06/20/2013 01:41 pm ET Updated Aug 20, 2013

U.S.-EU Trade Negotiations Must Include Financial Services

This past Monday President Obama and European officials formally announced the beginning of negotiations of the Transatlantic Trade and Investment Partnership (TTIP), which would bring a huge boost to the U.S. economy. From the beginning, U.S. officials have been clear that everything should be on the table for negotiation. But before the first round of negotiations start in Washington in July, that table is already becoming smaller.

The French have protested the inclusion of cultural issues, and now some U.S. officials are trying to take financial services off the table. They argue that TTIP is a way for financial reforms to be weakened. The objective of the industry, instead, is to ensure that U.S. and EU rules are consistent and coordinated. For TTIP to truly bring the economic benefits for all Americans that it promises, financial services must be included in trade talks.

By nearly every measure, the U.S. and EU economies and capital markets are inextricably linked. The U.S. and EU comprise the world's two largest economies and capital markets, and our financial markets are the most efficient, deep and liquid in the world. Cross-border flows between the two areas total nearly $32 trillion annually, or around $87 billion daily. Direct investment--an important measure of the shared interests, which both markets have--is equally impressive. U.S. direct investment in the EU totals $2.2 trillion, while EU direct investment in the U.S. is $1.6 trillion.

What became clear in the aftermath of the financial crisis is that our financial system is truly global, and rules and regulations overseeing global markets need to be consistent and coordinated across all nations.

TTIP would provide a process and framework run by regulators themselves that would address existing and future regulatory issues at an early stage and provide the mechanisms to resolve, or at least mitigate, regulatory differences between countries. Not all issues will be resolved through that process, but TTIP simply offers a venue to discuss duplicative, incompatible, or conflicting regulatory requirements emanating in different parts of the world.

By including financial services in TTIP, we are not seeking to bypass Dodd-Frank or other reforms. Dodd-Frank and similar reforms underway in Europe will be largely completed before TTIP negotiations are concluded.

This kind of venue will be vitally important in the future, as here in the present, regulators in different countries are already at odds over key reforms including derivatives and capital requirements.

To improve the safety and stability of global financial markets and their ability to fuel economic growth and job creation here at home, it is imperative to move toward a more coordinated and consistent approach to regulating the financial sector. TTIP provides the best opportunity to accomplish this goal.