Small Steps Towards Recovery: EU-US Free Trade

There is no silver bullet to fixing the economy, and focusing on jobs by itself is not the right approach. We need a series of changes that promote growth, and a willingness to accept it will take a few years to see the seeds we plant today take root.

Here is one small change that would help with economic growth:

While tariffs are already low between the U.S. and the EU, the enormous size of their economic relationship—$600 billion in trade and $2 trillion invested by companies in each other’s markets every year—means that even small steps could yield significant gains in prosperity.

According to a report by the Brussels-based European Center for International Political Economy, a trans-Atlantic zero-tariffs initiative would increase combined U.S.-EU gross domestic product by $180 billion within five years. That’s more added growth than either would receive from the completion of the Doha Round of multilateral trade talks. And while Doha is facing serious obstacles to its completion, a “Trans-Atlantic Zero” deal could be signed quickly. The issues that have held up bilateral trade pacts in the past—social, labor and environmental standards—should not matter between the U.S. and EU, which share roughly similar ways of organizing their societies.

Since one-third of trans-Atlantic trade occurs between branches of the same firm, eliminating tariffs on that trade would cut costs for both American and European companies and make them more competitive in global markets. That could help trans-Atlantic firms respond to the rise of Chinese, Indian, Brazilian and other emerging-market firms without resorting to protectionist measures.

Read the whole argument from Peter Rashish in the Wall Street Journal.

Anthony Randazzo

Anthony Randazzo is director of economic research for Reason Foundation, a nonprofit think tank advancing free minds and free markets. His research portfolio is regularly evolving, and he maintains a wide interest in economic policy at both a domestic and international level.

Randazzo is also managing director of the Pension Integrity Project, which provides technical assistance to public sector retirement system stakeholders who are seeking to prevent pension plan insolvency. His research focus on the national public sector pension crisis has a dual focus of identifying the systemic factors that cause public officials to underfund pension obligations as well as studying the processes by which meaningful pension reform can be accomplished. Within the Project he leads the analytics team that develops independent, third party actuarial analysis to stakeholders considering changes to public sector retirement systems.

In addition, Randazzo writes about the moral foundations of economic theory, and is currently developing research on the ways that the moral intuitions of economists influence their substantive findings on topics like income inequality, immigration, or labor policy.

Randazzo's work has been featured in The Wall Street Journal, Forbes, Barron's, Bloomberg View, The Washington Times, The Detroit News, Chicago Sun-Times, Orange-County Register, RealClearMarkets, Reason magazine and various other online and print publications.

During his tenure at Reason he has published substantive research on housing finance, financial services regulation, and various other aspects of economic policy at the federal level. And he has written regularly on labor economics, tax policy, privatization, and Turkish-U.S. political and economic issues.

Randazzo has also testified before numerous state and local legislative bodies on pension policy matters, as well as before the House Financial Services Committee on topics related to housing policy and government-sponsored enterprises.

He holds a multidisciplinary M.A. in behavioral political economy from New York University.

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