EU-US free trade talks show why Britain is better off in

Few can seriously claim that UK on its own would have as much clout in trade negotiations as the whole of the EU.

Like it or not, David Cameron had a good win at the EU budget summit last week. After over 24 hours of caffeine-powered talks he got what he came for - a real terms cut in EU spending. That said, it is easy to overplay Cameron's role in the marathon talks. Germany's Angela Merkel was, as ever, the real dealmaker.

In any case, as Will Straw wrote last Friday, the budget deal is hardly something to celebrate. The budget headings that suffered the biggest cuts were "Global Europe" - which includes development spending - and investment in infrastructure projects. In contrast, despite being cut by 11 per cent, spending on the Common Agricultural Policy - possibly the worst and most wasteful of all EU policies - remains the largest single area of spending.

But while 99 per cent of the summit media coverage was about rehearsing centuries-old cliches about European diplomacy - in last week's case, Britain screwed the French by making a deal with the Germans - the importance of the EU budget was actually pretty low. In fact, while over 24 hours were spent haggling over how Europe would spend just over €900bn of its own money, leaders spent a few minutes and several pages of the summit communique talking about something of far greater significance to the EU's future.

The importance of Barack Obama's launch of formal negotiations aimed at agreeing the world's biggest ever bilateral trade deal during his State of the Union speech to Congress yesterday, dwarves the endless debates in Brussels on rebates, "own resources", and the difference in funding for Pillars 1 and 2.

It hasn't happened overnight. Since autumn 2011, diplomats have been working behind the scenes on preparing the ground for a EU/US trade talks. Full negotiations on a deal looking not just on the elimination of tariff barriers but also on harmonising regulatory and technical standards for products could generate 2 per cent of GDP on its own. EU officials think that, by itself, a US trade deal could translate into €275bn per year for the European economy and two million new jobs.

The EU - as both its supporters and critics would agree - is not just about the single market, but its status as the world's largest market is a valuable and, so far, relatively under-used commodity. At the moment, just four of the EU's 29 trade deals are with countries from the G20, and those four are with South Korea, Mexico, South Africa and Turkey. But the EU is now devoting increasing amounts of political capital to trade. An FTA was agreed with Singapore in December while a deal with Canada is expected to be completed imminently. Negotiations with Japan are expected to be launched in Tokyo in April, meaning that the EU will spend the next year brokering trade deals with the two largest world economies. In contrast to the EU's budget talks, there's nothing inward looking about that.

It is also a welcome sign that leaders are recognising that trade is the single most effective alternative to austerity. The collapse of the Doha round of WTO trade talks in 2005 followed by the financial crisis did real damage to world trade and to the European economy. One of the little-noticed developments in economic policy in recent years has been the glut of protectionist measures. The World Trade Organisation stated earlier this year that only 18 per cent of the trade restricting measures adopted by G20 countries since 2008 have been scrapped, amounting to a total loss of 3 per cent of world trade - equivalent to some €350bn.

But while the drive towards trade marks a decisive shift in priorities by the EU, it is also hugely significant to the debate on Britain's continued EU membership and to the Conservative Party's attitude to Europe.

One of the common lines of attack from the 'better off out' brigade is that, shorn of its EU shackles, Britain would be able to go around agreeing its own free trade deals. In response, one of the most convincing argument in favour of Britain being at the heart of Europe is that together we're stronger. In the EU we are one of the most powerful players in a bloc of 27 countries and 500 million people. Outside, we are, at best, a medium-sized power. When it comes to dealing with the likes of the US and Japan, few can seriously claim that Britain on its own would have as much negotiating clout as the whole of Europe.

Besides, an EU pursuing a free trade agenda should be like manna from heaven for most moderate Tories. It should also pacify those who grumble that the EU should be about trade, not political union. At the very least, if the EU continues the shift towards using its muscle to drive international trade deals it will becoming increasingly difficult for Conservative eurosceptics to maintain that we are better off out.

A couple of days before last week's summit, the Europe minister, David Lidington, told reporters that, come 2017, he and David Cameron wanted to be "campaigning with enthusiasm for a 'yes' vote". On his wish list, alongside less EU regulation and a liberalisation of the services sector, was the "fantastic prize" of a transatlantic trade deal. In Lidington's words, failing to go for it would be "betraying future generations". Cameron himself said today that an EU/US agreement would "create jobs on both sides of the Atlantic and make our countries more prosperous." It looks as though his wish may yet be granted.

It goes without saying that a transatlantic trade agreement is far from a fait accompli. Both sides like to subsidise large parts of their economy - particularly farming - and both will be under pressure from powerful internal lobby groups hoping to strangle the baby before it is born. But the EU and US have, nonetheless, made a bold statement of intent which could eventually lead to a seismic change in the world economy.

Ben Fox is a reporter for EU Observer. He writes in a personal capacity

European Commission President José Manuel Barroso speaks following a summit with US President Barack Obama as European Council President Herman Van Rompuy looks on. Photograph: Getty Images.
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Air pollution: 5 steps to vanquishing an invisible killer

A new report looks at the economics of air pollution. 

110, 150, 520... These chilling statistics are the number of deaths attributable to particulate air pollution for the cities of Southampton, Nottingham and Birmingham in 2010 respectively. Or how about 40,000 - that is the total number of UK deaths per year that are attributable the combined effects of particulate matter (PM2.5) and Nitrogen Oxides (NOx).

This situation sucks, to say the very least. But while there are no dramatic images to stir up action, these deaths are preventable and we know their cause. Road traffic is the worst culprit. Traffic is responsible for 80 per cent of NOx on high pollution roads, with diesel engines contributing the bulk of the problem.

Now a new report by ResPublica has compiled a list of ways that city councils around the UK can help. The report argues that: “The onus is on cities to create plans that can meet the health and economic challenge within a short time-frame, and identify what they need from national government to do so.”

This is a diplomatic way of saying that current government action on the subject does not go far enough – and that cities must help prod them into gear. That includes poking holes in the government’s proposed plans for new “Clean Air Zones”.

Here are just five of the ways the report suggests letting the light in and the pollution out:

1. Clean up the draft Clean Air Zones framework

Last October, the government set out its draft plans for new Clean Air Zones in the UK’s five most polluted cities, Birmingham, Derby, Leeds, Nottingham and Southampton (excluding London - where other plans are afoot). These zones will charge “polluting” vehicles to enter and can be implemented with varying levels of intensity, with three options that include cars and one that does not.

But the report argues that there is still too much potential for polluters to play dirty with the rules. Car-charging zones must be mandatory for all cities that breach the current EU standards, the report argues (not just the suggested five). Otherwise national operators who own fleets of vehicles could simply relocate outdated buses or taxis to places where they don’t have to pay.  

Different vehicles should fall under the same rules, the report added. Otherwise, taking your car rather than the bus could suddenly seem like the cost-saving option.

2. Vouchers to vouch-safe the project’s success

The government is exploring a scrappage scheme for diesel cars, to help get the worst and oldest polluting vehicles off the road. But as the report points out, blanket scrappage could simply put a whole load of new fossil-fuel cars on the road.

Instead, ResPublica suggests using the revenue from the Clean Air Zone charges, plus hiked vehicle registration fees, to create “Pollution Reduction Vouchers”.

Low-income households with older cars, that would be liable to charging, could then use the vouchers to help secure alternative transport, buy a new and compliant car, or retrofit their existing vehicle with new technology.

3. Extend Vehicle Excise Duty

Vehicle Excise Duty is currently only tiered by how much CO2 pollution a car creates for the first year. After that it becomes a flat rate for all cars under £40,000. The report suggests changing this so that the most polluting vehicles for CO2, NOx and PM2.5 continue to pay higher rates throughout their life span.

For ClientEarth CEO James Thornton, changes to vehicle excise duty are key to moving people onto cleaner modes of transport: “We need a network of clean air zones to keep the most polluting diesel vehicles from the most polluted parts of our towns and cities and incentives such as a targeted scrappage scheme and changes to vehicle excise duty to move people onto cleaner modes of transport.”

4. Repurposed car parks

You would think city bosses would want less cars in the centre of town. But while less cars is good news for oxygen-breathers, it is bad news for city budgets reliant on parking charges. But using car parks to tap into new revenue from property development and joint ventures could help cities reverse this thinking.

5. Prioritise public awareness

Charge zones can be understandably unpopular. In 2008, a referendum in Manchester defeated the idea of congestion charging. So a big effort is needed to raise public awareness of the health crisis our roads have caused. Metro mayors should outline pollution plans in their manifestos, the report suggests. And cities can take advantage of their existing assets. For example in London there are plans to use electronics in the Underground to update travellers on the air pollution levels.

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Change is already in the air. Southampton has used money from the Local Sustainable Travel Fund to run a successful messaging campaign. And in 2011 Nottingham City Council became the first city to implement a Workplace Parking levy – a scheme which has raised £35.3m to help extend its tram system, upgrade the station and purchase electric buses.

But many more “air necessities” are needed before we can forget about pollution’s worry and its strife.  

 

India Bourke is an environment writer and editorial assistant at the New Statesman.