As the European depression deepens and unemployment soars, policymakers are desperate to restore growth in a region crippled by debt. Opportunity knocks, but the question is: will Europe learn from its mistakes?
To help address this issue, I’m in Brussels speaking at the European Business Summit, where the hot topic is the Transatlantic Trade and Investment Partnership (TTIP). In short, TTIP is a trade agreement between the EU and US that seeks to bring convergence on key standards and regulations for the benefit of both economies. If successfully negotiated, TTIP would be historic in scale, supercharging trade in a transatlantic economy that already swaps nearly $1 trillion in goods and services each year.
In his recent State of the Union address, President Barack Obama put his stamp of approval on TTIP, announcing his intent to initiate an agreement with the EU. According to his executive office, “a successfully negotiated TTIP would aim to boost economic growth in the United States and Europe and add to the over 13 million American and European jobs already supported by transatlantic trade and investment.”
More jobs, more investment, more growth … this all sounds good, but will it happen? The Economist thinks TTIP has a good chance of surviving. While I commend the EU and US for its vision, I can’t help but remember the failed Doha Round launched in 2001, where similar trade negotiations between the EU and US stalled over emotions.
Like TTIP, the Doha Round aimed to lower trade barriers for global economic gain. Yet, 11 years later, no agreement has been made as the EU and US remain deadlocked over, in essence, the particulars of trading beans and rice. Despite the fact that agricultural trade accounts for only 8 percent of world merchandise trade, this issue became the linchpin in the Doha fallout, a missed opportunity said to be worth hundreds of billions in lost trade.
Facing economic crisis, Europe cannot afford another Doha Round. Europe needs an alternative to austerity and that starts with a transatlantic partnership that enables the private sector to fuel inclusive growth through more public-private partnerships. Holding on to protectionism policies of the past will only lead to further austerity and social unrest, which threatens the very foundation Europe is built on. Options are narrowing quickly, and approaching current negotiations in the same way as the Doha Round will prove fatal unless balanced with policies that promote free trade, especially in huge growth areas like the digital economy, which is estimated to reach $20 trillion in value this year.
EU and US relations are at a turning point, and the benefits of TTIP could be tremendous for the transatlantic economy. I encourage policymakers to heed the lessons of the past and bring these negotiations to a successful close. After all, TTIP is not a zero-sum game, but rather a joint effort to put our transatlantic economy in a stronger position to meet the competitive challenges of tomorrow. Let’s rise to the occasion.