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Free trade after Crimea

Antje Passenheim / sgbMarch 24, 2014

There has been one clear beneficiary of the Ukraine crisis: the transatlantic partnership. The EU and US now see eye-to-eye on foreign policy - and the annexation has boosted a proposed EU-US free trade pact.

Barack Obama and Jose Barroso
Image: imago/Xinhua

After the Crimea crisis, minds in Brussels have re-focused on making the largest free trade agreement in the world a top priority for the European Union. The Transatlantic Trade and Investment Partnership (TTIP) pact between the 28-member bloc and the United States is more important than ever, Republican Congressman Charlie Dent told DW.

"I think we should seize this moment to move aggressively to enact the TTIP agreement to better align the US and the EU," the Pennsylvania Congressman said.

"I think that's important to strengthen that economic alliance at this critical time, to the extent that better economic ties can only add to our overall security strategy. And that would further isolate Mr. Putin economically."

Largest tariff-free zone

Since last summer, the US and EU have been negotiating an end to tariffs and other trade barriers. These include safety standards, technical standards and competition rules. The goal is the creation of an economic area with more than 800 million consumers and around half of global economic output.

The US and the EU together represent one-third of the global trade in goods. Experts estimate that the free-trade agreement would increase the EU's gross domestic product by half a percentage point per year - in the US, slightly less.

The Ukraine crisis has underlined the importance of the TTIP, said the German ambassador in Washington, Peter Ammon. "I think the strategic importance of the transatlantic link is particularly clear under precisely these circumstances."

Doubts growing

First, some obstacles remain to be cleared. In recent months, doubt and resistance had begun to grow on both sides of the Atlantic.

Green corn with a white DuPont backdrop.
In February, the European Food Standards Authority declared safe DuPont's Pioneer 1507 MaizeImage: picture-alliance/landov

Critics say the negotiations are not transparent enough. European environmental and consumer protection advocates worry about American hormone-treated beef, genetically modified foods and chlorine-washed chicken. And there were differences of opinion on issues of data security, investment protection and the regulatory rights of member states.

"Agreeing to these rules with each other is not easy," Ammon said. "We cannot negotiate away the fact that in certain areas, we have different wishes and ideas."

The Americans insist on free-market access for their agricultural products to the EU's single market. But they are disconcerted by the way their negotiating partners want to protect their agricultural interests.

"You have those producers - particularly in France and Italy - who want to protect geographic identities," Ammon said. "Things like Parmesan cheese and Bologna." Cheaper US-made versions should not carry the name of the European originals, the Europeans insist.

Slow going

Many are also frustrated with the pace of the TTIP negotiations - particularly after the most recent round, when Americans were evidently less inclined to drop trade barriers than hoped.

Gas was another issue which resonated in Brussels. "We have to talk about exports of American natural gas to Europe, and to help make Europe much less dependent on gas from Russia," said Dent, who also sits on the House Ethics Committee and the Subcommittee on State, Foreign Operations, and Related Programs.

USA Fracking Öl
Can North Dakota ultimately help Ukraine?Image: Andrew Burton/Getty Images

The US wants to surpass the Middle East as a leading energy-producing nation as early as six years from now. Thanks to new fracking technologies, the Americans intend to produce more natural gas than they consume.

Republicans have been vocal in asking President Barack Obama to give the go-ahead for the necessary export terminals. But under current law, the US may only deliver oil and gas to countries with which it has a free-trade zone. The TTIP would make this possible.

Nor is agreement the agreement a purely economic pact, says Alexander Priviteira, who directs the economics program at the Washington-based American Institute for Contemporary German Studies at Johns Hopkins University.

"It's obvious now that there is a strategic component," he said. "And the strategic and political component of getting the US and Europe closer together is probably even more important than the mere slashing of tariffs and trying to find common ground, or harmonize standards between the US and Europe. It's a political message now."

Alexander Priviteira
The TTIP is receiving a political boost, Priviteira saysImage: Antje Passenheim

Scandals are yesterday's news

One problematic area of the past few weeks, Dent says, will also be on the table in Brussels. "We have to talk about the NSA and the abuses that may have occured."

Others in Washington, however, wonder what remains to be said on the subject. A no-spy agreement, as Berlin has requested in the wake of the eavesdropping scandal in which Chancellor Angela Merkel's phone was bugged, is apparently off the table.

During his visit to Washington in February, Foreign Minister Frank-Walter Steinmeier called for understanding: Germany and the US would have to accept seriously that they might simply have different assessments of the relationship between security, freedom and privacy.

As recent events have shown, Dent says, the real dangers lurk outside the EU and NATO. "We have to be prepared to defend ourselves, and we shouldn't let the NSA discussion distract us from greater threats outside the alliance."

Ignacio Garcia-Bercero and Dan Mullaney
TTIP chief negotiators: the EU's Ignacio Garvia Bercero and Dan Mullaney for the USImage: picture-alliance/dpa

Just a few weeks ago, the scandal threatened the free trade agreement - and the partnership. But Moscow's invasion of Crimea has pushed the NSA into the background. Intelligence experts in the US say the NSA affair will be a topic of conversation used to save face in Brussels - but thanks to Putin's intervention, it's no longer a reason to split. Too much is at stake.