In today's multilateral, multipolar world, Europe and America can and should work together in a partnership for global stability and the enlightened values both sides hold dear. Our Trans-Atlantic partnership guaranteed peace and prosperity in the 20th century. This strong relationship helped bring about the end of not only the first and second world wars but also the cold war. It allowed for democracy and freedom to extend to countries which for too long were not free. Moreover, it brought about the longest period of prosperity in our shared history.
I believe that in the 21st century we cannot rest on our past successes. Instead, we have to move forward and embrace this visionary and challenging agenda. We have to ask ourselves a crucial question: what can we do, as Europeans and Americans working together, to make the world a better, safer and more prosperous place for all?
Today, the House Ways and Means Trade Subcommittee will hold a hearing on negotiations of the US-EU trade and investment partnership agreement. We look forward to hearing our colleagues' views on this long awaited agreement.
On our side, the developments are clear: the renewal of our special relationship has to be made on the basis of a partnership of equals. The European Parliament has actively pushed for the formation of a High Level Group for Jobs and Growth and will continue to play an active role in promoting and supporting an EU-US Free Trade Agreement. On both sides of the Atlantic, as legislators, we have a crucial role to play in these negotiations. Our determination today will pave the way for a better present and future.
Our relationship is already very strong -- we have the biggest economic flows in the world. In parallel, 95% of our trade is 'problem free'. Our combined gross domestic product (GDP) represents more than half of global GDP. We, two partners have the world's strongest bilateral trade and investment partnership, accounting for more than 30% of world trade. Each day, $2.7 billion of goods and services are traded bilaterally, supporting millions of jobs in both our economies.
Although our relationship has enormous potential, this is far from being fully realised. Latest estimates show that a comprehensive and ambitious agreement between the EU and the US could bring overall annual gains of 0.4% in GDP for the US and 0.5% for the EU by 2027. Direct investment by the United States and the EU in each other's markets totals more than $3.7 trillion. Europe is by far the largest destination for US outbound investment, with Europe accounting for a roughly equal amount of US outbound investment.
We do have some issues on specific areas of legislation and regulation. But we have to think bigger than that. We need to set ourselves a more ambitious challenge. By 2020, we need to implement a genuine transatlantic single market, based on the four freedoms which already exist in Europe - the free movement of goods, services, capital and people. In the aftermath of the financial crisis, we are rethinking market regulation. We should be bold and work towards a harmonized regulatory framework that would make such a transatlantic market a reality.
Instead of pre-empting the outcome of the negotiations and building up a sense of fear we should invest in developing a culture of trust. This will facilitate dialogue among all stakeholders -- business, in particular small business, and the Research and Innovation sectors -- as well as providing the framework for long-term legal certainty.
Some may say that we are rushing. Others may say that we are too late. I believe that we should be honest with ourselves and answer the obvious questions: are we ready to negotiate as fast as possible, having the easy deals done as they could enter into force early and then get into more complicated negotiations later? Alternatively, do we put all the issues on the table and hope that the negotiations will end any time sooner rather than later?
For us, the prospect for negotiations are much better between the US and EU than for those with other countries. Why? Because in this negotiation, there should be little fear of social dumping on either side. For example, one can always argue that car regulations in the US and in the EU aim at achieving more or less the same goals although methods may vary. If it is good enough for us it should be good enough for the US and vice versa.
In turn, these imply difficult political decisions and structural changes in the way domestic systems function on both sides. More than ever, the European Union needs to act as a political union, rising above national divisions. Equally, the United States must show that its new multilateral approach can translate into concrete political action being more open. On both sides, the important goal of a partnership agreement is subject to certain conditions, being a challenge for both the American administration and EU leaders.
Our relationship goes further than a trade agreement. We need to use the Euro-Atlantic partnership to change the way global governance functions. The United States and Europe can and must take a leadership role in defining the principles and structures of this new multipolar, multilateral world.
We all know the difficult challenges we face today: economic insecurity, energy independence, climate change, migration and terrorism. Common action on these fronts is essential. Additionally, in addressing these issues, we need to find ways to bring on board Russia, China, India, Brazil and other new regional powers.
We are home to the world's most successful democracies. I firmly believe we need to use this partnership to put in place the right policies and right institutions on a world-wide scale. The US and Europe are similar to an old couple in the family of nations. If they get on well, the rest of the world benefits. Conversely, if they disagree or fall out, the world suffers accordingly.
I am convinced that only a strong America with a strong Europe as its partner can guarantee peace and prosperity in this century. The goodwill has long been there. Now, more than ever, we need to translate this into action.