It is not just up to Washington to correct global imbalances
16 Jan '06
10 min read
Finally, it will be crucial to advance the deregulation of product and services markets. While some progress has been made in deregulation of product markets, wide divergences exist across EU countries. And the largest sector of the economy—services—remains insular. A good start would be the adoption of the EU Services Directive without delay and dilution.
This is an ambitious agenda for both European countries and the United States, but there is high payoff from structural and fiscal reform. From an international perspective, restoring confidence and revitalizing growth in Europe through structural reforms that address supply-side constraints and raise domestic demand would help raise global growth and offset the potential contractionary effect of fiscal adjustment in the United States. And structural reform that helps the global economy is also in the best interests of the people of Europe. Similarly, fiscal reform in the United States is not primarily a service to the world, but a service to the American people. Both are simply the right things to do.
Another major contribution to redressing global imbalances would be to end the extreme poverty that persists in large parts of our world while unprecedented abundance reigns in others. A critical test of these commitments will be the ability of governments to rise above narrow interests in completing the WTO's Doha Round of trade liberalization talks and cooperate for the greater good of all.
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