Panel: Mini Deals Can Have Big Impacts, but Congress May Rein Them In

The U.S. says its "mini deal" approach is better than traditional free trade deals, because of their speed and focus on current problems, and while two trade experts didn't dismiss FTAs as a 20th-century tool, they acknowledged those advantages mean mini deals are here to stay.

Georgetown Law professor Kathleen Claussen, who has served as a panelist in a number of state-to-state disputes, said during a Peterson Institute for International Economics Trade Winds episode that "these other trade agreements, they also govern trade flows and sometimes in big ways."

Trade Winds examined mini deals in the EU -- where there are about 2,000 -- and in the U.S., where there are about 1,500 signed over decades with 130 countries. The panelists concluded that they will continue to grow in visibility and will keep getting negotiated and signed.

"Some viewers may say, no, the FTAs are of greater commercial importance, we should be doing those," Claussen said. She pointed out that trade negotiators can pursue both, as the EU is doing.

She said that the executive branch's leeway to negotiate critical mineral agreements or other mini-deals may change, given the Constitutional authority for Congress to lead on trade. "There are initiatives underway to draft legislation that would redraw the contours of the relationship between the two branches and maybe some executive branch actors would be accepting of that, as well," she said.

Lucian Cernat, head of global regulatory cooperation at the European Commission’s Directorate General for Trade, said he has been responsible for a number of conformity assessment agreements.

He said the topic of mutual recognition agreements "is extremely important in the Trade and Technology discussions in the United States."

He agreed with Claussen that it's wrong to dismiss the economic significance of mini deals since they don't lower tariffs. He cited a recent estimate from the European Centre for International Political Economy that projected that if the EU and the U.S. can agree on adding the products they are talking about to the existing mutual recognition agreement annex, that "could affect positively more trade value than all the five or six FTAs we have been struggling to conclude recently -- Australia, New Zealand, Mercosur, Chile. Put all these FTAs together, and they cover less trade than the MRA that we’re trying to expand now with the United States.”

Cernat defended the MRAs, saying, "It’s not about eliminating testing and safety requirements; it’s about eliminating duplicative testing."

He said mini deals address specific trade barriers, and he said, "by now, thanks to our globalization efforts, the biggest problems companies face are no longer tariffs." He added, "In the future we may see more mini deals, because we ran out of tariff reduction in the [Organization for Economic Cooperation and Development countries], at least."

Not only are they faster to negotiate, because they are more limited, Cernat pointed out, they can be less politically sensitive. "You don’t have to make quid pro quos, difficult compromises. You don’t have to trade off a quota on beef vs. cars or a cheese quota, that sort of thing."