Next year is the time to take a shot at negotiating a free-trade agreement that would jumpstart growth in the world’s two biggest economies, British Ambassador Sir Peter Westmacott said in Atlanta Nov. 20.
While some may argue that existing integration and low tariffs make a pact between the European Union and United States redundant, Mr. Westmacott said the case is simple: governments on both sides are short on tools to stimulate growth and need to inspire companies to get off the sidelines.
“We all desperately need more jobs, more growth, more economic activity. We are all short of public money to throw into additional stimulus packages, or to invest in this or that industrial sector,” he said. “Therefore we need the private sector to pick up the slack. The private sector is sitting on trillions of dollars in cas, which they have not got the confidence in future economic growth levels to invest.”
Economists have indicated that a trade pact that removes even the relatively low tariffs and harmonizes rules on foreign ownership and investment would add 2-3 percent of gross domestic product growth on either side of the Atlantic, he said.
British Prime Minister David Cameron has broached the subject with President Obama, and Mr. Westmacott himself has been promoting the idea in discussions with labor groups and other stakeholders in the U.S. He believes 2013 offers the best environment for productive discussions.
“There is generally a view, even in the agricultural sector, it seems, in Europe and here that 2013 is the time to see if we can launch a fresh attempt to secure a comprehensive free trade agreement between Europe and the United States,” he said during a speech hosted by the World Affairs Council of Atlanta.
Analysts agree that such an agreement would be rife with political challenges, especially from the farming and manufacturing lobbies on both sides.
Asked about ongoing trade and procurement disputes between Boeing Co. and European Aeronautical Defence and Space Co., the parent company of France-based Airbus, Mr. Westmacott said both sides should realize that competition is healthy.
“There needs to be … at some point an understanding that it isn’t worth continuing to pay huge sums to lawyers to keep this going and … that the world’s aerospace economy is big enough for more than one player,” he said.
Along with the automotive sector – producing more cars than in 1980 – the ambassador highlighted aerospace as an industry in which the United Kingdom is doing particularly well. Aerospace also happens to be Georgia’s largest export product by value.
Mr. Westmacott said the EU-U.S. trade pact wouldn’t be imperiled by the U.S. “pivot to Asia,” a strategic shift in economic and military focus exemplified by President Obama‘s recent visit to Myanmar and other Southeast Asian countries.
But even as they make “natural” overtures to growth markets in Asia, both sides should keep a realistic view of their own economic integration.
“The stock of U.K. investment in the United States right now is 120 times greater than that of China in the United States,” he said.