Business

What’s At Stake For Texas In Free Trade Talks With Europe

The Lone Star State already leads the U.S. in exports to Europe and would see those sales expand further if remaining trade barriers were eliminated. But the real payoff may come in helping both American and European firms resist Chinese competition.

 

Texas flag and a money sign

Negotiators from the United States and the European Union are hoping to wrap up talks this year on the Transatlantic Trade and Investment Partnership (TTIP). The deal has the potential to dwarf all previous U.S. free trade agreements in its economic impact, including NAFTA. But a finished agreement would still have to win approval from Congress. Companies that do business on both sides of the Atlantic are already trying to build grassroots support for that fight.

The Trans-Atlantic Business Council represents 70 U.S. and E.U. companies, employing close to 6 million workers. The council has launched a nationwide roadshow to promote TTIP to American business leaders, politicians, and the general public. Houston was the fourth of eight stops on the ongoing tour.

“European investment represents a lot of jobs in this region,” says Tim Bennett, the council’s director-general and CEO.

“And Houston shouldn’t ignore that, and should compete for that, and as the energy capital of the world, should actually capture an awful lot of that.”

Texas is already the top U.S. state exporting to Europe. A lot of that takes the form of petroleum products and chemicals, but it also includes goods ranging from computers to heavy machinery. In 2013, Texas shipped close to $38 billion worth of goods to Europe, more than triple its exports to China.

That trade would grow substantially if the U.S. and E.U. could work out a deal to lower or eliminate the remaining transatlantic trade barriers. But the sheer size of the American and European markets means that trading relationship is likely to remain strong regardless of what happens with TTIP.

Or does it?

“For France, for example, we have a bilateral trade [with the U.S.] of $80 billion [a year],” says Sujiro Seam, Consul-General of France in Houston. “We have also major investments, cross border, which represent the French investment here in Texas — it’s $12 billion and it supports 43,000 jobs. The advantage and the added value of TTIP is that we will keep it this way.”

The concern isn’t so much that existing barriers will hurt transatlantic trade. It’s more that they make it tougher for both the U.S. and Europe to compete against China.

“It’s [about] how to use the combined force of the transatlantic economy to keep standards high – labor, environmental, consumer standards,” says Daniel Hamilton, director of the Center for Transatlantic Relations at Johns Hopkins University’s School of Advanced International Studies. “Neither of us anymore, U.S. or E.U., can uphold those standards internationally [alone]. So if we don’t get together today, across the Atlantic, we’re going to end up with a Chinese standard.”

If U.S. and E.U. negotiators do manage to hammer out a deal, Congress gets to have its say, and that’s where things can get tricky. As things stand, members of Congress can amend or filibuster a bill implementing a trade pact, just like any other bill. Any amendments by Congress would prompt the Europeans to demand changes of their own, causing the entire effort to bog down or collapse.

The traditional way to avoid this is for Congress to pass a law granting the White House “Trade Promotion Authority.” For a set number of years, Congress gives up its ability to amend trade agreements. It can only vote “aye” or “nay.”

Hamilton says this may be one area where Congress and the Obama Administration can find common ground. “There is Republican support for Trade Promotion Authority. The challenge is within the Democratic Party.”

Democratic opposition to such legislation, and free trade deals in general, started growing under President George W. Bush, out of concern that such deals with developing nations helped businesses at the expense of organized labor and the environment. That’s less of a concern with TTIP. European labor and environmental standards are, if anything, stronger than those in the U.S. But it is a concern for the other major deal the Obama Administration is negotiating — the Trans-Pacific Partnership, which would include such countries as Malaysia and Vietnam.

Still, the odds are that the House will pass Trade Promotion Authority in the coming months. Then it will come down to whether the White House can convince at least six Democratic senators to vote with the Republicans and stave off a filibuster from the left.

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Andrew Schneider

Andrew Schneider

Politics and Government Reporter

Andrew heads Houston Public Media’s coverage of national, state, and local elections. He also reports on major policy issues before the Texas Legislature and county and city governments across Greater Houston. Before taking up his current post, Andrew spent five years as Houston Public Media’s business reporter, covering the oil...

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