The US and the EU on Wednesday launched their most ambitious attempt to liberalize transatlantic trade following US President Barack Obama’s commitment to a new pact outlined in his State of the Union speech.
A joint statement from Obama, European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso, said they would kickstart moves in the US Congress and among the 27 EU governments to open negotiations on a new free-trade pact seeking to eliminate or minimize barriers everywhere from the automobile to the pharmaceuticals industries, to services, agriculture and investment.
Britain said the talks should start this year. In Brussels, leaders said they wanted the negotiations launched by June and envisaged a two-year process, although EU Trade Commissioner Karel De Gucht hoped the talks could be concluded by next year.
In part, this is a response to the rise of China in the global trading contest and to the long-running stalemate in the Doha round of world trade talks. Washington and Brussels also hope to boost their flagging economic performance through a breakthrough that is likely to be difficult and complicated to achieve.
“A high-standard transatlantic trade and investment partnership would advance trade and investment liberalization and address regulatory and non-tariff barriers,” the joint statement said.
European leaders were pleased at the decision, saying a successful negotiation could result in a boost to annual EU GDP of about 70 billion euros (US$93 billion) or half a percentage point.
De Gucht described a potential pact as “groundbreaking,” while Barroso called it a “win-win solution” that could generate a bonanza for the European farming, food and automobile industries.
British Prime Minister David Cameron said he would use Britain’s chairmanship of the G8 countries this year to push the transatlantic trade agenda.
“It’s great that President Obama has set out his determination to agree a trade deal between the EU and the United States,” he said.
The political momentum appears to have shifted in favor of a more comprehensive trade pact, although the devil will be in the detail. A successful outcome could have an impact on the UK debate over whether to remain in the EU.
Barroso would not comment on the likely effect, but said that “Britain as an EU member is strongly advocating this kind of agreement.”
The conclusion of any talks could be influenced by the German election in September, followed by European elections next year and the installation of a new commission, and by any potential glitches in the US Congress. The US-EU’s trading relationship is valued at 2 billion euros a day, accounting for 30 percent of global trade, while the US and the EU make up almost half of the world’s economic output.