The United States should use the upcoming negotiations with Europe on a Transatlantic Trade and Investment Pact (TTIP) to push cooperation forward on key financial reforms. We have moved from strong transatlantic agreement in 2009 and 2010 on the principles of financial reform to wandering in a morass of details and conflicts over parochial interests. Normally, one would not think of mixing trade negotiations with critical and complex financial regulations, especially given the crucial importance of financial stability. However, finance is a global business that is dominated by North America and Europe and the TTIP negotiations may give us a chance to better coordinate its regulation. Failure to coordinate will make finance more expensive, slow our economies, and cost jobs.
While political issues may force some exclusions (the French, for example, want to exclude areas that might “endanger” their entertainment and cultural industries), there does not appear to be nearly that level of sensitivity about financial services, at least if the treaty goals in this area are narrowly defined.
Thus, for financial services, it’s not an “if” it’s a “what.” Virtually everyone can agree that tariffs and equivalents, and “market opening” measures are appropriate to consider. However, there are few or no tariffs in financial services across the Atlantic and relatively few areas of disagreement on market access. (There remain some issues about access by US funds managers and rating agencies to EU markets, for instance, but these are minor by comparison with other trade issues.)
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