The Foreign Service Journal - April 2017
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APRIL 2017



based producer of luxury Mercedes automobiles, has warned

that, come 2020, more than half its skilled workers will be more

than 50 years old—and it is struggling to find enough young

apprentices to replace them. Meanwhile, Volkswagen has

revealed that a third of its vehicles are already being produced

by factories in Asia.

The TTIP-ing Point?

Where, then, do Europe’s difficulties leave the trans-Atlantic

relationship? The short answer is largely unaffected for the time

being, but vulnerable to substantial change in the longer term.

More than half a century of trade and investment across the

Atlantic has created an extraordinarily robust joint economy.

American-owned assets in Europe are worth $14 trillion, says

the U.S. Bureau of Economic Analysis, accounting for 60 percent

of all U.S. foreign investment around the world. For their part,

European investors account for two-thirds of all foreign-owned

holdings in the United States.

The fairly recent U.S. “pivot” to

Asia still has a long way to go

before it makes a dent in the

trans-Atlantic relationship.

Trade in goods across the

Atlantic is, at about half a

trillion dollars yearly, rather

less buoyant. That’s a reflec-

tion of the competing local

attractions of the European

and American domestic mar-

kets, but also of protectionist

tendencies in both. It is also

why, in recent years, Brus-

sels and Washington invested a good deal of political capital in

the unsuccessful effort to conclude a Trans-Atlantic Trade and

Investment Partnership.

The idea has been to overcome regulatory differences, and

also to fashion a common U.S.-E.U. front against the inroads

that Asian competitors—China today, India tomorrow—are

making in global markets. “The TTIP is not a free trade agree-

ment; it’s a hell of a lot more than that!” says Christian Lef-

fler, the former Swedish diplomat in charge of economic and

global affairs at the European External Action Service, the E.U.’s

increasingly powerful foreign policy arm. “Its importance lies in

a shared approach to regulations and standards.”

Elements of the agreement may survive the protectionist

sentiments of Pres. Trump and some members of his Cabi-

net, but much of it looks set to share the fate of the cancelled

Trans-Pacific Partnership. The closing months of 2016 saw

TTIP increasingly bogged down, both on key questions like

disputes settlement arrangements and also over abstruse and

unimportant details. “There seemed irreconcilable differences,

for instance, between American experts who insisted that the

purity of, say, oysters and clams depended on the water they’re

grown in,” recalls former U.S. Ambassador Tony Gardner, “and

Europeans whose testing methods concern their freshness.”

Still, the immediate outlook for trans-Atlantic trade should

not be cause for concern. The bureaucratic hurdles erected

by European or American officialdom are not insuperable, if

there’s enough goodwill. It’s also unlikely that the flows of goods

and services across the Atlantic will be quickly disrupted, even

by ugly spats between political leaders.

More worrying is the longer-term risk that the European

Union and the United States may be embarking on divergent

geopolitical paths. Their

shared concerns during the

post-World War II years are

fading. The certainties of

the Cold War are a quarter-

century out of date, and

have anyway been eroded by

disagreements over policy

toward the Middle East, with

Syria following Iraq and Iran,

and by increasing differences

of approach toward militant

Islam and Russian assertive-

ness. Although these disagree-

ments arise within Europe as

well as across the Atlantic, the overall trend seems to be away

from the common threat assessments that have been such a

strong feature of U.S.-E.U. relations. Differences over security

are creating sharper frictions than competing economic inter-

ests have ever done.

Some began to question the value of the North Atlantic alliance

after the 1989 fall of the Berlin Wall and the subsequent collapse

of the Soviet Union. Since then, Russia’s military resurgence and

more assertive foreign policy have given NATO a new lease on life,

but that has been somewhat negated by the failure of its European

members even to maintain their modest defense budgets. Their

“freeloading” has long provoked irritation in the United States,

and Pres. Trump’s apparent hostility to the alliance may even spur

European governments into plowing funds into defense.

In the ever-tougher conditions

of the globalizing world

economy, Europeans know

that not even the continent’s

largest countries can expect

to make their voices heard and

advance their own interests.