EU urgently needs free trade with the US and Japan
by Catherine Bearder
The EU needs free trade agreements with the major developed economies, primarily the United States and Japan, to kick-start economic growth again - says MEP
As European leaders trudge once more towards another 'make or break' European summit, the debate is still raging across Europe - both inside and outside the eurozone - on austerity versus growth. Media reports have become progressively black and white with commentators fixated on German Chancellor Angela Merkel's austerity against French President François Hollande's growth. The result has meant that all nuances are being shunted aside. We should not be content with this simplistic debate and we should highlight the fact that there are other tools to boost our economy in a sustainable way. These can supplement growth and investment strategies, as well as the necessary fiscal consolidation.
Increasing our trade and investment with countries outside the European Union is vital, but this is often overlooked by the media. Crucially, it is a truly cross-border policy where the European Commission can act decisively in the interests of jobs and sustainable growth - without the need for an arduous session of haggling, vetoes and posturing at a governmental summit.
The commission estimates that 90 per cent of global growth in gross domestic product will take place outside the EU by 2015 - which is why the union's series of trade negotiations with India, Brazil - via the MERCOSUR negotiations - and Malaysia are so important. We must conclude these agreements rapidly, while ensuring that our expertise and knowledge on protecting the environment and furthering sustainable developments is taken on board. This will help stimulate our economies in tough times and contribute to sustainable growth in our own region as well as in those emerging economies.
The second element of the EU's trading strategy, which is potentially even more important, is negotiating free trade agreements with major developed economies. So far the EU's spate of free trade negotiations has only captured three countries that you might consider developed: South Korea, Singapore and Canada. The South Korea FTA is the major trade policy success of the last few years. Singapore and Canada look like they could very well be next. However, if we are honest with ourselves, these agreements are not the game-changers that our economy so desperately needs.
What we need is free trade agreements with major developed economies, primarily the United States and Japan. We can no longer wait for the Doha negotiations to provide the long awaited boost to our commercial relations with these global powerhouses. We need free trade agreements and we need these negotiations to start straight away.
The potential advantages are clear. Our exporters will gain greater access to markets of hundreds of million wealthy consumers. The tariffs on their products will be slashed and burdensome regulatory requirements will be streamlined. For European import businesses, imported parts will become cheaper - making our companies more competitive and reflective of the modern reality of global supply chains.
For our competitive service industries, new opportunities and sectors will open up and our businesses will be able to compete for foreign procurement contracts currently denied to them. These benefits should create the jobs that we so desperately need and consumers will have greater choice and profit from cheaper products. In addition, through liberalising environmental goods and services, these free trade agreements with developed countries could also be instrumental in furthering our sustainability agenda.
A free trade agreement with the US is the real prize. Until now, the two founding fathers of the World Trade Organisation have spent the years since its inception in 1994 - bickering like children on issues such as subsidies for Boeing and Airbus, imported bananas and beef hormones - among others. Out of the ashes of Doha, this squabbling seems to have been set aside and there is now real momentum heading towards the launch of free trade negotiations.
Let us not kid ourselves; the negotiations will be long and tough. Although, the potential advantages are too good to ignore. The US Chamber of Commerce has estimated that the elimination of tariffs alone would increase transatlantic GDP by $180bn. This does not even start to take into account the other advantages generated in services, investment or procurement.
The US is our largest trading partner already with bilateral trade in goods reaching €444.7bn last year. And this was with all the tariffs, regulatory hurdles and other barriers thrown in. Imagine if many of these barriers were eliminated and the tantalising prospect of a boom in transatlantic trade and investment becomes clearer. So when leaders meet this week to discuss bailouts, banking unions and investment packages - they should save a moment or two to discuss sustainable trade. It is time to conclude our current negotiations and it's time to seize the momentum and launch free trade negotiations with Japan and the US.
Catherine Bearder is a British MEP and the Liberal Democrat Party spokeswoman on international trade in the European Parliament