EU Week – Opening doors to a transatlantic trade deal?

It’s Europe week in DC.  The real fun and games are this Saturday when each of the EU Embassies open their doors to our neighbours, curious to find a shortcut to see the inside of those fine properties on Embassy row (hint: go to the British Embassy at 3100 Massachusetts Avenue and see close up the Sir Edwin Lutyens-designed Residence, the fine English rose gardens, and sample some of the wares from our side of the pond).

The more serious stuff has been taking place throughout Washington this week.  On Tuesday, just a little further down Massachusetts Avenue at the Johns Hopkins University’s School of Advanced International Studies (SAIS), UK Foreign Office Minister David Lidington gave a speech about Transatlanticism in the Twenty First Century.  Even further south, on Capitol Hill, the Transatlantic Partnership Network (TPN) has been hosting its transatlantic week, three days of serious speeches and panel sessions about how to make the EU-US High Level Working Group on Jobs and Growth a success.  The list of speakers was impressive: Deputy National Security Adviser Michael Froman, Deputy US Trade Representative Miriam Sapiro, the US Chamber of Commerce’s Myron Brilliant, House Speaker John Boehner (R-Ohio) and Congressmen Cliff Stearns (R-Florida), James Costa (D-California), Sander Levin (D-Mi), the European Parliament’s James Elles (see his joint blog about it here) and Peter Skinner, and many more from Congress, the European Parliament, the US Administration, the European Commission and business who I should give individual credit to but are victims to my selfish compromise on space.

I’m making a big thing of this because they were almost all speaking to a theme that the British Government has seen as a huge priority for growth and jobs on both sides of the Atlantic – an EU-US free trade agreement, or partnership, or whatever label works so long as it’s comprehensive, ambitious and realistic, and a single package.  It’s no secret that the UK would have far preferred to have concluded the multilateral WTO Doha Round.  The economic benefits would have been enormous, for all.  But it hasn’t happened, and appears unlikely to any time soon.  Hopefully we can pursue fresh and credible approaches to retrieve the most valuable bits of it, like trade facilitation or services.  And hey, trade facilitation was argued to have been worth half the value of the Doha Round anyway.  So that’s not to be sniffed at.  And today’s global supply chains make easier, swifter, more transparent customs procedures and quicker movement of goods all the more important, for developed and developing countries alike.  Nevertheless on its own it’s not going to deliver the scale of trade liberalisation we need in Europe and America to spur demand, growth and jobs.  It’s unlikely to deliver ambitions to double UK exports by 2020 or US exports by 2014.

So what are we going to do?  Well, just look at the trade figures.  Bilateral trade between Europe and the US was almost $1 trillion in 2011, 13% up on the year before.  That’s double US/China trade and far more balanced.  Let’s look at investment too.  The UK and US alone are each other’s single largest investment partners – UK investments in the US are 135, yes, one hundred and thirty five, times Chinese investment in the US.  Our bilateral investment supports one million jobs in the US (paying 18% above the average) and one million jobs in the UK.  So when you consider the current scale of the transatlantic commercial relationship it’s not difficult to imagine the huge potential that we could share by knocking down those remaining barriers to trade in goods, agriculture, and services, opening up more transatlantic investment, government procurement and regulatory coherence.  To judge from the estimates of gains in the specific sectors, an ambitious comprehensive deal would be worth 2-3% of GDP growth in Europe and the US.

Of course, some cynics will argue we’ve been down this road before.  They’ll point to chlorinated chicken, GMOs, Buy America and disputes over aircraft subsidies.  They’ll ignore what Europe and America have notched up in the last couple of years in the Transatlantic Economic Council.  Like common principles on ICT or investment.  Or developing shared standards on electric vehicles and e-health.  To quote that great transatlanticist Winston Churchill from a speech he gave in 1940 during one of Europe’s other challenging chapters, “if we open a quarrel between past and present, we shall find we have lost the future.”   And if we don’t steer the future, not just on trade and investment but regulatory coherence too, someone else will do it for us.  So, as Foreign Office Minister David Lidington said at SAIS, and as many others echoed at TPN on the Hill this week, let’s not lose this historic opportunity to seize a comprehensive transatlantic trade agreement that opens the door to our jobs and growth.