Time for an Economic NATO

If we judged the recent U.S. presidential campaign from the standpoint of its positive results for trans-Atlantic relations, we wouldn’t find much there. As far as Europe was mentioned, Mitt Romney discussed only stagnant socialism.

Of course, one hopeful supposition was nevertheless hidden behind the campaign rhetoric: Regardless of whether Obama or Romney won, there was a possibility – discussed on both sides of the Atlantic since the 1990s – that the U.S. and EU might finally enter into serious negotiations regarding the creation of a trans-Atlantic free trade zone. Looking at the last few weeks since the American elections, there is every indication that that moment is really on the way.

In the matrix of political will, business interests and economic arguments, everything is falling into place. The U.S. is recovering slowly from a deep recession and greatly needs to maintain – and as far as possible increase – economic growth. The EU is even more dependent on economic recovery for a way out of the crisis. It follows from various studies that, if it were possible to remove remaining import tariffs and regulatory measures, economic growth on both sides of the Atlantic would increase by a half or, according to the most optimistic estimates, as much as two percent.

Let us repeat the well-known facts. The U.S. and EU together account for half of worldwide GDP and more than a third of the global marketplace. U.S. direct foreign investment in the EU in 2011 amounted to $2 trillion, twice as much as America invested in any other region. On the flip side, the EU invested $1.6 trillion in the U.S., four times more than in any other region. It is actually astonishing that these two blocs, who additionally have strong cultural ties, have still not formed a free-trade association. The reasons that have prevented it so far – above all protections for agriculture and the food and drug industry – will be difficult to overcome even now. However, never before has such a willingness to begin serious negotiations been so clearly expressed by politicians, including Angela Merkel, David Cameron and Hillary Clinton, and from important institutions such as the Council of Europe, the European Parliament and the American Congress.

The EU-U.S. High-Level Working Group on Growth and Jobs, which was created last autumn to evaluate the possible formation of a trans-Atlantic zone, is supposed to publish its closing report by the end of this year. In all likelihood, it will be supportive, as indicated by the weeks-old statement of EU Trade Commissioner Karel De Gucht that “there is now, for the first time in years, a serious drive towards an EU-U.S. free-trade agreement” on both sides. Secretary Clinton summed it up for the American side when she stated that the key question for the US and Europe now is “whether we invest as much energy into our economic relationship as we have put into our security relationship.” By that she meant nothing less than that the time has come for America and Europe to form some kind of economic NATO. That is, to take a necessary step toward the defense of their common economic future.