The full potential of an EU-US trade deal is still to be realised, argues Sarah Ludford.
The economic crisis demands that we prioritise jobs and growth, and encourage the investment in Europe that will bring these benefits we need to break down barriers to international trade. The EU has made welcome progress on trade deals with South Korea and Singapore, but the ultimate prize is a comprehensive trade and investment partnership agreement with the United States. Even though the EU and US account for half of global output and a third of world trade and have massive investments in each other’s economies, existing restrictions – some of them outright protectionist - mean that the full potential is not realised. While the abolition of remaining tariffs on goods will bring worthwhile gains, the greatest benefits will be in removal of non-tariff barriers to achieve a much more integrated transatlantic marketplace. The cost of meeting different safety rules do not make it worthwhile for many companies to export their products and so the goal must be alignment or mutual recognition of currently differing regulatory and technical standards on both sides of the Atlantic and the liberalisation of trade in services that are currently shielded from outside competition.
Tearing down such barriers could boost Europe’s economic output by an estimated €80bn annually and that of the US by a similar amount. As a vice-chair of the European parliament’s delegation to the United States, I have discussed the trade agreement with congressmen and we are all aware of the political difficulty of standing up to the various interests involved and the obstacles to reaching a deal, particularly though not only, in agriculture. Well-known examples include US objections to EU restrictions on GM food, meat and milk, while European exporters complain about the ‘buy America’ rules which restrict bidding to US suppliers.
Nevertheless, both sides recognise the significant benefits the biggest trade deal in history would bring for jobs and growth, not least by establishing regulatory standards and new trade and investment rules that have global relevance. This recognition must stimulate the compromises necessary to reach this historic agreement. And when it does, it will also fundamentally shatter UK eurosceptic claims that British trade would benefit from EU withdrawal.
Sarah Ludford is a vice chair of parliament’s delegation to the United States