A European Affair

UK-EU-US

-Newsflash: End of the world now scheduled for 1 April 2015-

Ancient Mayan calendars predicted the end of the world’s current cycle on the 21st December 2012. Mankind has now been faced with the Earth’s demise several times. A popular doomsday cult foresaw the end in March 1843. When Halley’s Comet was scheduled to pass by the Earth in 1910, astronomers assured citizens that its tail would contain toxic fumes, severe enough to cause widespread death. As the millennium dawned, techies speculated on the apocalyptic consequences of the Y2K phenomenon. In March 2008, two scientists filed a lawsuit in the US intending to prevent the Large Hadron Collider project from starting up in Switzerland, believing the structure could potentially form a black hole capable of engulfing the planet. Finally, most scientific scholars agree that in 7.6 billion years from now the sun will enter a giant red phase, which will in some way destroy the planet.

Fear not however! I am happy to say that serious experts have now predicted the end of the world for the 1st April 2015, which happily means our posterity will avoid roasting under the aforementioned giant red sun.

The basis of this prediction rests upon the unfolding of two events, beginning this year. Sometime in January 2013, British PM David Cameron will give a (infamous) speech setting out the Coalition’s European policy. Pundits expect that some sort of referendum may or may not be touted, Cameron will clarify his own position and some sort of UKIP vs. Europhile media campaign will ramp up speed. In 2014 Hague’s audit of European competences will be due, adding further fuel to the fire.

Also in the spring of 2013, talks concerning a free-trade agreement (FTA) between the EU and the US will likely commence. For the past year, representatives from the EU and the US have been present at a “EU-US High Level Working Group on Jobs and Growth” (sexy, I know). Led by US Trade Representative Ron Kirk and EU Trade Commissioner Karel De Gucht, the group has been examining key areas in which a free-trade agreement between the world’s largest global markets could be mutually beneficial. De Gucht reaffirmed the EU’s interest early November, stating, “We know what is at stake and what we can do about it” (European Commission). Later in the month, U.S. Secretary of State Hillary Clinton reciprocated, stating that the US was interested in a “comprehensive agreement” that might resemble something like an “economic NATO” (Washington Post).

The US and the EU together hold about 50% of the world’s GDP and already enjoy a healthy trading relationship; around 2 billion Euros of goods and services are traded transatlantically every day. An FTA would probably aim to eliminate any remaining tariffs on such goods. In a world with global supply chains, where car parts might cross the Atlantic several times in the process of construction, even a low tariff barrier raises costs. 63% of FDI in the US is European, while 50% of FDI in Europe is from the US. Any proposed FTA would likely include further investment liberalization. Where non-tariff barriers are concerned (service regulations and qualifications), the OECD suggests that an agreement could lead to a GDP growth of up to 3.5% on both sides of the Atlantic. Any trade deal will have to work hard to overcome sensitive issues (particularly on food safety) and working to harmonize technical standards across various sectors will be difficult, although the latest news suggests the deal will likely use cooperation rather than harmonisation.

Recently, David Cameron outlined that the UK would use its G8 leadership this year to press for a quick resolution of the FTA. Interesting, given that Mr. Cameron may be leading a country that may not be eligible to benefit from such an agreement in a few years time…

So, by 2015, a UK referendum on Europe will have occurred or will be in sight. EU-US negotiations will have unfolded. The UK will probably have voted itself out of Europe; coming to any global negotiating table offering a trading carrot of 60 million consumers, rather than the EU’s 500 million spenders. The US-EU negotiations will have stalled due to sensitive agricultural concerns. The UK’s referendum will have prompted other referendums amongst EU members, causing markets to spook. The US will have finally fallen off a fiscal cliff.

Alternatively, a Spirit of Compromise will prevail amongst UK and EU politicians discussing membership terms, a new FTA will succeed creating jobs and growth based on trade rather than borrowing, whilst avoiding sensitive areas such as GMOs. But the Spirit of Compromise does not seem very popular these days and indeed often seems to be branded as undemocratic; why should my interests take note of my neighbours?

To illustrate, I would like to quote an excellent FT article:

“The problem is that states will be operating in a more fragmented and unpredictable international landscape. As the world becomes more multipolar it is also becoming less multilateral. The rising states are jealous of national sovereignty. Politicians in the west have grown reluctant to cede power to international institutions.

The paradox is that this makes it all the harder for governments to address the insecurities, whether economic or physical, that most trouble their citizens. Uncontrolled migration, economic offshoring, financial instability, climate change, unconventional weapons proliferation, cross-border crime and terrorism – none of these are problems within the capacity of individual states to resolve.

To reclaim power governments will have to act in concert. The danger is that they will look instead for someone else to blame by stoking the fires of nationalism.”

And so, by the 1st April 2015, the world will end. Probably.


 

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