Experts: Regulating global economy is an 'EU-US affair'

The first six months of 2009 will be a period of "maximum pain", but the transatlantic relationship may help to ease the ongoing economic turmoil, experts from both sides of the Atlantic said at a conference in Brussels last week.

The conference, organised by the American Chamber of Commerce to the EU (AmCham EU) on 15 January and entitled 'The Transatlantic Relationship: The way forward,' brought together high-profile experts from both sides of the Atlantic, less than a week before the inauguration of Barack Obama as the 44th President of the United States.

Financial crisis: 'Worst is yet to come'

Under no illusions as to the magnitude of the challenges ahead, participants at the event made clear that the EU and US economies may not yet have seen the worst of the financial and economic crises.

Presenting a 2009 survey on the transatlantic economy, Joseph P. Quinlan, senior fellow at the Washington, D.C.-based Center for Transatlantic Relations at John Hopkins University, argued that IMF forecasts of negative growth of 0.5% for the euro area and of 0.7% for the US in 2009 were "too optimistic".

According to Quinlan, the global credit crunch will continue to have a negative impact well into 2009, because credit is "the oxygen of the economy".

"We are not done yet," the US expert argued, as "banks are still writing off bad loans" and "still mistrust themselves and their best borrowers".

'Yes' to better regulation, but don't create a 'fortress mentality'

Participants agreed that better cross-border regulation of financial markets was needed. "De-regulation has clearly proven its limits," argued Monique Goyens, director of the European Consumers’ Association (BEUC) said, while Mark Spelman, global head of strategy at the consultancy Accenture and chair of AmCham EU's executive council, called for "smart regulation" on a case-by-case basis. "A one-size-fits-all approach won't suit everybody," he said.
Future of the Transatlantic Economic Council

Participants agreed that the Transatlantic Economic Council (TEC) continues to be the appropriate body in which to address these issues. US Ambassador to the EU Kristen Silverberg reassured the audience that the TEC will remain a priority under President Obama.

On issues such as trade, regulatory affairs and counterfeiting, the TEC has proved to be "efficient", said Silverberg, who expects the US and the EU to further strengthen the body.
David O'Sullivan, who heads the European Commission's trade directorate, suggested "bundling together" technical disputes to ensure win-win outcomes, particularly on issues such as on GMOs and chlorinated chicken.

Stanley Crossick, founding chairman of the European Policy Centre (EPC), brought China into the picture, suggesting that bilateral transatlantic regulatory dialogue should include the rising Asian giant whenever possible.

Crossick also called for more involvement of MEPs and members of US Congress in the TEC's activities, a point well-received by other speakers.

Most speakers warned against cultivating a "fortress mentality", insisting that such an approach is not the best way out of the crisis, Czech Ambassador Milena Vicenova pointed out, in line with the motto of the Czech EU Presidency, 'Europe without borders'.

There was also broad agreement that bringing the Doha talks to a successful conclusion will be a key priority for the transatlantic partners, with participants expressing their hope that President Obama will not try too hard to court fellow Democrats, who control both chambers of Congress and pursue a rather protectionist agenda.

Security and trade: Two sides of the same coin

Michael J. Baunton, vice-president of construction and mining equipment manufacturer Caterpillar, voiced the business community's fear that the recession might inspire governments to raise trade barriers to protect their own economies, which he said in fact would harm companies with a strong focus on exports.

In a debate about whether trade or security should come first in the transatlantic relationship, participants from both sides of the Atlantic revealed different priorities. While Europeans are concerned about 'soft' issues such as the environment and food security, Americans instead focus on physical security issues such as terrorism, O'Sullivan told the audience.

A case in point was the technical nature of US legislation requiring 100% scanning of containers in ports, which is set to come into force in July 2012. Deputy Chief of the US Mission to the EU Christopher Murray explained that the law might be postponed if it proves to be an impediment to trade flows, as pilot projects seem to demonstrate.

'Time for a transatlantic big bang': Prospects for a rejuvenated relationship

Despite the gloomy economic forecasts, participants at the AmCham conference felt 2009 could be a pivotal year in rejuvenating, recalibrating and reinforcing EU-US relations.
Looking ahead to the inauguration of a new president in the US and elections to European Parliament and a new European Commission coming into office in Europe, 2009 will mark "significant changes" on both sides of the Atlantic, said John Vasallo, chairman of AmCham EU and Microsoft's vice-president for EU affairs.

Professor Quinlan challenged the audience by saying "don't think the best times are already behind the transatlantic economy," arguing that the "transatlantic recession offers a huge opportunity" to prove that the EU and the US are still the key players" in the global economy.
He called for EU and US political and economic leaders to act boldly and use the current year as a "transatlantic big bang" to kick-start the economy. He suggested creating a "transatlantic capital market", equipped with a "deep, liquid capital pool". The driving force should be to "think big", he stressed.

Asked whether the focus should be on reacting quickly to the the crisis at national level or developing better cross-border solutions, Quinlan answered: "Let's go for the long haul and do it right."

O'Sullivan argued along the same lines, saying it was "better to take our time than risk speedy, uncoordinated solutions". But he also admitted that "both good and bad legislation can come quickly or slowly". He added: "The crisis is an opportunity to bring cooperation to a higher level."
EU and the US still in the driving seat

Despite growth opportunities in the emerging world, countries such as Brazil, Russia, India, and China (referred to as the 'BRIC' countries), are "not ready yet to step in" to outweigh the transatlantic partnership, Quinlan argued. China, especially, is "much weaker than many suggest," given how firmly it is embedded in the global economy, the scholar argued.

Positions:

"The transatlantic economy is still the bedrock of the global economy," argued Joseph P. Quinlan, senior fellow at the Centre for Transatlantic Relations at John Hopkins University, Washington, D.C.

Czech Ambassador to the EU Milena Vicenova, whose country currently holds the EU Presidency, said the "current gas crisis has proven the necessity for Europe and the US to work together".

Experts at the conference called for more transparency in TEC meetings. "Transparency is an issue for which Europeans can still learn from US policies," according to EurActiv Publisher Christophe Leclercq, who moderated one of the panels.

Next steps:
20 Jan 2009: Inauguration of new US President Barack Obama.
May 2009: TEC to prepare EU-US summit.
9-10 June 2009: 1st EU-US summit under President Obama.

21/01/2009 EurActiv (EurActiv)