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Free Rough 01

Free Trade or Rough Trade Across the Atlantic?
Free Trade or Rough Trade Across the Atlantic?

In principle, there is nothing wrong with free trade, at least between partners who are more or less equally developed. It is worthwhile to look a past experience with free trade agreements.
Canada signed the NAFTA free trade agreement with the USA and Mexico. Overall it benefitted, but there was a price to pay, as BBC reports;
“The protesters in the 1980s were wrong, but in some ways they were also right.
After the agreement came into force, Canada was thrown into a recession, partly because of free trade. Two hundred thousand manufacturing jobs were lost in the first two years. “

Europe should look at both the opportunities and the risks before it plunges into the Atlantic. We can expect results similar to those of the EMU; the already strong economies will grow stronger at the expense of their weaker partners. Recall the promise of the EMU to somehow force the weak to grow strong by imposing convergence criteria equally on Germany and Greece? Now we are going let Bulgarian companies freely compete with USA based mega corporations.

Let us take a more detailed look. The trans-Atlantic free trade agreement will reduce, sometimes eliminate, two types of barriers; tariff and non-tariff.

Now, the average trans-Atlantic tariff is around 4%. This is why the advocates of this free trade agreement are only promising 0.5% to 1.0% more GDP and “hundreds of thousands” of new jobs. With 26.000.000+ Europeans out of work we must not pay too dearly for the promise of solving 10% of that problem, especially when there is no guarantee.

In the import/export industry the abbreviation “cif” stands for “customs, insurance, freight”, the three costs that must be paid to deliver to the customer. They tend to be around 10% of the end price. The agreement will do nearly nothing to reduce the costs of insurance and freight transport. This is another reason why its advocates make only modest claims.

The devil hides in the reduction of non-tariff barriers to trade. The recent ban on animal tested cosmetics is a non-tariff barrier that will have be either scrapped or compensated by giving in to Uncle Sam on some other point. There will be fireworks galore when the time comes to talk about the freedom to export Frankenstein Food to Europe.

The recent MFF negotiations in Brussels have shown that agriculture is a higher priority than science and technology in the EU. Washington will extract huge concessions from Europe in exchange for tolerating our subsidies.

To be fair, some North American standards are higher than the EU’s. One example is on page 55 of Stupid White Men where Michael Moore describes how Mercedes Benz “has continually refused to meet American milage and pollution standards”. The automobile lobby will go into overdrive in Brussels to get those American standards lowered at the planet’s expense.

If the governments on both sides of the pond rush to sign we may end up with a very Rough Trade Agreement.

Created by: ashbrmi last modification: Thursday 28 of March, 2013 [17:50:49 UTC] by ashbrmi

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