The US and Europe now have two great opportunities to give their economies a much needed boost. One is to successfully navigate their debt mountains and fiscal cliffs. The other is to finally negotiate a US-EU free trade agreement.
Over the past few years, the United States and Europe have rarely been the source of positive news for the global economy. While the nascent American recovery is fragile and under constant threat from political brinkmanship in Washington, Europe has been pulled back into recession as a result of its sovereign debt crisis.
To some observers the malaise symbolizes the decline of the transatlantic economy, as emerging powers claim a bigger share of global trade, investment, and economic growth.
But the US and Europe now have two significant opportunities to give their economies – and the relationship between their economies – a much needed boost.
The first opportunity is for each side of the Atlantic to successfully navigate the perilous terrain of their debt mountains and fiscal cliffs, and remove some of the uncertainty that’s holding back hiring and investment.
The second is the real possibility that, after discussing the idea for decades, the US and the 27-member European Union could actually start negotiating a comprehensive US-EU free trade agreement. That would not only give impulse to both economies, it would rejuvenate the transatlantic relationship generally.
The immediate focus, naturally, is on Washington, where President Obama and House Speaker John Boehner are negotiating to avoid the “fiscal cliff,” a series of automatic tax hikes and spending cuts scheduled to take effect on Jan. 1. Given the political polarization, an early and wide-ranging deal seems improbable.