US and EU flags. Photograph courtesy of openDemocracy
The EU and US will launch talks on a free trade agreement, where both sides have agreed that “everything is on the table” and an aim of producing the biggest trade deal in history.
The US and EU are currently the two biggest economies in the world, but China and other emerging economies are catching up quickly, and this deal would maintain Western economic influence.
US President Barack Obama announced US support for an agreement in his State of the Union address, with European Commission President Jose Manuel Barroso shortly afterwards saying:
“A future deal between the world’s two most important economic powers will be a game-changer, giving a strong boost to our economies on both sides of the Atlantic”
It is unclear how long any agreement may take with such complex negotiations often taking many years. However, some optimistic officials have referred to a two-year time-frame.
Lower tariffs and even free trade have been in negotiations between the EU and US for years according to EU Trade Commissioner Karel De Gucht, but this is the first time the plans have been publicly announced. The import duties imposed on goods sold between the two are already relatively low, but still prove a barrier for companies from one entering the other. The similarly strict but essentially different safety standards on goods is often another barrier for sales across the Atlantic.
One particularly difficult and complex sticking point of negotiations will be in agriculture, with the Common Agricultural Policy in the EU and GMOs in the US likely to slow talks as common ground is found.
The EU estimates that such a free trade deal could boost GDP growth by 0.5%, something which currently looks very attractive with the continent still currently experiencing an economic depression.
