Within a few months, the U.S. and European Union will formally launch free-trade talks. Now is the time to think big.
After years of neglect, this trade relationship is ripe for improvement. Europe is suffering through a prolonged economic downturn and America needs all the growth it can get. Liberalizing trade is a sure way to give business a boost. Both sides have strong incentives to make progress. It can’t happen soon enough.
As a matter of principle, there should be no barriers to imports and exports between the U.S. and Europe.
Europeans remain wary of America’s genetically modified food, for instance. Americans have different standards for approving prescription drugs. Rules for headlights, seat belts and other auto parts need to be harmonized. The negotiations are liable to get complicated.
Not every trade issue is so terribly difficult, however. Here’s a simple idea that would make a big difference: Get rid of the system of tariffs and duties that needlessly obstruct trade across the Atlantic.
There is no reason why the U.S. and Europe should impose these taxes on goods just because they happen to cross the ocean. What a coup it would be to jump-start trade talks by saying: No more!
No more tariffs and duties on the vast majority of goods being traded. Zero 'em out.
America did just that with Canada and Mexico in the North American Free Trade Agreement.
For industries such as chemicals, machinery and cars, which pay the most in tariffs and duties, a zero deal would make a big difference. It would encourage more economic activity and import competition. It also would introduce important efficiencies: About one-third of trans-Atlantic trade is between branches of the same firm — a company shipping stuff from one of its locations to another.
A free-trade agreement between the U.S. and Europe should start with eliminating tariffs and duties, but it should not stop there. The tough work of tearing down regulatory barriers and harmonizing standards has the potential for an even greater payoff. For too long, and for no good reason, free trade has eluded the U.S. and Europe. Let’s make a deal.