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If US-EU trade deal is dead, what does that mean for South Carolina?

People holding up posters against the proposed Trans-Atlantic Trade and Investment Partnership march during a protest in Madrid, Saturday, Oct. 15, 2016. Several hundred people have gathered in Madrid to protest the major free trade deal between the United States and the European Union.
People holding up posters against the proposed Trans-Atlantic Trade and Investment Partnership march during a protest in Madrid, Saturday, Oct. 15, 2016. Several hundred people have gathered in Madrid to protest the major free trade deal between the United States and the European Union. AP

Three years ago, South Carolina looked poised to reap enormous benefits from a proposed new U.S.-European trade agreement.

Exports would increase by billions of dollars, and more than 10,000 jobs were expected. But these days, one of the more ambitious trade plans in history can’t even get a mention in a U.S. presidential campaign. And in Europe, it looks to be “de facto dead.”

South Carolina Secretary of Commerce Bobby Hitt responded to an emailed question about the shaky status of the trade deal with this: “Team South Carolina is committed to strengthening relationships overseas, expanding global connectivity and creating new trade opportunities for the state’s existing and prospective businesses.”

Hitt, however, wouldn’t directly address the Trans-Atlantic Trade and Investment Partnership. The partnership was once expected to quickly sail through, backed by President Barack Obama and European Union officials, and praised by business groups. These days, the reluctance to name the thing isn’t that unusual.

For something with such a bureaucratic sounding name, usually shortened to TTIP, it’s incited a substantial amount of angst around Europe. There were an estimated 250,000 protesters in cities around Germany in September calling for the agreement to be killed, in a follow-up protest to one in Berlin a year earlier that attracted about 150,000 200,000 protesters.

Team South Carolina is committed to strengthening relationships overseas, expanding global connectivity and creating new trade opportunities for the state’s existing and prospective businesses.

Bobby Hitt, S.C. secretary of commerce

German Economics Minister Sigmar Gabriel last month declared the trade agreement “de facto dead.” European Union trade decisions have to be unanimous, but in recent weeks only 12 of the 28 member nations have said they would sign on to the deal. French Economics Minister Matthias Fekl in August even tweeted that “France demands a halt to TTIP negotiations.”

In the third presidential debate, Donald Trump and Hillary Clinton spared only a few words for a different trade deal, the Trans Pacific Partnership, and Trump had quite a bit to say about the North American Free Trade Agreement, which passed during Bill Clinton’s presidency and which Trump classified as a horrible deal for the United States. They didn’t mention TTIP, though experts think the candidates made it clear that trade agreements were not among their priorities.

Yet this is an agreement that proponents thinks would create a U.S.-European Union partnership that would allow them to hold their places at the head of the table as Chinese economic influence continues to grow.

Frances G. Burwell, vice president for European Union and special initiatives at the D.C.-based Atlantic Council, a research center, said in an interview that it was difficult to sift through the arguments against the agreement to find what were legitimate, and what were simple misunderstandings.

In the United States, the anger against the pact is simple: It will take American jobs. Burwell said this was not only wrong but that the agreement was expected to create more than 10,000 jobs in South Carolina alone.

The agreement, she said, “makes sense. It makes sense strategically and economically. If we want China to rule the world, we should not support it. Otherwise, yes, it’s in our best interests.”

In Europe, there is concern that U.S. safety standards are lower than EU standards, and that Europe will be forced to accept the lower standards.

In Europe, the anger covers more ground. There’s particular concern about genetically modified agricultural products sneaking onto European grocery shelves. There is concern that U.S. safety standards are lower than EU standards and Europe will be forced to accept the lower standards.

Burwell said that, in most cases, the concerns were misplaced. She also noted that U.S. and EU standards are often the highest around, for instance on matters such as how fire retardant children’s clothes must be.

With the TTIP, the U.S. and EU would represent 45 percent of world trade and 40 percent of global gross domestic product, and therefore represent a substantial trading force. Without the TTIP, each must negotiate separately, and she said there were fears that high standards would be more difficult to obtain.

Gabriel, speaking to the German magazine FOCUS, said he wasn’t convinced that TTIP would provide all the benefits attributed to it by advocates.

“I do not believe in the miraculous calculations of economic growth resulting from TTIP,” he said. “Every currency exchange rate fluctuation has a stronger impact. All the projections of both the supporters and opponents of TTIP remind me of voodoo economics.”

Still, he said he saw the agreement as a necessary part of continuing prosperity for both nations. German Chancellor Angela Merkel told Funke Mediengruppe, a German newspaper chain, that she thought it was important to resume negotiations, which are seen as having the best chance for success if they’re completed before Obama leaves office in January.

“We should support everything that can create jobs, and that includes the free trade deal,” she said.

The deal reduces tariffs, and in U.S.-EU trade about half of all shipping is actually inter-company shipping. Projections indicate the Mercedes-Benz plant in Ladson, South Carolina, relies on parts shipped from Europe to make vans, for instance. Suppliers in the United States similarly ship parts to European factories. Overall, South Carolina would be expected to see an increase of 187 percent in exports to Europe.

Burwell said the primary beneficiaries would be small- and medium-sized companies, those who aren’t as able to build high export and import taxes into their bottom lines. She said that she hoped the trade plan did eventually gain approval.

“If it were to die, I think what you would see would be a failure of growth, instead of a decline,” she said.

Matthew Schofield: 202-383-6066, @mattschodcnews

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