The American Chamber of Commerce to the EU is calling for simpler visa procedures to make it easier for scientists and researchers to move between Europe and the United States, in response to competition from emerging economies such as China and India.
John Vassallo, chair of AmCham EU, said increased cooperation on innovation and education could drive economic recovery on both sides of the Atlantic.
"Despite the economic crisis and the global downturn, the United States and Europe remain each other's most important markets," said Vassallo, who represents American companies active in Europe.
Vassallo was speaking at a high-level conference on 'Innovation in the Transatlantic Relationship', which took place in Brussels on Thursday (3 March).
He pointed out that "the US is the principal source of foreign direct investment in the EU" and suggested that America and Europe could also be seen as two halves of one integrated transatlantic region.
AmCham EU is calling on the EU institutions and the US federal government to further develop their cooperation in the framework of the Transatlantic Economic Council (TEC), with a focus on eliminating tariffs and reducing other barriers to trade.
Vassallo also called for "an IQ alliance" between America and Europe, with streamlined visa procedures and simpler online administration, so as to make it easier for scientists and researchers to move back and forth across the Atlantic in search of new opportunities.
EU-US relationship 'still the deepest'
The conference in Brussels coincided with the publication of 'The Transatlantic Economy 2011' – the latest edition of an annual report which aims to provide a comprehensive overview of the economic relationship between the European Union and the United States of America.
The report was presented to the conference by Joseph Quinlan, an expert in financial services and investment strategies who has spent many years working on Wall Street and a senior fellow of the Center for Transatlantic Relations at Johns Hopkins University in Washington, DC.
According to Quinlan, the economic relationship between the EU and the US is "still the deepest relationship out there". To illustrate this point, he referred to a chart showing the activities of purchasing managers, who he said were on "the frontlines of economic activity".
The two lines representing the United States and the euro zone have remained very close together in the last few years. Both declined dramatically in the last few months of 2008, and then recovered quickly during 2009, returning to pre-crisis levels in 2010.
"Two years ago, if you told me the transatlantic economy would have a V-shaped recovery, I probably would have disputed that," he said. "But we've seen a very significant V-shaped recovery."
Quinlan identified a number of common issues and challenges facing both the EU and the US, and also gave his views on how policymakers should respond to these challenges.
The investment banker argued that policymakers on both sides of the Atlantic should be aiming to achieve economic growth rates of more than 3%, and claimed that this would be possible if enough was done to promote investment, encourage innovation and raise educational standards.
However, he admitted that both the EU and the US are facing serious financial problems, including massive levels of public debt, which could make it more difficult for them to compete with emerging economies such as China, India, Korea, Turkey and Brazil.
Quinlan warned that national budget deficits and record debt levels would lead to a decline in the amount of public funding available for investment in the coming years. Therefore the private sector would have to take more of a leading role in driving innovation.
He said that governments could encourage companies to invest more in research and development (R&D) by offering incentives such as corporate tax breaks, although he admitted that public opinion might not necessarily support this kind of measure in the current climate.
"Increasingly you need money and you need natural resources, and natural resources are increasingly concentrated in developing countries," said the American, who identified control of key commodities, food and energy sources as being vital for economic competitiveness.
Quinlan insisted that human capital is also a crucial factor for economic competitiveness. He highlighted the importance of investing more money in schools and raising overall educational standards, as well as attracting and retaining the most talented individuals, such as scientists and researchers in the context of what he called a "battle for global brains".
Innovation commissioner sees 'striking parallels'
Many of the same issues and ideas were also taken up by Máire Geoghegan-Quinn, the EU commissioner for research, innovation and science, who was invited to deliver the keynote address at yesterday's conference.
The commissioner highlighted the importance of international cooperation on economic issues, which she considers is "the only way to achieve an advantageous business environment and a level playing field on a global basis".
Regarding the relationship between the EU and the US, she said, "our economic integration is the deepest that exists, whether we are talking about trade in goods and services, foreign direct investment issues, the flow of talent and technology or the exchange of knowledge".
The Irish commissioner outlined the main elements of her proposals to establish an 'Innovation Union' in the framework of the 'Europe 2020' strategy (see 'Background'), which were endorsed by EU leaders at last month's European Council meeting.
"The shared ambition of the EU and its member states is to put in place a new environment for innovation – based on a framework for business that promotes and rewards innovation, leverages more private investment and attracts top talents worldwide," she said.
Geoghegan-Quinn said she had noted "striking parallels" between the approaches towards innovation and economic development that were currently being promoted by the European Commission and by the federal government in the United States.
The commissioner argued that the EU and US should take advantage of the similarities which existed – in terms of both vision and approach – between Europe's 'Innovation Union' initiative and President Barack Obama's 'Strategy for American Innovation'.