Trade Policy, Economic Growth and Aging
By Michael Hodin
If all goes well on July 8, when EU trade negotiators come to DC to meet with their American counterparts, we may soon see headlines like: “The New U.S./EU Trade Agreement Ushers in 21st-Century Economic Growth.” Given the enthusiasm over the proposal at the G8 Summit in Belfast, we should expect to see progress made on the largest international trade agreement in history. But for all the cause célèbre over French filmmaking, the Trans-Atlantic Trade and Investment Partnership (TTIP) must grapple with the peculiar, but inescapable challenge of “population aging.”
An aging population and a trans-Atlantic trade agreement may seem an unlikely pairing, but history suggests otherwise. Historically, the best trade deals have been those that dealt with the issues most relevant to their time, like environmental protectionism, intellectual property, and investment regulation. Today, as the World Economic Forum has noted, much of our economic success hinges on the “promise or peril” of an aging population.
Not surprisingly, the U.S./EU trade talks have come under fire. Asia, Africa, and Latin America — the argument goes — will be left out as the north Atlantic powers join forces. There is reason to question the impact that TTIP will have on the rest of the world, but such inquiry must bear in mind that, like the US and the EU, the entire world is aging, and the most rapid aging is seen in the developing world. If TTIP can help engage aging populations in economic growth, we will all be winners.
But what would a section on aging populations in the trade agreement look like? There are four insights that should guide its development.
First, given the remarkable increases in longevity seen in recent years, a standard “retirement age” should be phased out. On both sides of the Atlantic, we continue to abide by an age set by Otto Von Bismarck 1880s, and we are consequently depleting public and private coffers. Updating “retirement age” to align to 21st-century longevity would open the doors to restructuring pension policies. Different and more flexible policies would bolster economic health from Detroit to Lisbon.
Second, given the rapid growth of the 65+ and 85+ populations — the latter being by far the world’s fastest growing demographic segment — the ways that we care for those in need must become more effective and efficient. Home-based and community-based “aging in place” models are burgeoning throughout the world, and there is an increasing recognition that, as the youth population declines in the US and the EU, it will take immigrants to fill the roles. A smarter, more flexible immigration program should be created.
Third, negotiators ought to look at common changes in tax policy, particularly the more egregious VAT Tax in many of the EU countries that today operate as barriers to entry and create unequal playing fields. In parallel, negotiators could also consider relaxation of labor laws, which today operate as barriers to the most effective care and create unequal playing fields between America and Europe.
Fourth, the Agreement could be a basis for scientific and medical collaboration meeting the expanding health needs of aging populations on both sides of the pond. The recent U.N. Outcomes Document on Non-Communicable Diseases recognized this shift in global demand in light of global longevity. The increased health challenges from Alzheimer’s, CVD and Diabetes, to age-related vision and dermatological deteriorations must be seen as more than treating the sick, but also as an investment to keep people healthy and active longer so as to remain independent, participating in economic and social life, and contributing to growth. Common regulatory standards for innovation between the FDA and EMA come to mind.
It is unfortunate that the Trans-Atlantic Trade and Investment Partnership has attracted only minimal attention. Done right, it can set the foundation for lucrative trade partnerships in the 21st century while also helping turn the global aging population into a social and economic asset. G8, the OECD, the WHO, and other organizations have recognized that the ties between population aging and economic growth are inextricable. Here’s a chance for the U.S. and the EU raise the bar.
Originally published at www.huffingtonpost.com on September 2, 2013.
