I read a very compelling piece from Bloomberg Online today urging policy-makers in the United States and Europe to enact an EU-U.S. free trade pact. Given the turbulent economic times we live in, a free trade pact seems like a no-brainer to me as such an agreement would very likely provide a significant jolt to the global economy. As the article points out:
Although the remaining tariffs on goods are comparatively low (5 percent to 7 percent, on average), bringing them to zero would increase U.S.-EU trade by more than $120 billion within five years and generate combined GDP gains of about $180 billion, according to a study by the U.S. Chamber of Commerce . . . [f]urther, more than one-third of transatlantic trade is conducted between affiliates of the same companies, and eliminating the tariffs they pay would make companies on both sides more competitive.
Despite the seemingly “pain-free stimulus” an EU-U.S. free trade pact offers, I am not so optimistic that the execution of such a pact is realistic given the current (global) political climate, and that leaves me feeling very frustrated.
Today (the 19th) marked the second and final day for the G-20 summit in Mexico. Instead of announcing the passing of an initiative like an EU-U.S. free trade pact, policy makers gave us more of the same old rhetoric about how “[a]ll G20 members will take the necessary actions to strengthen global growth and restore confidence.”
G20, stop telling us that you will take the necessary actions, and instead actually take them. Stop telling us that you are “committed to open trade and investment,” and instead actually pass something substantial like an U.S.-E.U. free trade pact which would open up trade and investment. Stop “support[ing] the intention to consider concrete steps towards a more integrated financial architecture, encompassing banking supervision, resolution and recapitalization, and deposit insurance,” and actually create a more integrated financial architecture, encompassing banking supervision, resolution and recapitalization, and deposit insurance. I mean “supporting the intention to consider…;” come on…
Honestly, I think the entire world would agree that we have heard enough of the rhetoric; it’s time our leaders do something. An EU-U.S. free trade pact would be a nice start. I am tired of being frustrated.