From Peter Westmacott, British Embassy: A deep, comprehensive, state of the art free trade and investment agreement between the European Union and the United States is, in my view, both the greatest challenge and the biggest prize on the trade policy market today.
It is a chance for us to set the standard for 21st century free trade agreements—a chance to shape the progress of globalisation as opposed to being shaped by it. And the political stars are aligned within the EU in a way they may not be again for some time. We cannot let the opportunity slip through our fingers.
It is difficult to overstate the potential of this project. The combined EU-US GDP—over thirty-two trillion dollars as of last year—accounts for nearly half the world’ output. Our trade and investment relationship is of similarly staggering size: bilateral trade between the EU and US reached $989 billion last year, and our combined bilateral investment stocks approached $3.5 trillion.
The EU-US High Level Working Group on Jobs and Growth, co-chaired by EU Trade Commissioner Karel De Gucht and US Trade Representative Ron Kirk, has been exploring what is possible since last November. Last month its interim report noted:
“… a comprehensive transatlantic trade and investment agreement, if achievable, is the option that has the greatest potential for supporting jobs and promoting growth and competitiveness across the Atlantic.”
Despite the low level of our current tariffs, the huge size of our commercial relationship means that the potential economic benefits would be far greater than from any prior free trade agreement. Estimates suggest that a comprehensive deal covering goods, agriculture, services, investment, government procurement and regulatory co-operation would be worth two to three percent in GDP gains to the EU and the US. Irresistible at a time when growth is so stubbornly low and fragile. That’s why the UK has been at the forefront of pressing the case. . . .
An EU-US free trade agreement is not a magic bullet for Europe. Nor is it a cop-out from the Eurozone’s problems. The Eurozone is, incrementally, dealing with its sovereign debt and banking crisis, and its structural imbalances. Trade is the best tool we have in the kit bag to put growth into gear. We will put our economies back on a path that is sustainable—and at minimal cost to the taxpayer, who is already feeling the burden of the economic downturn and continued uncertainty.
Right now, there are trillions of dollars in the global economy sitting around doing nothing but lose value. If we restore businesses’ confidence in market certainty and global stability—if we open up new markets for their goods and services —we unleash the potential of the free market and business’ investment.
Remarks by British Ambassador Sir Peter Westmacott to the Washington International Trade Association. (graphic: Aviation Report)