U.S.-EU Trade Deal Gets Hung Up on Politics

Germany’s vice chancellor, Sigmar Gabriel, says talks about a major trade deal between the European Union and the U.S. have failed, though “nobody is really admitting it.” That statement should be taken with a grain of salt, but the Trans-Atlantic Trade and Investment Partnership appears to be doomed, at least until after elections in the U.S. and major European countries.

Gabriel’s Economy Ministry is not involved in the TTIP negotiations. He also is the leader of Germany’s Social Democratic Party, the coalition partner of Angela Merkel’s Christian Democratic Union but also its biggest political rival. Germany has a general election next year, and polls show a 10-11 point lead for the CDU over Gabriel’s SPD, so it’s in the vice chancellor’s interest to kick off the political season early and try to score points by taking popular positions. He is, for example, also calling for a cap on the number of refugees Germany will accept — an unusual position for a leftist, but one that the German public considers reasonable and Merkel rejects.

Denouncing the TTIP looks like a similar ploy: The trade deal’s negative rating in Germany reached 59 percent late last year. “As Europeans, we mustn’t, of course, submit to American demands,” the vice chancellor said in an interview with the German TV channel ZDF.

Bloomberg

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.