Date: 8 March 2006
 
Speakers. Josè Maria Aznar, President, FAES, former Prime Minister of Spain
Francisco Cabrillo, Chairman of the Economic and Social Committee, Madrid Regional Government
James Elles, MEP
H.E. Jeremy Kinsman, Ambassador of Canada to the EU
Karel Lannoo, Chief Executive Officer, CEPS
Chairman: Pedro Schwarz, Professor, San Pablo CEU University, Madrid, Member of the CEPS Board of Directors

The Chairman of the event, Pedro Schwartz, welcomed all participants and thanked Mr. José Maria Aznar, President of the government of Spain in 1996-2000, for presenting the keynote address, as well as the Centre for European Policy Studies (CEPS) for hosting the event.
 
Josè Maria Aznar started off his speech recalling that the Atlantic area has been the prosperity pole of the world for the past 50 years. To him, the alliance between the United-States and the European Union stands for common values such as democratic freedom, peace, security and economic freedom. Those common values lead in his eyes to common principles and objectives, which underpin the way the transatlantic alliance faces common threats. Global problems call for joint action. According to Mr. Aznar, the United States and the European Union have to act in a coordinated manner so as to better address the concerns of terrorism, global warming and energy efficiency.
 
The transatlantic alliance should also be committed to freeing trade, as a means to fighting poverty. The G8 and the World Trade Organisation have been largely responsible for fostering worldwide trade and have contributed to alleviating poverty. Achievements such as the ‘Monterrey consensus’ show the genuine interest and the ability of transatlantic-led organisations to successfully address global matters. Mr. Aznar underlined a rising tendency in worldwide political affairs that was well sketched by President G. W. Bush: “when Europe and the US are united, no problem and no enemy can stand against us”.
 
Indeed, the transatlantic link is crucial and most of its interaction takes place at the economic level, but Mr. Aznar sees the European Community as a politically genuine pro-Atlantic product. Following the end of WWII, Europe was left with two options: adopt either regional economic integration or multilateral liberalisation. History has lead Europe towards the second option, towards the General Agreement on Tariffs and Trade and its clause of the most favoured nation. In abiding to this principles, Europe has rooted its construction in an Atlantic perspective.
 
The idea of an Atlantic community as a means towards strengthening the Atlantic link is nothing new; Maurice Allais was a fierce defendant of an Atlantic trade area to name just one. Mr. Aznar emphasised that many of the EU’s greatest minds are well aware that the free trade policy will not limit itself to the EU, but rather that the EU is one of the intermediary steps towards creating an area of free trade at the worldwide level.
 
Indeed many barriers to cross-border investment and trade remain on the world scale, but Mr. Aznar believes that many barriers can be removed through transatlantic cooperation. However, particular effort remains to be done on the EU-side. In fact, progress on the Lisbon agenda is a crucial prerequisite for reviving the transatlantic area as a whole. The EU governments’ decision against fully freeing services within Europe is contrary to Europe’s needs: it could hinder the achievement of the Lisbon goals and mitigate the benefits of a Transatlantic Prosperity Area.
 
The prospect of substantial welfare gains should motivate the establishment of an Atlantic Prosperity Area. Particularly the European Union should grasp this opportunity, as according to a recent OECD study, Europe is to gain relatively more of such a transatlantic alliance. Statistical estimations quantify the potential gains for Europe to be as high as an increase of 3.5% of GDP per capita, or in other words “a year of salary for free”, as Mr. Aznar put it.
 
Mr. Aznar recalled that legislators on both sides of the Atlantic recently renewed their mutual interest in an Atlantic Prosperity Area. Currently, the ending of G.W. Bush legislative period and the commitments on the European side leave little leeway over the upcoming year and a half, but a strong political commitment is needed in order to make the Atlantic Prosperity Area a political priority. Mr. Aznar suggested the 11th anniversary of the New Transatlantic Agenda to be a unique opportunity to adapt the Transatlantic Economic Association to the current situation.
 
Chairman Pedro Schwartz then assumed the podium and started his intervention by emphasising the open nature of the Atlantic Prosperity Area. He urged countries such as Canada or Mexico to join the current project. Additionally, he underlined to what extent the economic ties between the United States and the European Union are deep and strong; they are not only well connected, but together they also act as the main engine to world prosperity, representing 80% of world FDI, 70% of world M&As and 79% of stock exchanges volumes.
According to Mr. Schwartz, the role of China is often overemphasised. Mr. Schwartz asserted that nowadays trade is not the referential of interest when estimating economic exchanges but rather FDI. A rapid glimpse at FDI shows that the amount of FDI between the EU and China is dwarfed by FDI activity between Ireland and the EU.
 
The agricultural sector remains the greatest barrier to achieving the Doha Round and a pan-sectoral transatlantic free trade area. Advances have been great in the area of cotton and sugar, and Mr. Schwartz sees the Common Agricultural Policy losing political credibility in the short term.
 
Tariffs between the European Union and the United States are already low, but considerable effort needs to be devoted firstly to the regulatory as well as the service level, especially after the partial failure of the Bolkenstein Directive. Secondly, anti-dumping has no intellectual basis and thus need to be tackled rapidly. The current erection of barriers towards China adds Byzantine complications to the spaghetti bowl of trade agreements.
 
Thirdly and finally, Mr Schwartz sees this open Atlantic Area as genuinely open to very poor nations. From Mr. Schwartz’s perspective, such an Atlantic Prosperity Area consists of a “Doha plus” agreement, i.e. a bottom-up approach towards freer trade.
 
Mr. Cabrillo began his intervention by underlining that the focus of the book was on regulation and institutions. In fact, the main barriers to trade in the European Union and in the United States are not tariffs, but non-tariffs barriers. Regulation is often used as a barrier to trade, so as to insulate local producers from foreign competition. The most widespread type of non-tariffs barriers are embedded in national regulations, in security standards and also in quality standards. The next step towards reinforcing Atlantic economic linkages will be a political one; Mr. Cabrillo emphasized that there is need and scope for mutual recognition.
 
In fact over the past few years, anti-dumping rulings have been widely used. Europe has raised some against Chinese textiles, and developing countries are increasingly using them. Mr. Cabrillo sees this trend as a step towards the most traditional barriers. Furthermore in the anti-trust areas, cases such as Honeywell-GE or Microsoft cannot be tolerated in the future. The tendency towards public procurement which favours local producers is grave, and recalls the means used in the great depression of the 30’s.
 
Mr. Cabrillo sees the prospects for the Atlantic Prosperity Area to lie in the creation of employment and in unleashing prosperity at a global level.
 
James Elles, MEP emphasised that it is crucial to take advantage of such a proposal. He believes that there is real interest on the US side to deepen linkages with its European counterparts. Indeed G.W. Bush is losing power due to the ending of his legislative period and the EU faces similar tensions due to the parliamentary elections and new appointments in the Commission in 2009. Thus, 2011 seems for Mr. Elles to be a potential date for the discussion of the Atlantic Prosperity Area. Economic linkages are so deep that a transatlantic market could be imaginable in 2015. What needs to be strengthened in the context of an Atlantic Prosperity Area is the structure of institutions. The scope for intervention can be divided in two areas. Firstly, Art. 24 GATT should include the unilateral opening of the transatlantic market for emerging economies, as provisions refer to tariffs and not to non-tariffs barriers. Secondly, a partnership agreement needs to be agreed between the European Union and the United States to build a new agenda addressing matters at the economic, political and security level. According to Mr. Elles, such an idea could really help legislators on both sides of the Atlantic.
H.E. Mr. Jeremy K.B. Kinsman argued that the north-Atlantic community already exists and that it does more than solely exist. In fact, the countries surrounding the Atlantic generate 75% of worldwide FDI. Thus, the European Union and the NAFTA as a whole are already well interlinked.
 
Mr. Kinsman added that a new phenomenon is observable in transatlantic cooperation. In fact, the cooperation isn’t based on trade anymore but on so-called ‘affiliates’. This phenomenon stands for Canadian manufacturers which are already very much European. As in the current state of world affairs the business community leads the political community towards cooperation, a 21st century agreement should, according to Mr. Klinsman, not be of a sole trade relationship but a lot more dealing with regulatory convergence and mutual recognition.
Finally, Mr. Kinsman two warnings. Firstly, he believes that the Doha round is suffering because of politics and that it is due to the fact that the business sphere doesn’t see enough advantages in the Doha round coming through. Consequently, pushing a transatlantic agreement through might in the end hurt the Doha round. Secondly, the transatlantic business model already exists; what is needed is a common political model.
 
Last speaker of the panel, Mr. Lannoo, CEO of CEPS underlined three key factors. Mr. Lannoo believes not solely in the necessity of a transatlantic political model being part of this Atlantic Prosperity Area, but more exactly in the necessity of an accurate accountability mechanism. Without an appointed electorate, pushing through a political model might prove counterproductive. Finally, the fulfilment of such an agreement should rely on a bottom-up approach, i.e. a couple of sectors should be chosen to play a visionary role in this transatlantic cooperation. After proven success, the newly appointed model would then be generalised step-by-step approach towards realising the Atlantic Prosperity Area.