U.S.-EU trade negotiations paralyzed by ‘fear of failure’

   National Foreign Trade Council President said in a blog entry Friday that U.S. trade negotiations with the European Union are paralyzed by “fear of failure.”
   He noted that while U.S.-EU negotiations have significant high-level political support, that enthusiasm hasn’t trickled down to negotiators. But he said there is a compelling motivation for the two sides to work together like never before to ease trade barriers.
   “In my view, this time will be different because of the competitive challenge China poses for both of us,” Reinsch wrote. “If the Americans and Europeans can work together to develop common standards and regulations, our combined market power will help make them reach global standards. If we do not, then we risk seeing Chinese standards become the de facto global standard by virtue of their market power. In other words, as Ben Franklin said in a different context, ‘we must all hang together or most assuredly we will all hang separately.’
   “Making progress on standards harmonization is also important because it is where the greatest opportunity for trade gains between the U.S. and EU lies. Aside from some peaks, tariffs are generally low, labor and environment issues are less divisive than with other countries, and, aside from agriculture, access barriers are less onerous than elsewhere. What American companies most often complain about is the thicket of regulations in the EU they must navigate through in order to sell their products and services, and European companies have the same complaint about us. So, progress in this area would have the double benefit of enhancing trade between two very large and highly integrated markets and of pursuing a common policy in dealing with the Chinese economic challenge.”
   Reinsch said the dynamic that is apparently holding negotiators on both sides back is the idea that these negotiations “cannot fail.”
   “Of course, 100 percent certainty is an elusive commodity in the best of circumstances, but in order to approach that in this case both sides have entered into extensive pre-negotiation discussions intended to assess the odds of failure. In the process, they have also settled on some confidence building measures, mostly in agriculture, which, if successfully completed, will presumably demonstrate to each side that the other is not only serious, but that it can deliver.
   “That may well work, but the process is disturbing nonetheless because it is tantamount to a negotiation before the negotiation. If we pre-negotiate everything, what is left to talk about once the ‘real’ negotiation is launched? More important, the real question is what’s wrong with failure? Being afraid to fail amounts to being afraid to risk, an attitude that runs counter to what most successful businesses are doing in today’s hyper-competitive marketplace… The price of not trying is far higher than the momentary embarrassment of failure,” he said. – Eric Johnson