A free-trade template: EU-Canada accord shows the way for U.S.
October 25, 2013 (Chicago Tribune (IL)) The following editorial appeared in the Chicago Tribune on Thursday, Oct. 24:
It was smiles all around in Brussels last week as Canadian Prime Minister Stephen Harper and European Commission President Jose Manuel Barroso concluded a broad free-trade agreement. The deal knocks down barriers in virtually every sector of economic activity. It gives Americans reason to smile, too.
The United States and Europe opened free-trade talks earlier this year and, despite a delay because of the federal government shutdown, optimism runs high. The framework hammered out between Canada and Europe provides an excellent model. With any luck, a similar U.S.-Europe blueprint will take shape by mid-2014. President Barack Obama said he'll push his fellow Democrats to back a deal. Republicans generally favor free trade, so they'll likely support a pact that would benefit slow-growing economies here and in Europe.
Though trans-Atlantic trade is relatively smooth, it suffers from antiquated rules, tariffs and other unwanted leftovers from the bad old days of protectionism. If the U.S. and EU follow the trail blazed by Canada, a huge payoff awaits.
The 28-member European Union is the world's biggest economy, and the biggest trading partner of the U.S. Because of the enormous scale, knocking down even relatively small barriers will generate tens of billions of dollars in additional economic activity. That will translate into jobs, growth and prosperity.
Trade deals of any magnitude are never easy. It took years for the U.S. to approve modest bilateral agreements with Colombia, Panama and South Korea. The Canada-Europe deal requires approval of all 28 EU member states, as well as Canadian provinces that, fortunately, were included at the negotiating table. Still, the approval process could take two years _ plenty of time for those who benefit from protectionism to make mischief.
We expect the deal ultimately to win approval. Both sides have much to gain.
The agreement opens the market not only for goods but for services, too. It provides new opportunities for small business as well as large. It ends long-standing issues over government procurement practices, patent protection and investment disputes. The result will be robust competition that makes business more efficient, reduces costs, encourages investment, cuts red tape and benefits everybody except those who have a vested interest in the status quo.
In no industry is the status quo more difficult to overcome than in agriculture. This particular vested interest stands in the way of common-sense reforms to benefit the consuming public. The Canada-Europe deal makes progress on agriculture issues, but it would be stretching to call the results free trade. Freer trade? Sort of. Expanded trade? Definitely.
Hard to believe, but this sweeping pact almost foundered over arguments about pork chops and feta cheese. Such is the malignant political clout of Big Ag. Finally, in just the past few days, a breakthrough emerged: Canada agreed to double its quota on EU exports of fine cheese in exchange for greater access in Europe for Canadian beef and pork.
Canadians agreed not to feed pigs destined for export the chemical ractopamine _ a drug in common use across North America to promote rapid growth of livestock but banned in Europe. Canadian makers of feta, Gorgonzola, Muenster, Asiago and fontina cheeses can continue to use those place names on their products, but new producers would be forbidden from doing so without indicating the product is an "imitation."
Liberalizing trade in the food sector would enrich many producers who could compete for business abroad on a level playing field. Alas, agriculture will be dragged along into the 21st century _ over its shortsighted protests.
This industry's intransigence will be front and center on Capitol Hill shortly when Congress takes up the lingering farm bill. This five-year reauthorization of food-stamp and agriculture-subsidy programs expired last year; an extension expired at the end of September.
Public attention has focused on Republican efforts to restrict the rapidly growing food stamp program. The most damaging part of the proposed legislation, however, is the continuation of Soviet-style central planning over the farm sector. One of the worst proposals would expand a ridiculously bloated program known as crop insurance. It would enable farm operators to guarantee into the future the now-robust revenues their businesses enjoy, at taxpayer expense.
Enough. The sooner our nation eliminates the subsidies and protectionism that distort the global market for food, the sooner we can achieve free trade with our closest allies, and the sooner America's economy can reap the benefits.