Spying Claims Cast Shadow Over US-EU Trade Talks

Long-awaited trade talks between the Unites States and European Union started last week, but a black cloud hanging over them could be a warning sign for supply chain professionals.

Several news sources, including Reuters, have reported that European leaders are coming to the table looking for assurances that alleged US spying on EU diplomats and institutions will stop — or at least that the extent of data gathering will be clarified. It's uncertain how the allegations raised recently by Edward Snowden about the National Security Agency's activity will affect the talks, but the issue is worth watching.

What could happen if free-trade negotiations break down because of alleged spying operations? I'd bet most electronics supply chain professionals really didn't consider this type of risk previously, but maybe you'd be wise to factor in political issues like these. What hangs in the balance — $646 billion in annual trade between the US and the EU, according to Reuters — is not chump change. The proposed Transatlantic Trade and Investment Partnership pact would be the world's biggest free-trade deal. It would cover about 50 percent of global economic output, 30 percent of global trade, and 20 percent of global foreign direct investment — again, far from chump change.

The spying allegations do add a certain amount of drama to the mix. But even if they hadn't come up, US and EU politicians and trade officials would be wrangling over deep-seeded differences that go beyond eliminating remaining tariffs on exports and imports. In fact, it has taken two years (far longer than Snowden has been a household name) to get the talks this far.

Sensitive issues ranging from agricultural market access to electronic commerce standards and competition will face additional debate and will require compromise if a deal is to be signed. The Guardian has reported that the issue most relevant to the high-tech space is the EU's data privacy regulations. US companies such as Facebook, Google, and Microsoft would like to have them relaxed. Given the recent NSA allegations, personal data use and privacy protection, which always rank high among EU priorities, will become even touchier subjects.

Talks will drag on from here. Some say a deal could be reached by the time the current European Commission finishes its term in late 2014. Others are guessing 2015. Six months one way or the other doesn't really matter. What matters, as it does with all trade agreements, is that some of the issues will come knocking on the electronics industry supply chain's door.

What lessons learned from previous trade pacts may help reduce the risks associated with the anticipated US-EU agreement? Share your thoughts below.

12 comments on “Spying Claims Cast Shadow Over US-EU Trade Talks

  1. Suzanne.Deffree
    July 16, 2013

    Thank you for bringing this important issue to the floor, Jennifer. Statements from the White House also note intellectual property, a matter of high importance and concern to many electronics design engineers, as a focus of the Transatlantic Trade and Investment Partnership pact talks. Given the spying claims and IP challenges US and EU engineers have had to face in trade with other regions, such discussions could become a significant matter for our electronics supply chain.

  2. Houngbo_Hospice
    July 17, 2013

    Negociations will not break down because the major players of the european economy such as Germany and Great Bretain want to move forward with the discussion despite opposition from countries like France. But it happens that France and many other countries engage in spying too and the US can also use that as a valid argument against them as well.

  3. elctrnx_lyf
    July 19, 2013

    I'm still wondering what is the real impact on the electronic industry if the trade pact between US and EU doesn't come to a good agreement.

  4. ahdand
    July 19, 2013

    @electrnx: A political answer is what you will get but I hope it wont happen        

  5. Himanshugupta
    July 21, 2013

    I think the title is just…”Spying claims…” and EU is too fragmented and weak at this point to come up with any concrete actions agains the US spying programs. And US is not too worried about the spying on foreign nations as they are (OH GOD!!!) spying on their nationals.

  6. Himanshugupta
    July 21, 2013

    @electrnx, IMHO the trade talks will go on and conclude as always. I think most of the nations would know about these spy programs as everyone does it one way or other. I think the only pressure that EU can exert on US is to reduce the extent of spying.

    July 21, 2013

    The relationship between USA and Europe is so deep rooted that the talks will eventually result in agreement that is mutually beneficial to both parties.  Mind you it might take years.

  8. Jennifer Baljko
    July 22, 2013

    @FlyingScot – I agree with you. Eventually, after long drawn out political negotiations and concessions bargaining, a pact will come about. What final shape it will take and when it's signed, well, I gues we'll see how that plays out.

  9. Mr. Roques
    July 25, 2013

    If the talks between the US and China haven't stopped, why would this one stop? The risks are far greater with China and still: money is money. I believe the same will happen here.

    They can ask the US to stop and the US can say it will but: 1) the US won't, 2) they have to do a better job at hiding their secrets.

  10. SunitaT
    July 29, 2013

    When snowden brought the NSA topic up, it was safe to assume that markets would be affected. The US must know where to draw the line. Although the extent of spying has yet to be found out, but this rumor is enough to create tensions within a company or group of companies and diminishes the trust barrier between companies; which may or may not be more devastating than a market crash.

  11. SunitaT
    July 29, 2013

    @Mr Roques: yes, profit oriented companies won't be bothered, but what about those conservative companies like the Avnet, that works on experience and trust, who can bear a market loss but not a hole in the trust layer between the people of the company and between the clients and the company, how are they to get the best out of this then?

  12. SunitaT
    July 29, 2013

    @FlyingScot: it has taken years. Now the new set of allegations against the spying agencies of the US are spoiling the theme that was hard to set. One way or another, the ultimate profit would be taken up by that person who holds the most information.

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