For businesses on both sides of the Atlantic, President Obama’s State of the Union address contained a highly welcome message: The Administration will “launch talks on a comprehensive Transatlantic Trade and Investment Partnership with the European Union.”
The benefits of such an agreement – including job creation and projected additional growth of 1.5% – have been at the core of discussions thus far. There is no doubt about the significance of these effects in the current economic climate. But there is so much more at stake.
Prosperity and Connectedness
To understand the broader impact of a U.S.-EU trade deal, let’s take a step back and examine what free trade flows have already accomplished around the globe. There is no better example than Europe, the world’s most globally connected region. The data in the DHL Global Connectedness Index show how prosperity in countries and regions is strongly dependant on their integration in cross-border flows of goods, services, capital and information. Thanks to European integration, something remarkable has transpired. In fact, nine of the ten most globally connected countries are located in Europe.
The continent’s current debt crisis and must be viewed against the backdrop of these accomplishments. Certainly there is a long road ahead with tough structural reforms in the areas of budgetary and fiscal policy. In the absence of new impulses, we have to expect slow growth for the next few years. These challenges are not, however, insurmountable. To the contrary – they demand a bold, positive vision for Europe’s future. Deeper economic integration plays an important role in shaping this new perspective.
There are two reasons why a free trade agreement with the United States would represent a milestone in Europe’s long-term plan.
First, it would create new opportunities for European and American businesses. The elimination of tariff and non-tariff barriers, effective regulation and alignment of regulatory policies would results in significant decreases in the cost of trade. This translates into major efficiency gains and better service for our customers. In other words, a free trade deal would result in tangible benefits for all.
Moreover, a transatlantic free trade zone would further strengthen the largest bilateral economic relationship in the world. Already today, goods and services valued at 1.8 billion Euros are exchanged on a daily basis. Taken together, the EU and U.S. economies generate approximately half of global economic output and process one third of global trade volume. Some 14 million jobs have resulted from the European-American economic relationship.
Second, a free trade deal would unleash a new dynamic between the United States and Europe, allowing an even stronger common basis to emerge – a basis from which we can jointly address the most pressing global challenges of today. These range from climate change to sustainable globalization, or a form of integration that opens the door of opportunity to people all over the world.
Free trade drives growth and innovation
I am convinced that a thriving transatlantic marketplace will bring benefits beyond the borders of Europe and America. It will ultimately drive trade and growth in emerging markets and revitalize the entire global trading system. It will also accelerate knowledge transfer between our continents, enabling the development of game-changing, globally significant technologies, products and services. Therein lies the huge opportunity to prove the effectiveness and global role of pluralistic, innovation-oriented societies once again.
President Obama has pledged his personal support for a trade deal with Europe, and the European Union is more than ready to move forward. The private sector is prepared to contribute ideas and suggestions for implementation. A swift conclusion to the negotiations will boost hope for a better tomorrow – on both sides of the Atlantic.