The consul general of Ireland, the president and CEO of the Federal Reserve Bank of Atlanta, the chief operating officer of United Parcel Service Inc. and the German parliamentary state secretary were all on the same page at the May 9 Europe Day celebration.
It was a veritable chorus in favor of the benefits of free trade and the potential benefits of a Transatlantic Trade and Investment Partnership.
Even so, questions about the motivations behind the creation of the largest free trade area in the world sprung from the 120 attendees: How are China and Africa going to respond to the creation of such a gigantic free trade area including the U.S. and all the members of the European Union? What is to be the timetable for such an agreement? How is Atlanta to benefit?
The World Affairs Council of Atlanta brought these officials together at the Commerce Club downtown for a luncheon address by Hans-Joachim Otto, parliamentary state secretary of the German Federal Ministry of Economics and Technology.
Prior to the luncheon, Ireland’s consul general, Paul Gleeson, underscored the important economic ties already linking the U.S. and Europe. His remarks were echoed by Dennis Lockhart, the president and CEO of the Atlanta Fed, who introduced Mr. Otto.
One of three parliamentary state secretaries at the Ministry of Economics and Technology, Mr. Otto also itemized the strong bonds and his analysis was pretty much endorsed by David P. Abney, COO of UPS.
Among the talking points:
1. Total U.S. investment in Europe is three times higher than in all of Asia;
2. EU investment in the U.S. is eight times more than what the EU has invested in China and India;
3. One-third of the trade across the Atlantic is composed of intra-company transfers;
4. Either the EU or the U.S. is the largest investor for almost all other countries in the global economy;
5. The EU and the U.S. are responsible for half of the world’s gross domestic product and one-third of the world’s trade flows;
7. One third of all patent applications come from the U.S. and the EU.
Despite these reassuring developments for both sides of the Atlantic, Mr. Otto raised several red flags. Yes, the transatlantic relationship is “an anchor of stability in a rapidly changing world,” he said.
But he immediately qualified this sense of order with “a change and shift in power.” As soon as 2016, China is to become the world’s largest economic power, he said, citing research by the Organization for Economic Cooperation and Development and the International Monetary Fund.
China and India along with emerging nations across the globe will be generating a larger gross domestic product than that of all the members of the G7, which represents seven of the most highly industrialized nations.
Having identified the challenges for the U.S. and European economies, he then offered the panacea of the Transatlantic Trade and Investment Partnership, which President Obama has declared is a U.S. policy goal and that the German government also favors.
The partnership is to create a free trade area encompassing 800 million consumers on both sides of the Atlantic, putting in place key standards and regulations and high quality norms in an agreement that far exceeds any other.
“It an ambitious agreement, a huge opportunity for both sides,” was a constant refrain in Mr. Otto’s address.
An experienced politician, he recognized that there would be difficult negotiations ahead particularly concerning agricultural and cultural policies, non-tariff barriers involving quality standards, stifling bureaucracies that create time constraints and unnecessary costs especially for small- to medium-sized companies.
But then he bore into the core of his argument. If the agreement is completed and approved in the near future, the U.S. and the EU would be in a dominant position to set new commercial standards including such evolving fields as nanotechnology and electric mobility.
“The strategic reason for the partnership,” he said boldly, “is rather than wait for others to impose standards (it is better) to be joint pioneers in setting the standards.”
Following the address, Mr. Abney joined Mr. Otto on the platform in a seated conversation during which he agreed with his comments except for what he termed as a “slight difference” of opinion.
Before getting to these, however, he spoke of UPS’s historic ties with Germany where it opened its first European office in 1976 and where it is expanding its European air hub in Cologne.
“We’re bullish on Europe,” he said, pointing to the amount of U.S. investment there and that 41 percent of the world’s purchasing power including both sides of the Atlantic amounts to $5 trillion a year.
He said that he supported “zero standards,” meaning that he was for the abolishment of all tariffs and non-tariffs impeding trade including agricultural and cultural issues, and technicalities such as electronic pre-clearance and the harmonization of security standards.
Both Mr. Otto and Mr. Abney said that a successful completion of the transatlantic agreement would benefit trade throughout the world, possibly even furthering the Doha Development Round of negotiations aimed at lowering barriers around the world.
Annabelle Malins, the consul general for the United Kingdom, queried their opinions about a timeline for the agreement.
Mr. Otto estimated two years of negotiations to go, though he advised that it was better to take as much time as necessary to get it right rather than rushing ahead with an agreement that would provide problems in the future.
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