EU-US Deepening

Wednesday's FT reports that Angela Merkel is seeking greater regulatory harmonization between the US and EU, as Germany begins its presidency of the EU.  This initiative is alternatively referenced as "transatlantic co-operation", a "transatlantic partnership", and a move toward a "transatlantic single market".  Except for agriculture, there would be little to impede a transatlantic FTA, but tariffs on both sides of the Atlantic are already low on manufactured goods.  And Merkel says she does not plan a FTA with zero tariffs.  On the other hand, Merkel seems interested in working on regulatory issues along the lines of the EU single market.  I have not seen studies of the costs of failure to harmonize or recognize, but Merkel must believe they are significant.  The FT quotes a German parliamentairan as saying that financial market integration would cut trading costs by 60% and the cost of equity capital by 9 percent.  These are surprisingly large figures.