When the Presidents of the EU and US meet in Washington they do so against the backdrop of significant economic turmoil on both sides of the Atlantic. The Eurozone remains deep in crisis and both the EU and the US face common economic, social and environmental challenges. In the EU, our ability to emerge from the crisis is being hampered by a lethal combination: complicated and protracted decision making processes on the one hand, and the fear of losing political capital (and power) as a consequence of adopting necessary but painful measures on the other. While the immediate critical problem for the EU is to solve the crisis, the issue facing both parties is how to kick start recovery and emerge poised for growth in a highly competitive global marketplace.
Yet, economic downturn is also an invitation to all of us in business and in politics to reflect and change. The current environment is ripe for change and for a real time opportunity for the EU and the US to act together.
In the fast evolving multi-polar world concerns have been raised, on both sides of the Atlantic, that the strength of the transatlantic partnership has diminished. The economic crisis has, for good reasons, created an EU increasingly looking inwards, and the US is seen to be focusing its attention elsewhere. It is time that we not only seek to reinvigorate the partnership but redefine it in the context of the realities we face today.
The summit is an opportunity to kick start a renewed and reinvigorated process of transatlantic partnership, focused on growth and jobs. In addition, not only can the US and the EU do much among themselves to set our respective economies on a path to restoring growth, the US and the EU can do much together in their common relationships with the rest of the world. The EU and the US remain the two largest single continental markets in the world, even small levels of growth in these markets can generate significant opportunities. For example a GDP growth of approximately 2% in the EU would create a market opportunity the size of Argentina. The Transatlantic economy has generated over $4.28 trillion in commercial sales annually and employs up to 14 million people in ‘onshored’ jobs on both sides of the Atlantic.
President Obama at the recent Asia-Pacific Summit signaled that he wanted and was open to the creation of a Trans-Pacific Partnership. The reality is that while multi-lateral agreements are good, bilateral actions and agreements can deliver faster results, particularly between partners who share similar challenges and opportunities, and a common heritage. There is an urgent need for our Leaders to emerge from the summit with a concrete package of measures which can be implemented. For example a joint ‘Transatlantic Jobs and Growth Agreement ‘ containing a series of initiatives with the ability to drive growth and create jobs. These initiatives could include: greater efforts on reducing and/or eliminating key NTB’s to transatlantic trade (the reinvigorated TEC is already making some progress), eliminating transatlantic tariffs, joined efforts to reducing global tariffs on green goods and services (a proposal which seems to have some traction with the G20), and stronger cooperation on investment policy. The US and EU trade approximately $600 million in goods annually, almost 40% of this is intra company, a reflection of the substantial investments we have in each-other. Reducing or eliminating tariffs even on a low base has the potential to boost US and EU exports by up to 17%.
Another initiative I would advocate is the establishment of a transatlantic regulatory regime in key sectors to address divergences that could inhibit trade and economic activity going forward (in nanotechnology, financial services, and e-health just to name a few). The bilateral expansion of government procurement commitments since an agreement in 1995 has achieved progress but much potential remains untapped. Possible imbalances between the parties on government procurement access should be resolutely addressed.
The transatlantic services economy has been described as ‘the sleeping giant’ of the transatlantic partnership. Service sector reforms in industries like health, transportation, capital markets, telecoms and ICT would provide a significant economic boost to the transatlantic economy increasing competiveness globally.
As our leaders gather in Washington we look forward with hope that they will have the collective resolve to open another chapter in transatlantic relations focused on realising the true potential of this partnership. The reality is that there hasn’t been a better and more urgent time to do it than now.