Last month, President of the US Barack Obama, European Commission President José Manuel Barroso and European Council President Herman Van Rompuy announced they were each starting the internal procedures necessary to launch negotiations on the much awaited trade agreement between the EU and the US. The negotiations will be based on the work of the EU-US High Level Working Group on Jobs and Growth co-chaired by Commissioner De Gucht and United States Trade Representative Ron Kirk.
Background
The EU and the US make up 40% of global economic output and their bilateral economic relationship is already the world’s largest. The aim of the high-standard Transatlantic Trade and Investment Partnership is to liberalise trade and investment between the two blocs. According to a report released today by the European Commission (Reducing Transatlantic Barriers to Trade and Investment
), the final agreement could see EU exports to the US rise by 28%, earning its exporters of goods and services an extra €187bn every year. Consumers will benefit too: on average, the agreement will offer an extra €545 in disposable income each year for a family of four living in the EU.
), the final agreement could see EU exports to the US rise by 28%, earning its exporters of goods and services an extra €187bn every year. Consumers will benefit too: on average, the agreement will offer an extra €545 in disposable income each year for a family of four living in the EU.
The European Union and the United States will have their eyes on more than just removing tariffs. Tariffs between them are already low (on average only 4%) so the main hurdles to trade lie 'behind the border' in regulations, non-tariff barriers and red tape. Estimates show that 80% of the overall potential wealth gains of a trade deal will come from cutting costs imposed by bureaucracy and regulations, as well as from liberalising trade in services and public procurement.
That's why the two trading giants will reinforce their regulatory cooperation, so to create similar regulations rather than have to try to adapt them at a later stage. The aim is to build a more integrated transatlantic marketplace, while respecting each side's right to regulate in a way that ensures the protection of health, safety and the environment at a level it considers appropriate. Both sides hope that by aligning their domestic standards, they will be able to set the benchmark for developing global rules. Such a move would be clearly beneficial to both EU and US exporters, but it would also strengthen the multilateral trading system.
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