WASHINGTON—In recent days, discussion in both Washington and Brussels has focused on Europe’s sovereign debt problems. But hunkering down is a prescription for prolonged suffering. In the face of a major challenge like the euro crisis, the best defense is a good offense. The euro crisis has demonstrated once again that the economic fates of Europe and the United States are inextricably linked. Persistent joblessness on both sides of the Atlantic together with flagging consumer and investor confidence have shaken the transatlantic marketplace more than any other event since the Great Depression. The need for closer economic cooperation has never been greater. Both Americans and Europeans are telling their elected leaders that they need jobs and growth. But their mutual debt burdens and the near exhaustion of monetary policy options means both Washington and Brussels must look elsewhere to spur their economies. The most promising and immediate way to do this is by launching a Transatlantic Jobs and Growth Initiative anchored in an effort to remove all taxes on and barriers to transatlantic trade and investment. Never has such an effort been more timely or more necessary:

• Unemployment is stubbornly high in both the United States and the European Union. There is little prospect of a rapid economic recovery. New sources of growth are desperately needed.
• The Doha Round is dead and there are no prospects of growth-inducing multilateral trade liberalization in the near future.
• The United States already has free trade agreements with Canada and Mexico, and the EU has one with Mexico and is negotiating a deal with Canada. It makes little sense not to have an EU-U.S. accord.
• China poses an unprecedented competitive challenge that is best met by the European Union and United States working together.
• The window of opportunity is closing. A decade from now, both Europe and the United States will trade more with China than with each other and the incentive to integrate the transatlantic market may be lost forever.

The benefits of such an effort could prove significant. A 2010 study by the European Center for International Political Economy in Brussels estimated that elimination of all EU tariffs on U.S. goods would boost U.S. exports to Europe by $53 billion and European exports to the United States by $69 billion. A 2009 European Commission study found that eliminating all actionable transatlantic nontariff trade barriers would add $53 billion to the U.S. economy and $158 billion to the EU economy. These estimates are a reminder that transatlantic barriers to trade and investment may be small compared with the obstacles U.S. and European exporters face in other parts of the world. But their removal would still pay significant dividends. To put these prospective benefits in context, the payoff from eliminating transatlantic trade barriers exceeds the likely economic benefit to the United States or to the European Union from completion of the Doha Round. It also exceeds the potential economic benefit to the United States of the Trans-Pacific Partnership now under negotiation. Brussels and Washington are selling short their own interests by not harvesting these benefits now. Interest in a Transatlantic Jobs and Growth Initiative is mounting. The U.S. Chamber of Commerce has called for the elimination of all barriers to goods traded between Europe and the United States as a first step toward a full free trade agreement. The U.S. Coalition of Services Industries has suggested pursuit of a transatlantic free trade area in services. The Transatlantic Business Dialogue advocates the establishment of a Barrier-Free Transatlantic Market. The Transatlantic Policy Network, made up of members of Congress, the European Parliament and transatlantic business leaders, has recently called for creation of a Transatlantic Market by 2020. And, in late September, the European Parliament called for a “comprehensive Transatlantic Growth and Jobs Initiative.” At the U.S.-EU summit on November 28, President Obama and his counterparts in Europe should instruct their respective teams to come up with a Transatlantic Jobs and Growth Initiative, which should be ready to be signed in mid-May 2012 at the G8 summit in Chicago. The Initiative should have multiple pillars: these should include elimination of all tariffs, free trade in services, and an investment agreement, among other things. Most important, these efforts should run in parallel, but not be dependent on each other. Tariffs can be eliminated relatively rapidly. If it takes longer to hammer out an agreement on services, that should not deny Europe and the United States the benefits of eliminating taxes on goods. The euro crisis presents a unique opportunity for political leadership. Americans and Europeans want jobs, they want growth, and, above all, they want a reason to hope. What they lack is a sense of direction and purpose from their leaders. A Transatlantic Jobs and Growth Initiative is a way to turn the euro crisis into an economic opportunity for all Americans and Europeans.

Bruce Stokes is a Senior Transatlantic Fellow at the German Marshall Fund in Washington.