A free trade agreement (FTA) between the European Union and the United States will amount to the “biggest bilateral trade deal ever”, according to European Commission President, Jose Manuel Barroso.
Speaking in Brussels on 13 February, Barroso, flanked by EU Trade Commissioner, Karel De Gucht, announced the intention of both sides to begin proceedings that would bring about a formal transatlantic deal on trade and investment. US President Barack Obama announced the initiative during his annual state of the union address on 12 February.
A joint statement by Obama, Barroso and European Council President, Herman Van Rompuy, said that the deal would “advance trade and investment liberalisation, and address regulatory and other non-tariff barriers”. This was echoed by Barroso on 13 February, who said the deal would advance “the development of global trade rules”.
He said, if successful, the deal would create “the largest free trade zone in the world”.
He thanked the “business community on both sides of the Atlantic” for its help in the initial success of the deal, and said that “we will definitely need their support for the next step”.
Currently, the EU and US account for about 47% of global GDP, about one-third of the world’s trade flow, while about €2 billion worth of goods and services are traded daily between the two. According to estimates, a free trade deal between both parties would bring annual gains of 0.5% GDP increase for the EU, with an equivalent 0.4% for the US by 2027.
Negotiations on the agreement will focus on three main areas, market access, regulatory issues and new modes of co-operation, including the contentious issue of intellectual property rights.
While admitting that reaching a deal will not be easy, Barroso said that if implemented, a comprehensive agreement could bring “tens of billions of euros per year” to the EU, as well as “tens of thousands of jobs”. He said, it provided a “boost to the economy that does not cost a lot of taxpayer’s money”.
“This sends a positive signal: that we mean business”, he said. “It shows Europe and the US are strategic partners, that are willing to go that extra mile”.
Trade Commissioner Karel de Gucht also admitted that finalising a deal “won’t be easy”. Speaking alongside Barroso in Brussels, he said that this represented a “groundbreaking” deal between the EU and US, which would cement “the economic relationship for decades to come”.
With the correct political will, he said, “we can dismantle the existing tariffs and make headway on market access”. The main focus of the deal, he added, should be removing barriers, overcoming divisive technical regulations ad harmonising standards and certifications.
He said that the EU hoped to begin formal negotiations on the deal by June, and “ideally, we would like to complete negotiations in two years’ time, and hopefully within the mandate of this commission”.
Both parties must now play a waiting game, although both are keen for developments to move before the summer. The Irish presidency of the council has already said it expects to launch formal negotiations before its leave office at the end of June. The European Commission will present a draft negotiating mandate to member states (which, according to De Gucht is almost complete), while the US administration will send notification of the deal to congress, which will trigger a 90-day period of discussion. Both sides say they are willing to open formal negotiations as soon as possible.
“We need to work together on developing global rules and standards, which will shape the future business environment of the world in the years to come”, said De Gucht. “This deal will represent real savings for business and better value for consumers”.