As leaders from the European Union (EU) and the United States meet in Washington next Monday
for their annual summit, transatlantic economic integration will top their agenda.
German Chancellor Angela Merkel, whose country is holding the rotating EU presidency, is expected to sign a framework agreement on transatlantic cooperation with U.S. President George W. Bush.
Non-tariff barriers, such as regulatory requirements and technical standards, will be the main targets of the new agreement, which was said to mark the beginning of long-awaited efforts to
build a transatlantic common market.
If combined, the common market will account for 60 percent of world gross domestic product. Forty percent of global trade is done between the world's two largest economic blocs.
Though the transatlantic market has been relatively integrated, it is still marred by unnecessary costs for businesses resulting
from different regulations and technical standards.
"It is no longer tariffs, but non-tariff barriers and regulatory burdens which act as the biggest brake on the transatlantic engine. By further reducing unnecessary obstacles to
trade and administrative burdens linked to different standards, we will do much to stimulate further economic growth," the European
Commission President Jose Manuel Barroso said in a speech at the New York Stock Exchange on Friday.
Regulatory cooperation under the new transatlantic economic framework will concentrate first on key sectors such as the automotive industries, the medical services and pharmaceuticals sector and on cross-cutting areas like investment, trade security and intellectual property rights enforcement, the Commission said.
Taking the automotive sector as an example, American and European carmakers currently have to meet different standards and undergo separate costly testing and approval procedures for sale
of identical vehicles in the U.S. and in the EU, which is quite a burden for the companies.
Removal of regulatory and other hurdles to mutual direct investment and integration of financial markets will be the key to future integration of the EU and U.S. economies since the
transatlantic economic relationship is more investment-driven.
In 2005, Americans invested four times as much in the EU as they did in China. Europe accounts for almost 70 percent of total U.S. inward investment stock, and owns 75 percent of all
foreign-owned assets.
During the one-day meeting, the EU will call for the mutual recognition of accounting standards by 2009 and for swift progress on mutual recognition of the rules governing securities markets, German officials said at a news briefing earlier this week.
Serving as a political platform to coordinate the present sector-to-sector dialogues, a high level transatlantic economic council will be set up following decisions at the summit. EU
industry commissioner Guenter Verheugen has been tipped to co-chair the council together with a U.S. counterpart of cabinet level.
If obstacles to transatlantic business were eliminated, Americans' per capita income would be boosted by up to 2.5 percent and Europeans' by up to 3 percent, the equivalent of two years
growth in Europe, according to a 2005 OECD study.
As a good start for future cooperation, the EU and U.S. leaders will sign an Air Transport Agreement at the summit to "open skies"
to each other's airlines.
The first stage agreement could bring up to 12 billion euros in economic benefits and as many as 80,000 new jobs on both sides of the Atlantic. But the core issue of loosening rules on foreign
investment and ownership in the aviation sector will be left to further negotiations.