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.