I’ve become increasingly interested in global trade. I believe the structure of trade is one of those very important areas that is commonly overlooked and misunderstood. With each country’s economy specializing, the idea is to have a functional marketplace for goods and services to be imported and exported.

But a marketplace can quickly become dysfunctional when political calculations and staid business interests slow things down to a grind. It becomes global distortion.

The US is currently involved in two large trade negotiations. The first is called T-TIP, a mega-agreement between the US and EU. The second is called TTP, a mega-agreement between the US / Canada and a number of countries, many emerging, in Asia-Pacific. It is notable that China is not involved in TTP negotiations.

But starting with T-TIP. From the FT:

“Sealing a deal by the end of 2015 “would take nonstop work,” says Miriam Sapiro, who this year stepped down as the deputy US trade representative in charge of the EU negotiations.

Yet that does not appear to be the way the schedule is shaping up. The next round of negotiations is not due until February and only four or five formal rounds are planned for 2015.

By comparison, the negotiators now nearing a deal for a US-led, 12-country Trans-Pacific Partnership have been meeting almost nonstop since the middle of this year. But on TTIP, there has been little actual negotiation over the past 18 months.”

The bottom line: T-TIP is stalling and TTP seems to be picking up momentum.

I’m not smart enough to deconstruct the complexities of each potential trade agreement. But I wonder if a new-vs-old dynamic is at play.

T-TIP would link the EU’s mostly advanced economies with the US. In the EU, some economies are doing relatively well (Germany), while other economies are not doing well (Portugal, Greece). The EU is made up of countries with long and varied economic histories. Each has their own risk-reward calculation, governance structure, and economic model. I wonder if the slow-down in T-TIP negotiations has to do with government — and, potentially, industrial — complacency. In short, are these bloated European countries — and a volatile American congress with its own view of European dynamism — able to capture bold trade opportunities? As the FT points out, there doesn’t seem to be the burning desire.

TTP seems fundamentally different. The potential partners are split between emerging and advanced economies. Each has a distinctly interconnected interest. Emerging economies are interested in further opening advanced markets for their exports; advanced economies are interested in opening new markets, further re-balancing the import-export dynamic, and setting standards — consumer protections — for imports. If done well, it’s a win-win.

When an economy is (actually) emerging, it needs to absorb considered risk, have a political system that builds trade alliances, and clearly determine its value. If agreed upon, TTP will help its emerging partners do just that.

Originally published at brendanhartdotcom.wordpress.com on December 16, 2014.