The fate of the integration between European Union and the United States is getting more interesting every day. While the economic stagnation and the new wave of euro-skepticism and populism are seriously threatening the European unity, a recovery dream may lay on the American shores. The US and the EU area jointly cover over a half of the global GDP, accounting about one third of trade, with an average low level of duties (below 3%), excluding some farm products.
The conclusion of the so called beef war has been a good progress: EU doubled its beef imports from the US and the American customs authorities canceled several retaliation measures on excellence food products (like Roquefort for example) and should also remove the ban on european beef imports issued in 1997 after the spread of the mad cow disease .
According to Charlemagne (The Economist’s blog), the tougher issues should be the traditional discord on French cultural protectionism or the thousands “geographical indications” in the European food market regulations, or the GMOs fear among EU consumers.
On the other side there are many benefits that could boost excellence industries, like the pharma companies for example, and the intangible enormous political turnover brought by the beginning of serious trade talks. EU leaders could avoid a pivot strategy focused on Chinese relationship by Mr. Obama and also show a powerful new wave policy to the most euro-skeptic members like the United Kingdom, waiting for the membership referendum within the next four years.
But the economic gain it’s not only a secondary matter. It’s quite interesting the overview provided by Mr. Francesco Daveri (Parma University and Bocconi MBA economist) in his last interview-book. Mr. Daveri points out how the main target for countries like Italy (rich, old and highly populated) should be and industrial policy focused on soft growth. The soft growth bases on a friendly environment helping R&D investments for a complete transition from low-cost economy to a modern high-tech industrial soul.
A soft growth policy requires an integrated package of measures: not only a tax reduction, or a credit boost, but a complete intervention on “invisible taxation” like the corporate services costs and the red tape ties.
There’s non need to focus your business strategy only on Chinese market, attracted by two-digits growth trends, he says, because the US market remains the biggest economy in the world. The slower increases in GDP, for example, show a similar GDP growth in absolute value:
You could make a simple estimate: China’s growth rate is about 9% per year; and its GDP is about 6.000 USD billions. So China’s producing a new income fo about 540 USD billions per year, ready to be gained by EU, Chinese and American manufacturers. During last years EU and USA are scoring a lower growth increase rate, therefore it’s based on a higher overall GDP value. It means that a growth increase in USA of 2% per year, on a 16.000 USD billions GDP, generates a new income of about 250 USD billions per year. So a combined growth in EU and USA generates the same new income of Chinese market rushing growth rates.
There are also “invisible” benefits: it’s quite easier, for EU small and medium enterprises, to gain and keep market positions in the US market, quite similar if we consider the close relationship between cultures, economies, regulations. Intellectual property laws are also very advanced, with a good brand protection. It’s easier to access the US market, rather than the Chinese or Far East markets.
Therefore, a Euro-Atlantic partnership progress is desirable, focusing on several non-tariff barriers existing between the markets, considering at the same time that a tight relationship with the counterpart doesn’t entail a looser one with China or with other emerging markets.
We should indulge in our transatlantic temptations: it’d be the recovery chance Europe needs, without neglect wise policies towards BRICS or next eleven countries.
Will the European leaders meet our expectations?