Many lawmakers are excited to hear about President Barack Obama’s intentions to open free trade negotiations between the European Union and the United States. According to this article on The Economist both democrats and republicans are ecstatic to begin negations. This same article states, “Getting rid of remaining tariffs could raise Europe’s GDP by around 0.4% and America’s by a percentage point. Ditching even half of today’s non-tariff barriers could boost GDP in both places by 3%”. The benefits of free trade have become more and more evident over the past few years. With the already close relations with the EU, the United States would benefit form this trade agreement. With an increase in markets comes an increase in demand. The more demand for a good means a greater profit, which simultaneously stimulates the job market. Opening this free market could help stimulate GDP for the United States thus creating more jobs.
However, not all law makers are excited about this free trade agreement. According to The Business Times, Senator Baucus is one of these non-believers. He states that if the United States is going to make this deal then it must include restructuring the agricultural agreement between the EU and the US. The EU has heavy restrictions on the United States agriculture because of the United States approval of genetically modified crops and addictive feed to produce leaner cattle. The European Union uses more natural practices than the United States for their agriculture. However, with these restrictions loosened the United States agriculture could have a new market to sell to, thus increasing profits for the industry.
Not all lawmakers have decided they like all aspects of this agreement, however they can all agree it would be beneficial for the United States economy. The European market is similar to the United States therefore making it an easy transition to cater to the European market. With similar markets the demand for US goods would increase thus expanding US markets.
As with any trade agreement, there will be winners and losers--I think that much of the apprehension by some comes from this fact. While some sectors may be negatively affected by the lowering of trade barriers between the EU and the US, the projected growth rate that could result from this agreement may outweigh the potential costs. As with NAFTA in 1994, the member countries realized it was more important to grow the economy as a whole than to worry about those sectors that may be hurt.
ReplyDeleteIs the EU suddenly accepting GMOs realistic or even desirable? I think that this is an important question when considering agricultural changes in trade. I know that many have long suspected the EU's refusal to deal with GMOs as a somewhat protectionist move. But, there are valid concerns that center around such crops as well. While the US might have already moved towards wholey supporting their use, if the crops really are bad, isn't reforming barriers to GMOs then similar to reducing barriers to drug movements? I mean to say only that there are a large number of things we could remove barriers to that would potentially increase GDP, but perhaps not all of them are smart moves.
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