VIENNA – The confirmation of Michael Froman as the US Trade Representative is a fitting moment to highlight the many opportunities that a free-trade agreement between the European Union and the United States would offer Europe, America, and the world.
Today’s three-tier global economy – 6% growth in emerging markets, 2% growth in the US, and no growth in Europe – shows ominous signs of paralysis and nationalistic unilateralism. Many see currency wars looming.
In such an economically insecure global environment, riddled with protectionist booby traps, a free-trade pact between the world’s two largest trading blocs, accounting for roughly 40% of global GDP, has never been more important. Historically, free trade and economic growth have gone together, as have protectionism and stagnation, and deeper trade integration of the US and EU economies would strengthen growth on both sides of the Atlantic.
The US economy’s projected 2% growth this year, despite a 1.8%-of-GDP cut in government spending, implies real private-sector growth of 3.8%. Although both the Federal Reserve and the European Central Bank have actively intervened to boost economic recovery, the results could not be more different.