April 30, 2013

According to a recent Atlantic Council-Bertelsmann Foundation study of trade experts and policymakers from the United States and Europe, there is widespread optimism that that two sides will be able to successfully negotiate a trade and investment deal. A transatlantic deal would have significant positive effects on the economies of both regions, particularly at this time of elevated unemployment and stunted growth.

A deepened and more integrated relationship between the world’s two largest economies—the United States and European Union—offers the potential for considerable benefits to consumers and companies alike. By removing the remaining tariffs, clearing the way for additional international investment, and streamlining regulatory policy, goods will be cheaper and firms will be able to more effectively mobilize and invest their capital across the US and Europe.

Importantly, a reinvigorated transatlantic economy will vastly improve the international competitiveness of both regions as together they could set combined standards for the world to aspire to in environmental policy, product safety, pharmaceuticals, and any number of other industries. Exporters hoping to sell goods in either market will have just one set of rules to comply with. This is perhaps the West’s last best opportunity to set global rules, as the emerging markets continue to gain ground.

While the benefits of an open transatlantic marketplace are fairly evident, to be sure there are significant hurdles that must be cleared. Traditional disputes over genetically-modified organisms in agriculture and government procurement practices are as evident as ever. Additionally, both US and European regulators will be hard-pressed to give up the powers they’ve acquired in order to develop a more predictable and transparent transatlantic rulemaking process. Thus, strong leadership on behalf of President Obama and his counterparts in Brussels, Berlin, London, and elsewhere across Europe will be vital. Given the many economic benefits at stake, and the depressed economic situations facing their countries, the leaders should certainly be motivated.

The United States and Europe have discussed a transatlantic free trade area in various guises for decades. However, as negotiations for a new Transatlantic Trade and Investment Partnership (TTIP) begin, this time truly seems different. Both sides recognize the need to stimulate their stagnant economies in the aftermath of the financial and Eurozone crises. Moreover, in an age of austerity, a deepened trade relationship marks a path forward that does not add to national debt levels. Lastly, the rise of the emerging markets—particularly China—which often subscribe to a different economic model focused on state-owned enterprises and government directed investment decisions, marks a historic moment and opportunity for the transatlantic community.

Standing at the precipice of negotiations, trade experts have indicated a strong backing and optimism for the initiative based on our data. The challenge will be to mobilize this sentiment into action.

Garrett Workman is associate director of the Atlantic Council’s Global Business and Economics Program. Tyson Barker is director of transatlantic relations for the Bertelsmann Foundation. This piece first appeared on GE Ideas Lab.

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