A Transatlantic Plan for Growth and Jobs

by Hristiana Grozdanova & Anna Maria Barcikowska

In the 2011 EU-US Presidential Summit focused on reinvigorating economic growth, creating jobs, and ensuring the financial health and stability of the transatlantic economy. Photo Credit: European Commission

When both sides of the Atlantic face fiscal and macroeconomic challenges at home and around the globe, it seems like the only way to overcome to shortcomings is to stay united. Looking back at the history of the European Union, one could see that in the somber times it was the economy that supported the post-war European countries to transit towards stabilization and even prosperity. This is still valid today especially if the US and the EU want to address the economic challenges arising in Asia and South America. The target is set – creation of a barrier – free transatlantic market to drive the job creation and growth we both urgently need.

Transatlantic trade and investment remain the most important economic relationship in the world, creating jobs, boosting economic growth, and stimulating competitiveness on both sides of the Atlantic. The transatlantic economy generates 54% of the world’s GDP and nearly 4 trillion euros in total commercial sales a year and employs close to 15 million workers.

In times of financial crisis, both Americans and Europeans have great stakes in maintaining economic cooperation strong and the momentum for a transatlantic free-trade agreement is steadily growing, rekindling Angela Merkel’s plan to create a Transatlantic Single Market. In 2007, Merkel proposed a plan to create a Single Regulatory and Supervisory Market between Europe and the U.S. to establish the principles of mutual recognition, harmonization and coordination of policies and regulatory bodies on such issues as competition, intellectual property and financial markets to enhance competitiveness and reduce inefficiencies.

Later that year the European Union and the U.S. Government created the Transatlantic Economic Council to guide and stimulate the work on transatlantic economic convergence. Since then, the idea has been only gaining traction, put into sharper relief by the financial crisis.

In 2011, German Chancellor Angela Merkel and French President Nicolas Sarkozy wrote to the leaders of the 27 EU member states calling for the European Council to express its political will “to strive for intensified transatlantic trade relations through an EU-US free trade agreement.” Similar remarks were voiced by the British Prime Minister David Cameron in Davos and repeated this March in Washington, DC during the joint press conference with U.S. President Barack Obama; both calling for exploring ways to increase transatlantic trade and investment.”

The political will to create an open transatlantic market is evident. It now has to be taken forward by practical proposals and concrete action.

The establishment by the EU-US Summit of a High-Level Working Group on Jobs and Growth, led by U.S. Trade Representative Ron Kirk and EU Trade Commissioner Karel De Gucht, is a right step in this direction.

The Working Group is tasked to identify policies and measures to increase U.S.-EU trade and investment to support mutually beneficial job creation, economic growth, and international competitiveness. These endeavors will include addressing the reduction, elimination or prevention of barriers to trade in goods, services, and investment; opportunities for enhancing the compatibility of regulations and standards; and enhanced cooperation on global issues of common concern and also for the achievement of shared economic goals relating to third countries.

By June this year, the Working group should have provided an interim update to the Leaders and should continue its effort to issue a report with findings, conclusions and recommendations by the end of 2012.

This effort should result in substantial proposals and concrete measures that would help create jobs, boost innovation, improve competitiveness, and ensure long-term growth and prosperity. This opportunity cannot be wasted. To this end, business and other economic stakeholders have to actively support political leaders on both sides of the Atlantic.

However, attention should be paid to:

• Businesses and business representatives. They could give practical advices on how the rule-based international trading system. They could help develop practical solutions to eliminate trade, investment and regulatory barriers that undermine the ability of the companies from the both side of the Ocean to expand economic growth and create jobs.
• Institutions. From the both side of the Atlantic there should be full cooperation and less administrative burden and red tape so the measures in the report can become a reality. The political will is obvious, but it should be supported by the appropriate administrative actions.
• Untapped potential. New areas of cooperation should be explored along with the already marked. This would be the link with future initiatives. It is worth exploring possibility to include security and defense.
• Citizens. Full involvement of the citizens should be ensured from the very beginning of the preparation of the report. Public consultations are important, but an active interface with the citizens should be maintained.

Hristiana Grozdanova and Anna Maria Barcikowska are both members of the Atlantic Council’s Young Atlanticist Working Group.