EU and US share common challenges and must adopt common approach

It is often forgotten that the European Union and the United States have a shared view of global trade and those areas where they have so much to offer the global economy. Throughout my time in the European Parliament, I have championed the transatlantic relationship and the foundation it provides for global trade. The huge commercial relationship between our two economies demonstrates the desire for businesses on both sides of the Atlantic to invest and trade, and the huge potential to build closer relations.

It has always been my personal view and that of the ECR Group that the Transatlantic Trade & Investment Partnership (TTIP) represented a great opportunity for the EU and the US to be the standard-bearer for how nations do trade by setting the rules of the multilateral trading system. With a combined economic area worth just under half of the global economy, the rest of the world would follow the rules set by these economies. Alas, the EU shied away and made mistakes that prevented transatlantic trade with the US to prosper.

Whilst circumstances meant that a comprehensive EU-US trade agreement was not possible, it is the duty of keen advocates of the EU-US trade relationship to make the case for closer, stronger trade relations. For instance, transatlantic trade is the cornerstone of the global trading system and of economic and strategic significance to both the EU and US. Every day, goods and services worth €2 billion are traded bilaterally, promoting economic growth and supporting millions of jobs in both economies.

Yet, the nature of this trade is transforming and developing by the day. We operate in a complex global economy where sophisticated value chains stretch across borders. Trade is becoming more centred on digital platforms, data flows, and value-added from the input of services. These issues are exciting and challenge our preconceptions of conventional trade and we have so much in common to reap the rewards of harnessing these developments in trade.

From negotiating ambitious provisions on data flows in bilateral trade agreements, to agreeing common positions on e-commerce at the WTO. There is a positive agenda we must pursue with vigour and conviction to enable cheaper products and greater choice for our consumers and opportunities to grow and invest for our businesses.

The adoption by the Council of the mandates for negotiations with the US is the first major step of this this positive agenda. These mandates, one on tariffs on industrial products and another on conformity assessments, will not only help to de-escalate rising tensions, but more importantly will bring substantial benefits to EU businesses and consumers. For instance, the US applies some very high tariffs on manufactured goods such as clothing and footwear. The elimination of tariffs in these sectors would open up opportunities for EU exporters and increase the international competitiveness of our industries. In addition, our SMEs would benefit from the elimination of duplicate testing, inspection and certification requirements, possible with a conformity assessment agreement.

It is very frustrating that it has taken nearly a year for the EU to move from initial discussions to adopting the mandates. Such delays indicate the EU has not learnt some key lessons from the TTIP negotiations to avoid making the same mistakes again. First, we must be clear about where our ambitions meet, and equally clear about where they diverge. Second, we must be proactive. It is the role of lawmakers and politicians to make sure SMEs are equipped with the knowledge and resources to navigate their way through new markets.

Moving forward with these negotiations is also important when looking at the bigger picture. With the growth of authoritarian and state-led economic growth around the world, more than ever it is vital that we, the US and the EU, make the shared case for free trade and a rules-based trading system.

The rise of China, from being a developing country, to a strategic competitor of the EU and the US, has significant implications for the global trading system. By nurturing and exporting an economic model that stifles competition, flouts open markets and prevents innovation, China has taken advantage of the rules-based system the US and the EU cherish. These issues are at the centre of many of the challenges today in the global economy – and should be at the centre of any solution too.

It is right both the EU and the US call out unfair practices when we see them – and respond forcefully. However, it is important that the EU and the US develop a common positon that does not lock out China, but instead ensures it cooperates on systemic reform that will last.

To ensure that China plays by the rules, we must also look to see whether those rules and the system it creates are working as they should. It is clear that the WTO has not kept up to date with developing in global trade and has not created the framework to incorporate countries such as China to become open, thriving market economies, as many anticipated would happen.

The US and the EU agree that the WTO needs reform and modernising. These updates need to be anchored in stronger rules, rules fit for purpose for this century, anchored in issues like industrial subsidies and forced technology transfer. Both the EU and the US have published proposals and ideas on reform, which is welcome. If we can effectively reform and update the WTO, we can set the rules of globalisation.

It cannot be overstated the importance of countries coming together to listen to the concerns the US has, and sharing ideas that will enable a way forward to emerge.

Securing a trade agreement between the EU and the US will send a strong message, showing a united front against other actors in the world who purport to defend and uphold the international system, but instead seek to undermine it. In order to tackle head-on the challenges we face and the opportunities at our fingertips, we must all work together to develop a common vision.

© Copyright Emma McClarkin
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