial, social, taxation and environmental policies didn’t drift apart. Governments would have more room to maneuver, as well as greater opportunities and responsibilities. The second major advantage is economic. A domestic market as reliable and as big as an EU-U.S. free-trade zone would be advantageous for both investors and workers. Economic growth would be fuelled, though perhaps not drastically. But investment creates jobs. The West could at least win back part of what it has lost. For one thing, it would regain the power to set technical standards – even if that does mean, in the global economy that is more a question of promoting standards than actually “setting” them. The most imposing effect of such a mega-merger of markets would doubtlessly be felt in the Far East. the boom region of the last decade and a half would rightly sit up and take notice. the new message would be this: the price of a product is still important, but the way in which it has been produced is equally relevant. Countries that refuse to tolerate trade unions – or which exploit women, children and the environment, to name just a few issues – would no longer be spoiled by preferential treatment at customs.
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When (Chancellor Angela) Merkel talks about a free-trade zone though, she isn’t thinking exclusively about economics. It’s true that the most transparent benefits for companies of lifting customs barriers and abolishing bureaucracy are most easily measured in dollars and cents. But there is another invisible advantage – one that influences the landscape of power even if it doesn’t appear anywhere on the ledgers. Merkel speaks of “nonmaterial values” that could be preserved and indeed strengthened by the free-trade zone. For years and years, fear of globalization has preoccupied governments at the cabinet level in virtually all Western capitals – and an alliance of the democracies and market economies surrounding the North Atlantic could do everyone there tremendous good. It would also re-energize the West.