The establishment of the World Trade Organization in 1995 marked the high point in multilateral negotiations to liberalize international trade. While it was originally envisioned that the WTO would continue to liberalize trade through a successive series of rounds of talks, the ability of the WTO Member States to reach consensus—and growing public opposition to the WTO—left the organization stalled. Instead, states have generally opted to pursue bilateral talks directly with one another.
The United States and the European Union were last week engaged in just such a negotiation, with the aim of establishing a new Transatlantic Trade and Investment Partnership. According to officials, a new EU-US trade agreement could be worth more than 2bn euros (approximately $2.7 billion) per day, with as much as 80 percent of these gains realized from harmonizing regulatory policy.
But this is the stick. Whose regulatory policy should reign supreme? Each of the two trade partners maintains extensive regulations governing public safety and protecting human health and the environment. But the regulations often focus on different areas, and agreement on the most controversial aspects of regulatory policy (such as genetically modified organisms) remains elusive. Critics of the WTO and other free trade agreements warn of the “downward harmonization” of standards, meaning that regulations could tend to favor the lowest level of protections, weakening environmental and health standards.
What do you think? Would a new trade agreement between the United States and the European Union provide beneficial economic growth for the two trade partners? Would the new agreement undermine existing environmental, health, and safety standards? Or can the US and the EU reach agreement that would liberalize trade while maintaining strong regulatory standards?