The US and Europe now have two great opportunities to give their economies a much needed boost. One is to successfully navigate their debt mountains and fiscal cliffs. The other is to finally negotiate a US-EU free trade agreement.
President Obama, accompanied by House Speaker John Boehner, speaks to reporters at the White House Nov. 16. The two men are negotiating on the 'fiscal cliff.' Op-ed contributor Peter Sparding writes that beyond a cliff deal, is the opportunity for a US-EU trade pact. 'Although hurdles to transatlantic trade are already relatively low, the sheer size of this marketplace ? nearly half the world?s gross domestic product ? ensures that even small improvements would produce significant gains.'
Carolyn Kaster/AP/File
EnlargeOver the past few years, the United States and Europe have rarely been the source of positive news for the global economy. While the nascent American recovery is fragile and under constant threat from political brinkmanship in Washington, Europe has been pulled back into recession as a result of its sovereign debt crisis.
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To some observers the malaise symbolizes the decline of the transatlantic economy, as emerging powers claim a bigger share of global trade, investment, and economic growth.
But the US and Europe now have two significant opportunities to give their economies ? and the relationship between their economies ? a much needed boost.
The first opportunity is for each side of the Atlantic to successfully navigate the perilous terrain of their debt mountains and fiscal cliffs, and remove some of the uncertainty that?s holding back hiring and investment.
The second is the real possibility that, after discussing the idea for decades, the US and the 27-member European Union could actually start negotiating a comprehensive US-EU free trade agreement. That would not only give impulse to both economies, it would rejuvenate the transatlantic relationship generally.
The immediate focus, naturally, is on Washington, where President Obama and House Speaker John Boehner are negotiating to avoid the ?fiscal cliff,? a series of automatic tax hikes and spending cuts scheduled to take effect on Jan. 1. Given the political polarization, an early and wide-ranging deal seems improbable.
Yet even going over the cliff is unlikely to do serious damage to the American economy, provided an agreement can be reached within the next couple of months. The effects of the missed deadline will have begun to take effect by then, and that pressure will make a deal more likely.
Meanwhile, the European debt crisis has appeared less dramatic in recent weeks, after the European Central Bank stepped up its activities and temporarily calmed investors. Also, eurozone finance ministers finally agreed today that the European Central Bank should become the regulator for a new EU-wide union of large banks. That?s an important step in bringing uniform oversight to the banking sector, and addressing the kinds of structural problems that caused the debt crisis in the first place.
Beyond solving their own internal crises, the US and the EU finally have the chance to get more from their economies by bringing them even closer together through a free trade agreement. Both sides should join hands and plunge into talks.
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