Time to think big across the Atlantic

The hope of somehow broadening and deepening the transatlantic market is an idea that simply won’t die. After a decade of ridicule by economists and rejection by both Paris and Washington, support among business lobbyists, members of the European Parliament and US Congress and the German and American governments has never been greater for new initiatives to remove obstacles to transatlantic trade and investment.

What form that effort might take - a free trade agreement, enhanced regulatory co-operation, an investment accord - will ultimately depend on political will on both sides of the Atlantic.

Some kind of deeper transatlantic economic integration has been bruited about for some time. Currently, the European Union and the US government are pursuing a regulatory co-operation dialogue that has yet to produce many tangible results.

Frustration over this slow progress is certainly one reason for renewed interest in a more ambitious transatlantic undertaking. The looming failure of the Doha Development Round is another. And business and political leaders on both sides of the Atlantic are suddenly quite concerned about China.

The potential benefits of a barrier-free transatlantic economy are significant. Americans’ per capita income would be boosted by up to 2.5% and Europeans’ by up to 3%, the equivalent of two years’ growth in Europe, according to a 2005 study by the Organisation for Economic Co-operation and Development (OECD).

To begin realising such gains Brussels and Washington need to:

• Nail down the numbers

Like the 1988 Cecchini report - which provided the economic justification for completing the internal market - Washington and Brussels should at the US-EU 2007 summit agree to undertake such a study so that it could be acted upon by the new US president and the incoming Commission president in 2009.

• Take on agriculture

Both Europeans and Americans hope to boost their production of energy crops. How they do this could become a source of new friction or an opportunity to shift existing farm subsidies away from food crops and into ethanol production. With the US Congress set to begin crafting a new farm bill and the EU set to think about new Common Agricultural Policy reforms in 2008, a study group comprising members of Congress and the Parliament should be formed to develop comparable, not competing, energy crop farm programs.

• Make manufacturing a winner

The chemicals industry, construction equipment manufacturers and others have long wanted to eliminate all tariffs on their trade. This has been one of the frustrated objectives of the Doha round. Washington and Brussels should say they are eliminating all tariffs on willing transatlantic industries and that other countries are free to join.

• Produce results from the regulatory dialogue

Europeans agree they need to do regulatory impact assessments comparable to those done by the US Office of Management and Budget. Get it done.

In financial services, the Americans need to resolve their differences with the Europeans over the Sarbanes-Oxley accounting standards. Comparable standards are long overdue.

• Make the transatlantic market a visa-free area

It is hard to build a single transatlantic economic space when Poles, Slovaks, Czechs and people from the Baltic states still need visas to enter the US.

• Free transatlantic investment

Only a few transatlantic investment barriers exist, notably US restrictions on foreign ownership of shipping, energy and communications companies and some European obstacles to US investment in financial services. Such restraints should be pared down to a minimal list of mutually agreed-upon critical infrastructure that will remain off limits to foreigners, freeing all other sectors to transatlantic ownership.

A post-Doha round US-EU effort to deepen transatlantic economic ties faces formidable obstacles. Political will is still lacking, despite suggestions that German Chancellor Angela Merkel is open to an EU-US free-trade zone. The idea has no champion inside the US government, the European Commission is unalterably opposed and no one knows what the position of the future French government may be.

Nevertheless, former US trade officials and business lobbyists who have laboured in vain in the field of transatlantic economic integration for the last decade are increasingly of one mind; it is time to think big. The incrementalism of the past has failed. High-level political commitment is needed to overcome existing obstacles to a single transatlantic market. And now is the time for Merkel, who will lead the EU in the first six months of 2007, and business to lay the groundwork to convince the next American and French presidents and the next Commission to embrace transatlantic free trade.

• Bruce Stokes is the international economics columnist for the National Journal, a Washington-based weekly public policy magazine. He is also a journalism fellow at the German Marshall Fund.

The hope of somehow broadening and deepening the transatlantic market is an idea that simply won’t die. After a decade of ridicule by economists and rejection by both Paris and Washington, support among business lobbyists, members of the European Parliament and US Congress and the German and American governments has never been greater for new initiatives to remove obstacles to transatlantic trade and investment.