Here’s a TTIP for you. No, that’s not a typo missed by our ever-vigilant editors. It stands for Transatlantic Trade and Investment Partnership, what British prime minister David Cameron calls a “once-in-a-generation prize” that can create two million jobs on both sides of the Atlantic, and Sir Peter Westmacott, Britain’s ambassador here in Washington, reportedly describes as the “Holy Grail” for resuscitating transatlantic economies. If the deal can be fashioned, TTIP will have created what analysts at the Brunswick Group describe as “the largest internal market in the world, with 830 million consumers, and would liberalize one-third of global trade.”

Some 150 negotiators from the EU and the U.S. sat down in Washington last Monday to begin negotiating a trade-liberalizing agreement between two parties that between them account for almost half of the world’s economic output. It wasn’t easy getting to the table. The French, whose antipathy to free markets extends to free trade, first refused to attend unless their subsidies to domestic filmmakers and quotas against American cultural products were declared off the table. Even their European negotiating partners laughed off France’s effort to refuse to allow discussion of a measure designed to protect producers of films no one wants to see, a move that would have antagonized Hollywood moguls, among them Barack Obama’s more important fundraisers.

Ever resourceful, the French then professed shock, shock to find that allies spy on allies, and that American spies were listening in on the deliberations of EU policymakers, a chore probably assigned to the insomniac spooks unlikely to nod off listening in on the several EU presidents as they try to figure out how to get Germany to put up still more money in order to prevent national flights from the euro. No use: negotiations have begun as scheduled.

The prize of which Cameron speaks is variously estimated at adding somewhere between 0.6 percent and perhaps 1 percent to annual world economic output. Or about $700 to the real income of every EU household and $841 to the income of every U.S. household (the precision of the latter estimate is a testimonial either to the arrogance or the sense of humor of the forecasters). Grasping that prize will involve three important steps.

The first is to recognize that the low fruits have already more or less been picked: tariffs between the two trading areas are already quite low. It is the non-tariff barriers to trade, NTBTs, to use the latest addition to the bureaucrats’ alphabet soup, that matter. For example, The Economist estimates that chemical exports to America face a modest 1.2 percent tariff rate, but NTBTs equivalent to a tariff of 19.1 percent.

Second, there will have to be significant concessions by both sides to eliminate or soften the impact of these non-tariff barriers. Europeans bar beef fed on ractopamine, which American ranchers use to produce leaner beef, while we bar EU beef lest we are felled by the mad cow disease that afflicted the UK and Europe some years ago. EU rules limit imports of the billions of dollars of genetically modified foods that our farmers produce annually; U.S. law (the Jones Act) requires that only vessels built here and manned by Americans can carry cargoes between U.S. ports, which the Dutch point out prevents a Rotterdam-bound vessel leaving Baltimore from dropping off goods in New York.

Third, politicians on both sides of the Atlantic will have to be willing to antagonize important constituencies. French president François Hollande might have to tell his filmmakers to consider making movies that attract audiences rather than subsidies, and his farmers that they will have to compete with more efficient American tillers of the soil. President Obama, in no position to force individual states to exclude protectionist “buy American” provisions from their procurement policies, will have to find some other concession to offer, especially since the recession has produced a fourfold increase in such state-level measures in recent years. Perhaps forgive us our buy-American sins and we will forgive you France’s exception culturelle, or allow foreigners to own U.S. airlines, which might just introduce a standard of service that American carriers have long since abandoned.

The thorniest issue relates to regulatory harmonization. It should be possible to agree to live-and-let-regulate in some areas. The EU insists on flashing brake lights on cars, American safety regulators prefer a steady red glow. Surely, agreements can be reached to allow auto makers additional economies of scale, and therefore better deals for consumers. But the question of the regulation of financial services is not so easily solved.

Through Mike Froman, the U.S. Trade Representative (USTR), the administration is insisting that the regulation of financial services be kept as far off the table as the French would have film subsidies. The president is concerned that harmonization would weaken the Dodd-Frank financial services reform act, and dilute American efforts to apply stricter U.S. regulations to foreign banks. The left of his party, most notably Maxine Waters, the California congresswoman and senior Democrat on the House financial services committee, is pressing the president to stand firm, and not allow “unelected trade representatives” to sell tight financial regulation for a mess of beef exports. Suspicions that regulatory harmonization might relax restrictions on bankers’ ability to cause another financial crisis are heightened by the fact that Wall Street bankers are insisting that more uniform regulation of the financial sector be one of the goals of the negotiations. Operating as they do across national boundaries, bankers would like to play by one set of international rules, especially if those rules are not as onerous as the U.S. ones.

These problems notwithstanding, the negotiators plunge on, hoping to meet the November 2014 date set for the inking of a final agreement, all the while “resisting the temptation to downsize our ambitions”, as Obama puts it. One must assume that the President and his negotiators have noticed that the final stages will play out during the run-up to the November 4 congressional elections, including the preceding months in which incumbent congressmen will be battling challengers in primary elections. That’s when pledges to preserve American jobs are required of all Democratic candidates by consumer groups (ever-suspicious of any relaxation of health and safety regulations) and unions skeptical of the promised benefits of freer trade. Whether the unions will be mollified by the fact that, unlike the circumstances underlying the NAFTA agreement with Mexico, America has a labor and energy cost advantage over Europe remains to be seen. Or soften their opposition to freer trade because economists at Germany’s Ifo institute say that in the long run a TTIP deal would benefit the U.S. more than the EU, real income per head rising by 13.4 percent in America and only 5 percent on average in EU member states.

This will end up as a crucial test for President Obama, whose standing has fallen as critics left, right and center are borrowing from Eliza Doolittle and accusing him of Words! Words! Words!–but no action to accelerate the economic recovery. Freeing trade, he says, would do just that. Which is one reason Obama also is driving to conclude the similar Trans-Pacific Partnership (TPP) being negotiated with eight countries in Asia and Latin America. Another reason just might be that both China and Russia would end up on the outside looking in.

Fans of the more inclusive Doha Round view these regional deals as inadequate alternatives. For them, none is better than half-a-loaf. Not for Obama.

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