Caitlyn McBride IR Paper I Professor Bradley-Storey 3/12/13 The recent State of the Union address has brought to attention

the renewed attempt to create a free trade agreement between the United States and European Union, the Transatlantic Trade and Investment Partnership (TTIP). An agreement of such magnitude would bring about a multitude of implications. It would be a large economic commitment and a statement of power against Asian states on the part of both parties. If it were to go through, both entities would see huge economic boosts as trade barriers are smashed. The agreement is unique in that is does not simply seek to abolish classical tariffs, which are already low between these allies, but eliminates many technical inefficiencies and regulation mismatches as well. If these were translated into comparable classic tariff, they would equate to 10% and even 20% tariffs in some sectors of business (European Commission). Previous attempts at such a deal have occurred, all failing to produce a comprehensive free trade agreement, but perhaps the time is right. Both the European Union and the US are looking to recover from the global financial crisis that occurred in 2008 and need an extra boost to help speed up recovery. Most importantly, the power of the not just the US, but the entire West is slowly diminishing as regional powers in Asia, like China and India, grow stronger and maintain larger slices of the globes economic pie, posing threats to Western dominance of the international system. It is because of these factors that neorealism would predict likely success for this agreement, indicating the conditions are finally prime to demolish trade barriers between some of the worlds oldest allies. Furthermore, the return of economic prosperity to these countries will ensure military spending can remain intact, which is especially important in the US as the recent sequester has resulted in large cuts across the board, including military spending and development. It is the USs chance to reassert its hegemonic

McBride 2 status and the EUs opportunity to bail out its sinking economies. These countries, now presented with system level factors that have been missing from previous attempts, can finally reap the domestic benefits of a free trade agreement through negotiations fueled by the need to repair the balance of power and prevent the Asian counties from rising even farther in the international system. Neorealism is a good theory to utilize in this situation for many reasons. Most prominent is that it prescribes how states react in response to the anarchic international system and changes in the balance of power. Both the US and the EU are constantly looking for opportunities to maximize their security and power (Waltz 2001), enabling them to assert dominance over China and other countries in the Asian region, which have exhibited huge growth rates in recent decades. Neorealism, extended by the balance of power and power transition theories, states that changes in power dynamics caused by rising powers are major sources of conflict in the international system. As a result, both internal and external balancing will most likely occur in order to avoid war (Levy and Thompson). This agreement signifies immediate external balancing through the unification of almost half the international GDP (HLWGJG), posing a considerable threat to the influence of Chinese, Japanese, and Indian power on the global stage. In the long run, the TTIP offers a greater opportunity for economic growth for both the US and EU, allowing them to further build their internal militaries and infrastructures. It is in the interests of both the EU and the US to stop the rise of Asian power. This is particularly important to the US, as the current unipole, because a strong China, Japan, and India all pose a legitimate threat to its power position if their growth rates continue into the coming decades. Mearsheimer theorizes that regional hegemons, like the US, actively seek to prevent the rise of other regional hegemons because they are most influential as the sole preponderant power since

McBride 3 global hegemony is unsustainable (Mearsheimer). As a unipole, the US attempts to defend the status quo and preserve the current balance of power. Since neorealism dictates that the US cannot be certain of the Asian states intentions (Mearsheimer), it is forced to assume that they will turn into revisionist states and preemptively defend itself. It cannot be ensured, for example, that China would maintain the status quo of international relations if it were to eclipse the USs power. As a result, the US must try to prevent the eclipse from happening. This is most peacefully achieved, according to the power transition theory, before the threatening power rises to an equitable level in order to prevent armed conflict that would undoubtedly place the status quo in danger (Levy and Thompson). The TTIP is an effective option for the US to help curb the growth of all the Asian countries. It will revitalize the economies of the US and countries within the EU, allowing them to defend their share of power and even open more trade between them as markets become more accessible. In the past, states were able to confront aggressive powers or hegemonic threats with military interference and alliances. This is evident in both World Wars and in many conflicts beforehand, such as the defeat of Napoleon. However, in the nuclear age war is no longer as effective a tool to confront other states: nuclear war would destroy everything on all sides, eliminating gains and amassing grave losses. Nuclear weapons have had the effect of increasing the amount of other types of competition between states, similar to the Cold War (Waltz 1988). Economic power is therefore a key to establishing relative power in this nuclear age, acting as an avenue for cooperation that still allows states to exert influence over each other and helps to grow military strength through funding. Neorealism suggests having a preponderant power, like the US, can actually prevent central war since no state is able to successfully challenge the leader (DKS). This assertion lends the US more motive towards securing its power position, since

McBride 4 maintaining its position helps avoid a nuclear war between the major global powers. Avoiding the armed conflict predicted by the power transition theory therefore is paramount in maintaining the current state of the international system. The US and EU can diminish the chances of armed conflict by preventing China and other Asian powers from eclipsing their economic power and, in effect, maintaining the status quo. Neorealist theory also does not place much weight on institutional power, which is important in this case because the agreement is bypassing existing international forums, most notably the World Trade Organization. For neorealism, institutions and long term cooperation is difficult to achieve because of tremendous uncertainty regarding other states intentions. This uncertainty compounds even further, according to Mearsheimer, when a large number of states attempt to cooperate because so many competing interests make it almost impossible to trust everyone involved (Mearsheimer). As a result, it is easier to achieve cooperation on a smaller scale, which this deals success would prove. Negotiations for a more globally focused free trade agreement have stalled in the World Trade Organization for several years, due in large part to the inability of Europe and the US to come to a consensus with rising powers like China (Fensom). This is because an agreement of such magnitude aims to secure absolute gains, where every state wins. Liberal motivations, however, fall short of neorealism in failing to address the existence and importance of power in politics. Realist theories correctly point towards relative gains as the primary factor in state decisions (Mearsheimer). A country as powerful as the US does not have the incentive to help so many other countries gain economic power, when it can orchestrate success independently. Such a large negotiation would also dilute its influence since so many other powers are involved. The US is very much concerned with maintaining its values internationally and, as transcribed in a House of Representatives hearing before the Committee

McBride 5 on International Relations, views compromising American values as a direct threat to sovereignty (Committee on International Relations). Since states must defend sovereignty in order to survive, the US will only enter into agreements where it does not feel its sovereignty is in jeopardy, which often presents as a problem in cooperation when sovereignty is sometimes bartered (Grieco). The TTIP offers an opportunity for the US where it can work with established allies, but still be in a high enough power position to push for most of its agenda. Even when the House hearing occurred in 1998, the fact that the EU was beginning to become more welcoming of US standards was mentioned. Over a decade later, this is even truer as the financial crisis has hit many European countries so hard that they are looking to embrace reforms (Wheatley). Working within these parameters, the US is able to subject itself to some European concessions without harming its power position. This is due to the face that, as a unipole, the leading state helps preserve the status quo and even further improves its power by allowing soft balancing in the form of accepting smaller states influence regarding some international policy (Ikenberry, Mastanduno, and Wohlforth). A free trade agreement between the US and EU, since it is being independently negotiated away from any overarching organizations or unwieldy groups of states, allows the states to keep their sovereignty and mitigate many of the neorealist barriers to cooperation that are rooted in a lack of trust primarily because it helps the US preserve the status quo. In addition, neorealism proclaims that the domestic characteristics of a state are not necessarily a major influence to their international decisions, implying states are like black boxes (BSO). This rings true for the possibility of a free trade agreement because so many previous attempts have failed all because domestic inconsistencies prevented cooperation. There were no system level circumstances that warranted cooperation and this led both sides to refuse

McBride 6 compromise. Many of the disagreements between the EU and US are rooted in agriculture and differing approaches to regulation, making them largely arbitrary to overcome, especially in recent years (Wheatley). However, this agreement is expected to achieve success even with these disagreements because it is no longer simply about domestic economic growth, instead these countries are seeking cooperation in reaction to the shifting balance of power. Hence, this agreement is rooted in power politics and the added economic benefit is more of a bonus for each side, helping to ensure long run growth. The differences in opinion still exist, but the US and EU are more willing to come to an agreement and compromise because the system is calling for cooperation in order to balance against Chinese and Japanese power. The High Level Working Group on Jobs and Growth conducted a report that recommended the US and EU should move forward with negotiations, not just for mutual benefit, but in order to establish global rules as well (HLWGJG). This is the difference between past attempts, like in 1998, where domestic economic gains were not enough for the two sides to overcome their differences. In the past, Europe and the US have always been each others biggest trading partner and controlled an even larger percentage of the global economy since the Asian countries had not begun to rise. Therefore, there was no reason to initiate more levels of cooperation. However, this combined power is now shrinking and the threat of new international powers is requiring the cooperation of the EU and US on levels previously unneeded to preserve the balance of power. In this sense, Waltzs claim that the international system ultimately drives state actions becomes true (Waltz 2001). The US and EU need to create sustainable cooperation amongst themselves in order to maintain their power and face of new threats. Trade negotiations are being influenced by the international system, which is serving to push domestic differences aside in order to find compromise (Kim). Since these threats were not as serious during previous attempts, it is logical

McBride 7 to assume that it is the changing international system and proposed power gains rather than the ever-present economic benefits that are making the TTIP more likely to succeed during this attempt. Speculation into the likelihood of success for this agreement is not simply based in theory, leaders on both sides have come out in support of the TTIP and have maintained optimism not just for a comprehensive free trade deal, but an expedited one as well (Allen, Germany.info). However, such optimism was surely present in past attempts because states do not tend to enter into negotiations with the expectation of failure. This is what makes the support of neorealist theory so vital. Unlike the postpositive liberal theories, realist theory is often thought correctly to predict state actions in our international system as it is now. Therefore, for these negotiations to succeed the international system will not have to change, instead an agreement can be successfully reached within the current implications of a self-help and anarchic international system. The balance of power is in the process of shifting and the creation of the TTIP would be an effective reaction. It will serve to stunt the growth of the rising Asian powers, helping to preserve the status quo and avoid war. Since the start of the nuclear age, war has become an almost inconceivable means to shift power dynamics. This has resulted in increased emphasis on other types of competition between states and future conflict is more likely to take the shape of the Cold War. It is in these countries best interests to pursue the Transatlantic Trade and Investment Partnership in order to avoid the alternative of a continuing shift in the balance of power. The United States and European Union can affirm their economic dominance over the Asian powers through the Transatlantic Trade and Investment Partnership, preserving the current power dynamics within the international system and decreasing the likelihood of future armed conflict between great powers by maintaining existing polarity.

McBride 8 Works Cited

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