Imagine a free trade zone stretching across Europe and America
. The largest hub of open enterprise in the world, able to compete with emerging economic giants like China on a level playing field. Well, the idea may just have stepped out of the realm of fantasy. United States President Barack Obama, in his State of the Union address, has tentatively agreed to a round of free trade discussions between the European Union and the US.
Although it is unlikely that Obama's move will actually pave the way for a free trade agreement
during his time in office, at least the groundwork will have been laid for a deal at a later date. After all, you have to start somewhere. In reality, EU officials have been working on a proposal since November 2011 and unofficial discussions stretch back even further.
Talking to Congress yesterday and couching the FTA proposal in his own American citizen-friendly terms, Obama promised to "launch talks on a comprehensive transatlantic trade and investment partnership with the EU because trade that is free and fair across the Atlantic supports millions of good-paying American jobs". Economists are forecasting that a US-EU FTA, - with harmonised standards and free of tariff walls - could boost gross domestic product by 2 per cent and create two million new jobs. A much needed shot in the arm for the European and American economies. Currently, America and Europe conduct business worth $2.7bn every day so there is a solid history to build upon.
Other FTAs with Japan and Canada are on the cards and another agreement with Singapore was concluded in December – as the EU seeks alternative bilateral deals following the collapse of the Doha
round of World Trade Organisation negotiations back in 2005. The EU's ambassador in Washington Joao Vale de Ameida purported to be "very happy" with Obama's announcement, adding "we will have a much greater influence if we are together". And Finnish Europe minister Alexander Stubb insisted that it was "good news for the world economy, growth and jobs".
In June last year, Catherine Bearder MEP urged both the EU and the US to hurry up and get around the negotiating table. Writing for PublicServiceEurope.com,
she said: "What we need is free trade agreements with major developed economies, primarily the US and Japan. We need free trade agreements and we need these negotiations to start straight away.
"The potential advantages are clear. Our exporters will gain greater access to markets of hundreds of million wealthy consumers. The tariffs on their products will be slashed and burdensome regulatory requirements will be streamlined. For European import businesses, imported parts will become cheaper - making our companies more competitive and reflective of the modern reality of global supply chains.
"For our competitive service industries, new opportunities and sectors will open up and our businesses will be able to compete for foreign procurement contracts currently denied to them. These benefits should create the jobs that we so desperately need and consumers will have greater choice and profit from cheaper products. In addition, through liberalising environmental goods and services, these free trade agreements with developed countries could also be instrumental in furthering our sustainability agenda.
"A free trade agreement with the US is the real prize. Until now, the two founding fathers of the WTO have spent the years since its inception in 1994 - bickering like children on issues such as subsidies for Boeing and Airbus, imported bananas and beef hormones - among others. Out of the ashes of Doha, this squabbling seems to have been set aside and there is now real momentum heading towards the launch of free trade negotiations."
It is unclear at this stage just what the next step will be in the US-EU FTA saga. While MEPs will want to be involved in formal negotiations, the more protectionist member states will be concerned about the perceived threats to their own industries. As a result, they will demand input and significant caveats in any deal. No matter, the gate has been opened. The truth is that, in the long term, Europe has no alternative in the evermore elusive search for economic growth.