The European Union turns 60. While having grown from a mere six original parties (Belgium, France, Italy, Luxembourg, the Netherlands and West Germany) to a union of 28 member states, the European Union has been put to a hard test in recent past with last year's Brexit vote, in which Britain voted to leave the union; high unemployment levels; rising nationalism and populism; the refugee crisis; terror attacks; geopolitical tensions at its eastern borders; and sluggish economic growth.
Despite the current crises the European Union is facing, there is strong potential for it to turn a corner now if it delivers short-term responses to populist concerns, medium-term concrete projects to foster growth and a long-term plan for better integration.
This is crucial for European citizens — and Americans, too. It is essential to remember that the Marshall Plan — which restarted the European economy after World War II — predated NATO by two years and, in effect, made it possible. It is now time to refocus on economic growth as a critical guardian of jobs, quality of life and national security.
First, transatlantic economic ties are so close in trade and investment that a small increase in EU gross domestic product (GDP) immediately has positive spillover effects on corporate profits, portfolio investment, U.S. exports and ultimately, on U.S. jobs. U.S. companies exported to the EU-27 (all the member states, aside from the United Kingdom) around $370 billion in goods and services during last year.
Despite the significant increase in exports to China, this market is still one-third of the continental European Union. Extrapolating from the average growth rate of U.S. exports to China and to the EU-27 during the period from 2010 to 2015, China will become a larger market for the United States not before 2040.
U.S. foreign direct investments (FDI) are massively concentrated in continental Europe, representing 41 percent of the total stock of investment broad. Again, China is a mere 3 percent of the total. And continental EU countries invest massively in the United States and account for 44 percent of total foreign investment. The inflow of European direct investment enhances the U.S. economy, especially in manufacturing, where EU companies often have enhanced labor skills and knowhow.
Not surprisingly, EU countries account for 68.3 percent of cumulative FDI in manufacturing, a sector President Trump has identified as central to his economic goals. At a time when the new U.S. administration envisages a return of the traditional manufacturing industry to the country, the importance of EU companies in achieving this result is relevant, and strong and sustainable growth for the EU economy is a precondition to continued European investment in the United States.
Second, the European Union and the United States share the responsibility of addressing the most relevant challenges of our times — namely terrorism and interstate conflicts, most of which are concentrated in, or emanate from, countries that are neighbors to the European Union's outer borders. An economically weak Europe will not be able to deliver on its commitments to defense and peacekeeping, and it will be hard for the United States not to take the lead or for the overall level of security to fall.
Third, the European Union and the United States share responsibility for global economic governance. Following 30 years of globalization, the highly interconnected world economy needs guidance and coordination. While globalization has created enormous economic benefits for both blocs, they need to find ways to address the adverse effects of globalization on their workforce: another important priority for Trump.
Together, the United States and the European countries currently represent the most important blocs in the International Monetary Fund (IMF), the World Bank and the G-20, which allows them to play a leading role in global economic governance, promoting policies that encourage the adoption of fundamental market principles and promote their common values.
However, with China's emergence as a major player in the global economy, this leading role will be threatened if the United States and the European Union do not continue to join forces.
The EU needs to make hard choices regarding its future. As the past 60 years have demonstrated, Europe is stronger economically, politically and militarily when it acts together. For the United States, abandoning the project of a Europe that is whole, free and at peace would mean abandoning its strongest economic, diplomatic and military partner.
As a report published earlier this month by the Atlantic Council shows, for Europe to continue to play its part in the transatlantic alliance, European leaders must move quickly to strengthen their economies through bold steps such as liberalizing their domestic markets and providing an investment boost that could break the unemployment stalemate. They also need to rethink their institutional setting, allowing for a Europe in concentric circles.
The NATO summit in Brussels planned for May 2017; the next EU-U.S. summit; as well as Italy's and Germany's presidencies of the G-7 and G-20, respectively, in 2017 will provide opportunities for the Europeans to set the terms of engagement with the new U.S. administration for the next four years.
Similarly, while Vice President Pence has voiced the United States' reinforced commitment to working together with the European Union, words will need to be matched with strong actions to reassure European allies. Europe remains America's closest ally and preserving the governance gains of past decades is the best guarantee for continuing the liberal international order.
C. Boyden Gray is a former White House Counsel to President George H.W. Bush and former U.S. ambassador to the European Union and U.S. special envoy to Europe for Eurasian energy under President George W. Bush.
Andrea Montanino, the director of the Atlantic Council's Global Business and Economics program, is a former executive director of the International Monetary Fund, where he represented the governments of Italy, Albania, Greece, Malta, Portugal and San Marino.
The views of contributors are their own and not the views of The Hill.