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Monday, June 17, 2013

European Federalism in E.U.-U.S. Trade Negotiations

When U.S. President Barak Obama and the E.U. Presidents José Barroso and Herman Van Rompuy announced that talks would begin on a free trade agreement between the E.U. and U.S., the hope was that a sweeping deal would “largely eliminate trade tariffs and harmonize regulations across a broad range of industries” in “the world’s biggest two-way economic relationship.”[1] That E.U. ministers meeting days earlier had decided to protect the “cultural exception” to international trade rules “for the sake of preserving” the distinctive cultures of the E.U. states was cause for concern, should the U.S. seek to exempt the financial sector in exchange.[2] France had long been concerned that the English-speaking California film industry would swamp smaller French studios to the detriment of the French language and culture. Even though exceptions threatening a broader trade deal are indeed protectionist, in this case European federalism is also at issue. This factor could legitimate the exemption such that a countering U.S. exemption would not be equivalent and thus justified.
Speaking with his E.U. counterparts at the announcement of talks, U.S. President Obama acknowledged that there would be “sensitivities on both sides.”[3] In particular, politics can always be counted on when contending interests come face to face. Perhaps with the European exception in his cross-hairs, the U.S. president added, “but if we can look beyond the narrow concerns to stay focused on the big picture—the economic and strategic importance of this partnership—I’m hopeful we can achieve the high-standard comprehensive agreement that the global trading system is looking to us for. It’s important that we get it right, and resist the temptation to downsize our ambitions just to get a deal.”[4] Protecting small French film studios is indeed a narrow concern that could unravel the broad agreement envisioned in a big-picture perspective.
In line with his American counterpart, President Barroso took aim at the cultural exception, saying, “It’s part of this anti-globalization agenda that I consider completely reactionary.”[5] He explained that he did believe in protecting cultural diversity, but not if that means sealing off Europe. But what if the desire to protect French cinema was part of a larger dynamic  going on at the time inside Europe? In particular, what if the push was one part of the complex political dynamic going on to adjust the E.U. federal system to the increased demands on that Union?
At the time, European leaders were wrestling with whether to transfer still more fiscal sovereignty from the states to the Union—a move that had occurred in the U.S. when the federal income tax came into being.  In the midst of the trepidation in the E.U. over handing still more authority over to the federal level, it makes sense that state governments would put extra energy into holding onto their distinctive cultures. Rather than being blanketed by Californian culture, the fear in the E.U. has been that European integration would wipe out cultural and linguistic differences existing between the states. Put another way, efforts to hold on to cultural diversity among the states may be necessary politically to counter the movement toward ever closer union.
The exigency of European federalism should not be reduced to a mere ploy in trade negotiations. Hence, the cultural exception should not be interpreted by Americans as legitimating a countervailing exception on the American side.  Such an “arms race” could unravel the “big-picture” deal before it faces ratification. Additionally, resisting the cultural exception could put needed reforms to the E.U.’s federal system at risk.  After two world wars in the twentieth century, the dissolution of the E.U. is not in the American interest. Hence, the American negotiators would be wise to keep such wider considerations in mind while negotiating. The other’s exception might just be in one’s own long-term best interest.

1. Matthew Dalton, “
EU Deal Paves Way for US Trade Talks
,” The Wall Street Journal, June 14, 2013.
2. Ibid.
3. Nicholas Winning and Paul Hannon, “EU, US Advance Free-Trade Deal,” The Wall Street Journal, June 17, 2013.
4. Ibid.
5. Andrew Higgins and Stephen Castle, “European Official Takes on the French,” The New York Times, June 17, 2013.