The mother of all economic integrations

Three months ago I discussed German enthusiasm for a transatlantic free trade area. Well, now Bertrand Benoit and Quentin Peel report in the Financial Times that Angela Merkel is planning on taking the next step -- not TAFTA exactly, but defintely liberalizing: Angela Merkel, German chancellor, will this month launch a sweeping initiative for the harmonisation of US and European legislation to boost investment flows and trade between the world?s largest economic blocs. Initial talks will review financial market regulations, including delisting rules, which many US-listed European companies feel are too cumbersome, as well as intellectual property law. Ms Merkel is also seeking mutual recognition of technical standards for products such as cars.... Her ambition is to create a single transatlantic market for investors, with common rules and standards on issues such as intellectual property and financial regulation. However, her initiative may face opposition from a more protectionist US and other EU member states.... ?Our economic systems are based on the same values,? said Ms Merkel. ?We have learnt how to combine the Anglo-Saxon and Continental European legal systems, which are very different from one another . . . think transatlantic co-operation will be more straightforward in many areas than might appear at first glance.? Ms Merkel?s initiative marks the EU?s first attempt to achieve a transatlantic single market since a similar move by the European Commission in 1998 petered out because of French opposition. Formal negotiations on drafting the partnership should start at the EU-US summit in May, she said. Matthias Wissmann, chairman of the German parliament?s Europe Committee, estimates that the integration of US and EU financial markets alone could be achieved by 2015 and would cut trading costs on both sides by 60 per cent and the cost of equity capital by 9 per cent. Ms Merkel stressed that tariffs and customs duties were not part of her plan.Merkel talks about this in an interview with the FT's Quentin Peel. Some excerpts: At the forthcoming EU-US summit we want to talk about ever-closer economic co-operation. Our economic systems are based on the same values. The EU and the US have sophisticated patent legislation. We have regulatory mechanisms governing our financial markets. We should be looking for ways to keep developing these together at a transatlantic level. We must watch out that we do not drift apart, but instead come closer together, where there are clear advantages for both sides. For example, it causes unnecessary friction for patent rules in the US to be structured differently from those in the EU. I think our economies can save a lot of money and effort, in stock market share offerings, for instance, or in setting technical standards. We face the same tough competition from Asian markets, and from Latin America in the future. We must join forces and co-operate, for instance in the fight for better intellectual property protection in the global market. Now I'm beginning to wonder if John O'Sullivan knew something I did not 18 months ago. I hope so -- for one thing, I could then look forward to Sherrod Brown complain about Polish plumbers.