EU Ambassador to the U.S. Stavros Lambrinidis gave a fireside chat on Feb. 17 pertaining to the relationship between the two largest economies in the world. He stressed the importance of trade to this friendship and how Wisconsin benefits greatly from that trade — the EU being the second-largest importer of Wisconsin goods.
During the talk Lambrinidis directed attention to the success of the European experiment — war between European nations is now unthinkable. Member states are bound together through trade and a shared set of rules and regulations.
He did elaborate, however, on EU’s most recent disaster: Brexit. Brexit refers to the British exit from the EU which officially occurred on Jan. 31, 2019. Now Britain is undergoing a year-long transition where it is subject to EU law and is a member of the customs union and single market. After that period it will have to write new laws replacing the EU rules and regulations it has followed for decades, and have the freedom to create its own trade agreements.
Brexit matters because it opens the UK up to new trade agreements with the U.S. while separating the UK from the EU. The market for agricultural products will change dramatically as the UK is kicked out of the single market, and the price of EU goods rise. Wisconsin trade expert Mark Rhoda-Reis sees this as a window of opportunity.
“Wisconsin has a lot of room to grow in that, considering that we’re only $55 million of that several billion-dollar imports,” Rhoda-Reis said.
Approximately 73% of the UK’s current food and agricultural imports are from the EU. As that trade relationship sputters out, a new one between the U.S. and the UK should replace it. With a free trade agreement between the UK and U.S., the price of exporting and importing goods will be much lower. By doing this, the U.S. would hand American producers an opportunity to make more money, employ more people and import cheaper British goods.
Foxconn’s ‘innovation centers’ are proving to be a burden on Wisconsin’s economyFoxconn Technology Group first fell into the American public’s eye after being heavily criticized by the media for their brutal, Read…
A trade agreement stands to help both U.S. and UK producers and consumers, and strengthen the relationship between the two countries. What’s not to like?
While the trend right now is for tariffs and trade wars, Wisconsin has realized by now that protectionism ultimately hurts the businesses and people the government tries to protect. Farms across Wisconsin and the country need bailing out to stay afloat, and many are still going out of business.
The U.S. should reconsider its stance on trade in general, not just with the UK.
Free trade would not throw Wisconsin farmers and other producers under the bus. Protectionism is much worse as it drives up costs for everyone — as firms that shouldn’t stay in business do — making it harder for everyone to do business.
Free trade would simultaneously allow fiscal responsibility and a more comprehensive social safety net. It would drive down the cost of doing business as tariffs and other barriers to trade are retired, which would then drive up revenues as other people’s costs go down too and they have more money to spend.
Farmers across US are suffering because of Trump’s trade war with ChinaMontana farmer Robert Henry has been receiving subsidies for his farm from the federal government as compensation for money lost Read…
That’s not to say all forms of regulation should be thrown out of the window. The EU is a shining example of what can be accomplished with free trade in the form of a single market along with regulation.
Lambrinidis was particularly enthusiastic about this. He explained EU goods are made by protected workers, in an environmentally friendly way and are not sold to fund repression or corruption.
“When we [the EU] export goods we export values,” Lambrinidis said in the chat.
If the EU can pull it off, why not the U.S.? The political reservations preventing the end of tariffs and the beginning of trade agreements are all underpinned by a fear of loss. Specifically, people are afraid they will lose their jobs and a part of their identity. And they couldn’t be more correct. Due to the protectionist policies the U.S. has long pursued, a free trade agreement would radically alter the economy. In the short term it would appear bad, but in the long term it would benefit all.
Retraining and innovation puts these reservations to rest. This could be funded by the increased economic activity that would be quickly engendered by the newfound ease and low cost of trade.
Harry Quick ([email protected]) is a freshman studying economics.