For many years, the United States and its European partners were the unchallenged global economic leaders. They not only created the major international economic institutions but also represented the bulk of the wealth behind them. But traditional transatlantic economic leadership faces challenges on several fronts. Emerging economies last year for the fi rst time ever surpassed the developed world in the total size of their national products – and they make up the lion’s share of total global growth. At the same time, globalization has eroded western governments’ control over their own economies, making them increasingly vulnerable to economic forces outside their borders. The power of “nonstate actors” has grown – capital markets, multinationals, hedge funds, and private equity.

The failure of the US and Europe to make concessions on farm tariffs and subsidies is the biggest obstacle holding up a successful conclusion of the Doha trade round, Bo Xilai, China’s commerce minister said Monday.

This report provides the IMF's latest views on recent developments and prospects for the region, discusses potential risks to the forecast, and describes key policy challenges.

Initiatives to reduce transatlantic trade barriers or to harmonize trade-related domestic policies in the EU and the US appear regularly on the agenda of policy makers. The last decade saw also considerable steps in transatlantic economic cooperation focusing on special aspects. In February 2002, a new call for a study on the benefits of a transatlantic free trade area (TAFTA) was made by the President of the EU Council to facilitate further liberalization schemes. This article examines recent developments in transatlantic economic policies, discusses changes in approaches in transatlantic regionalism and presents estimates of the economic consequences of transatlantic liberalization. Given the expected small benefits of a TAFTA and the induced costs for multilateral liberalization negotiations, the article discusses alternatives to TAFTA and argues for a multilateral approach, eventually being accompanied by some sort of open regionalism.

The proposal to create an open Atlantic Prosperity Area such described in this book is the proper way to reinforce the Atlantic link in the economic field. European and US citizens would benefit from increased trade and investment, reinforced competition, more innovation and higher productivity, leading to substantial and permanent welfare gains in terms of higher growth and more jobs. The European Union would be the one to benefit most from these gains. The rest of the world would also benefit from this initiative, directly by accepting the offer to join, and in any case indirectly from the increased prosperity in the powerhouse of the world economy.

The German leader argued for closer cooperation between the EU and US. "I feel it is very important that trans-atlantic economic relations are intensified," she said in her speech, where she called for negotiations about non-tariff barriers such as technical standards and financial market regulations.

The United States has reacted positively to an initiative from German Chancellor Angela Merkel to foster closer trade ties between the US and the European Union -- but says that the idea will have to be put on the back burner for a while due to more pressing concerns.

As they regain control of Congress, Democrats should remember that a combination of education, saving, social insurance, and progressive taxation would allow the engine of economic growth to continue humming -- while still providing better protection to America's working families.