No Gains for the U.S. from a European Trade Pact

EU

The current administration’s love affair with free trade is beginning to snowball. Before the dust had even settled on the new trade pacts signed in 2011 with South Korea, Panama and Colombia, President Obama initiated an intense push to join the Trans Pacific Partnership. A new agreement with the EU is also in negotiations and would mean the United States would open its borders to a large majority of the world.

TTIP map

Although the two economies are already very closely tied, the new deal would tear down all tariffs, non-tariff barriers and regulations put in place to help protect domestic businesses. Manufacturing in Europe is certainly less threatening than the unregulated practices in China and Mexico – but this move would simply build upon the practice of widespread free trading, and that trend is debilitating the U.S. economy.

The EU consists of 27 countries with varying individual economies. As a unit, these nations produce a massive amount of wealth, which means a lot of viable competition for American owned businesses. They also use a value-added tax as a tariff against American made goods – something the United States fails to do, meaning any “free trade” agreement would hurt the United States’ defenseless economy even more.

Of course, Europe is also a very large market for U.S. exports. But much like the U.S., the European economy is still battling hard times. There are a few countries within the EU still managing prosperous economies, such as Germany. But these countries have proven track records of preserving their own economies first, before allowing foreign business to penetrate their borders. This is one of the key reasons they still succeed when other nations struggle.

The bottom line is that endlessly searching for new “free trade” partners is not America’s most prudent strategy. Reform must begin at home, and the U.S. would do well to examine the economic methods of thriving countries like Germany. These countries look out for their own business and manufacturing first and foremost, which keeps the flow of money contained within their borders. The U.S. has been doing the exact opposite, with the exact opposite results. “Free trade” was instrumental in reducing the American economy to its current state, and seeking out more of the same will not prove a genuine solution.

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