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BALANCE OF PAYMENTS

Crossing Over

Baroness Catherine Ashton, the European Union trade minister, was in Washington this week for a meeting of the Transatlantic Economic Council. The engaging British Labor Party veteran has struck up a close working relationship with U.S. Trade Representative Kirk. The former House of Lords leader and ex-Dallas mayor have brandished their political acumen by working together, in May, for instance, in resolving a long-standing trans-Atlantic dispute over hormones in U.S. beef exports.

But major differences remain over poultry, aircraft subsidies and, more broadly, over what can be done to complete the Doha Round of trade negotiations and to further broaden and deepen the trans-Atlantic economic relationship.

 

Ashton and Kirk were not trade experts when they got their jobs. But some of the best U.S. and EU trade ministers weren't either. They are dealmakers. And they desperately need to resolve long-standing problems needlessly distracting governments on both sides of the Atlantic -- and to provide an economic vision and sense of purpose to a partnership that faces new tensions over the slumping dollar and, more broadly, over foreign policy issues such as Afghanistan and Iran.

Ashton knows that the beef deal, as important as it was, is not sufficient to carry the relationship forward. "I keep saying we can't dine out on this forever," she quipped, "we have to do another one."

Given the recent World Trade Organization decision against European subsidies for Airbus and a pending WTO decision on alleged U.S. subsidies of Boeing, Ashton thinks it is time to think about an agreement that constrains, but probably does not abolish, government support for commercial aircraft makers.

 

"We had an agreement," she said, referring to the lapsed 1992 EU-U.S. pact that put a ceiling on the permissible amount of direct public aid for large civil aircraft. "We need to see how we can find a new agreement that is reasonable."

More broadly, she warned against overuse of the WTO dispute settlement system in resolving disputes between friends. "I think we should negotiate solutions rather than litigate them, which takes years," she said. "Business will be better off."

On the Doha Round, which has dragged on for nearly eight years and looks likely to keep dragging, she urged: "It is time for everyone to show their cards. I am certain that President Obama and Ambassador Kirk are brave enough to do this."

Such pragmatism is a breath of fresh air. The only problem is: Ashton is a lame duck. Her tenure is about to end. And her reappointment is uncertain. Her prospects have nothing to do with her performance, which generally wins plaudits. But, thanks to the Byzantine politics of the European Union, where commissioner slots are allocated on a national basis, it is not clear if a Brit will again get the EU trade job.

 

Moreover, as a British Labor Party veteran, some question whether Ashton should be returned to one of the most powerful jobs in Brussels when most observers expect the Conservatives to win the British election next year.

So, since personalities, as important as leadership can be, are constantly changing, it is important to think about systemic renewal of trans-Atlantic problem solving. That raises the issue of the Transatlantic Economic Council, whose semi-annual meeting was Ashton's purpose for crossing the pond. The TEC is a body set up in 2007 to coordinate efforts to narrow differences in trans-Atlantic regulatory regimes. And is the latest iteration of similar institutional efforts that have gone on in one form or another since 1995.

Its record leaves much to be desired. "TEC is a success story waiting to happen," observed Peter Skinner, a Labor Party member of the European Parliament. "I am not sure when it will acquire the take-off speed to clear the runway."

This week's TEC meeting produced little of substance, in part because the European Commission is in flux and the Obama administration is not convinced the TEC is necessary or the best way to pursue trans-Atlantic economic integration.

If Ashton returns to her job, or once her predecessor is in place, both Washington and Brussels need to apply a dose of her pragmatism to how they proceed with the U.S.-EU economic relationship. Does it need fine-tuning or a new political vision?

The Atlantic Council of the United States and the Bertelsmann Foundation in Germany have made some useful recommendations in a recent paper: "Resetting the Transatlantic Economic Council: A Blueprint."

They argue that: "A radical restructuring of the TEC chairmanship would send a powerful signal and help revitalize the TEC." To that end, they suggest designating the U.S. vice president and the European Commission president as TEC co-chairmen, to elevate the public and bureaucratic heft.

As the dollar weakens and the euro strengthens, it is unclear whether the TEC will be sufficient to manage the tensions likely to ensue. Such relationship management might require a broader deal on the future of the alliance, one into which leaders on both sides can subsume day-to-day tensions.

This article appears in the October 31, 2009 edition of NJ Daily.

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