Saturday, 23 June 2012

Is an EU-US free trade agreement on the cards?

Ever since my trip to Strasbourg I've been fortunate enough to be signed up to the mailing list of press releases from Lib Dem MEPs. The press releases make for very interesting reading and if you want to receive them then you just need to contact Angelika, the press officer, via the Lib Dem MEPs website, and she'll be happy to add you to the list of press release recipients. If you're a blogger then you might find it a very useful source of material to blog about.

But the press release I received yesterday was quite momentous. The EU-US High Level Working Group on Jobs and Growth (a typically long winded piece of EU nomenclature) has produced an interim report outlining ways of increasing trade between the EU and the US - already the largest trade arrangement in the world which provides both blocs with billions of extra GDP and which supports tens of thousands of jobs.

Now, the report looks at a lot of different options for expanding and increasing transatlantic trade through things like lowering barriers to trade, such as tarrifs, and cooperation on trade regulation to ensure that they're as in line with each other as possible in order to make things simpler for businesses.

The report as a whole concludes that a ‘comprehensive transatlantic trade and investment agreement’ is the best option for supporting jobs and promoting growth and competitiveness across the Atlantic.

However, the ALDE group in the European Parliament, which is the bloc in which Lib Dem MEPs sit, has gone a step further. Catherine Bearder MEP, the Lib Dem EU spokesman for international trade, has called for a complete free-trade agreement between the USA and the EU.
“I call on the European Commission and their American counterparts to launch negotiations for a free trade agreement as soon as possible.

As the UK and other EU countries are struggling to find the jobs and growth that our citizens so badly need, we have to look for new ways to stimulate our economy and increase our competitiveness.  
Key to this is trade with non-EU countries through launching free trade agreements. The World Trade Organisation’s negotiations to find a global agreement have come to a halt; we now need to urgently look at a post-Doha agenda to free up trade potential.”

Now the really exciting thing is that the US Chamber of Commerce has estimated that simply eliminating the import tarrifs would generate an extra $180 billion for EU-US GDP. So you can imagine just how much GDP a full-on free trade agreement would generate.

From our perspective in the UK, we account for 22% (£118 billion worth) of total EU-US trade so we'd stand to benefit hugely from any such free trade agreement. Catherine Bearder herself has said:
“The potential benefits for the UK are clear: if we can remove the remaining import tariffs, break-down regulatory barriers and increase access in investment and services, this could be a game-changer for our economy.”
On top of which, it's worth remembering that the EU single market as a whole represents the largest economy in the world and that the USA represents the world's second largest economy. The benefits of such two economies removing all barriers to trade between them could not be understated. In a world where western economies are gradually being eclipsed by developing economies the only way in which western countries are going to be able to remain competitive is through radical moves like this

In particular, if we want a big stimulus package to kick start the spluttering economies of the US and EU countries, there could hardly be a better package than this which, as an added bonus, would cost almost nothing to implement - a few tens of millions of pounds to implement new regulations and the removal of tarrifs as opposed to the tens of billions of pounds of extra GDP that would be generated. It's a no brainer.

And, given that the ALDE group represents the swing vote in the European Parliament, Lib Dems and liberals stand a good chance of actually getting the ball rolling on a free trade agreement - which, in addition to the economic benefits, would represent a triumph of the old liberal principle of free trade as a way to make everyone better off. I'm surprised the media aren't reporting this because, if this does take off, it really would be a game changer, not just for the EU and the US, but for the world economy. And if it does, it will be because Lib Dems put the idea out there.

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