Currently, politicians in Europe and America are mulling over the possibility of lifting regulatory barriers to facilitate more trade and better economic growth for economies ravaged by the ’08 recession. Some serious issues must be resolved to create a new Trans-Atlantic Free Trade Zone.
President Barack Obama, British Prime Minister David Cameron, and Germany’s Chancellor Angela Merkel are excited about the prospect of going forward with a Trans-Atlantic Free Trade Zone. President Obama applauded the notion in his State of the Union Address.
The idea behind this effort is to lift barriers, eliminate tariffs, and bridge the regulatory gaps that prevent the opening up of markets on both sides of the Atlantic. U.S. manufacturers and small business owners need expanded markets for their goods and services. Estimates are as high as $140 billion for enhanced economic activity in the United States alone. The expanded trade could put another thousand dollars into the hands of every consumer here in America.
Another important advantage would be to spread manufacturing fixed costs over a much greater volume of economic activity. The product cost learning curve would improve with an expanded manufacturing base. As companies build their cash flow from added sales, more surplus resources could be made available for research and development of new products, processes, goods, and services.
There are a number of differences to be overcome. Accounting rules need to be more uniform. The International Federation of Accountants has been reviewing comparability issues in recent years. In addition, labor union concerns must be addressed. Right now, government budgets are constrained on both sides of the Atlantic.
Expanded trade would create more employment opportunities to take people off programs in place to preserve the social safety net. With less government expenditures on the social safety net, budgets could return to balance and tax revenues would increase as an outgrowth of expanded employment and global economic activity.
Another stumbling block for Europe is American bio-engineered food. The details of articulating the protocols for food production and distribution must be agreed upon before the agricultural component of the free trade agreement can be finalized.
Right now, a Trans-Atlantic Free Trade Zone is a work in progress which is subject to finalizing the details of the issues referred to above. A glimmer of hope lies in the favorable attitude of American and European politicians toward full implementation in the not too distant future.
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