EU and US Inch Closer to Transatlantic Trade Pact
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A free-trade agreement between the United States and Europe, elusive for more than a decade, could soon become a reality as reports indicate that U.S. and EU trade commissioners are set to launch trade talks this month, potentially unleashing billions of dollars of new transatlantic business.
A free-trade agreement between the United States and Europe, elusive for more than a decade, could soon become a reality as reports indicate that U.S. and EU trade commissioners are set to launch trade talks this month, potentially unleashing billions of dollars of new transatlantic business.
As the European Union mulls another year of economic stagnation and the United States a year of lacklustre economic recovery, governments on both sides of the Atlantic will come together this month to study whether a comprehensive free trade deal between the world’s largest trading partners could provide a much needed boost to economic growth.
Towards the end of 2011, Brussels and Washington asked their respective trade offices to study the feasibility and benefits of a trade deal and had in October last year committed to “working towards the goal of launching in 2013 negotiations on a comprehensive transatlantic trade and investment agreement”.
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The report and its findings are expected to be published this month and supporters of a trade pact argue it could rival the North American Free Trade Agreement in scale and be a cheap way to encourage trade between the European Union and the United States, which is worth $700 billion a year.
Karel De Gucht, the European trade commissioner, said in November:
[quote] There is now, for the first time in years, a serious drive towards an EU – U.S. free-trade agreement. [/quote]
Efforts to improve trade relationship gained momentum after the failure of the so-called Doha round of global trade talks. In addition, Canada and the European Union are close to a free trade agreement, which puts pressure on the United States to follow suit.
Together, the bloc and the United States account for about half the world’s total economic output and nearly a third of world trade.
A free trade deal could increase economic output by 122 billion euros ($160 billion) a year for Europe alone and add 0.52 percent to the EU’s gross domestic product in the long term, according to European Commission estimates, benefiting industries ranging from chemicals to automakers.
Eliminating barriers in the automotive sector, which makes up the largest chunk of EU – U.S. trade, could bring a 15 percent fall in costs for both sides, the Commission estimates.
Total U.S. annual investment in the European Union is also higher than in all of Asia, while EU investment in the United States far outstrips EU investment in India and China combined.
However, the deal faces complex challenges as “trade policy has moved from focusing on simple import tariffs on goods – already low for most transatlantic commerce – to often complicated ‘behind-the-border’ domestic regulation. Technical standards, not tariffs, are the biggest barriers to integrating fast-growing US and European markets such as pharmaceuticals, medical services and advanced electronics,” said the Financial Times.
Martin Schulz, president of the European Parliament, warned:
[quote] We have differing takes on food safety, consumer protection and environmental standards that are deeply rooted in our cultures. [/quote]
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