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Plan for EU-US Free Trade Agreement Gains Momentum

By Ashley Vaughan

A free-trade agreement between the United States and Europe is gaining momentum and may finally be attainable, business and political leaders say. Arduous negotiations lie ahead, but supporters of a pact say that it could rival the North American Free Trade Agreement (NAFTA) in scale and be a profitable, affordable way to encourage growth between the EU and U.S.

“There is now, for the first time in years, a serious drive towards an EU-U.S. free trade agreement,” European Trade commissioner Karel De Gucht said earlier this month. He hopes talks can be launched “as soon as possible,” reports the New York Times.

Numerous European leaders, including Angela Merkel, the German chancellor, and David Cameron, the British Prime Minister, are urging newly reelected President Obama to push for an agreement. The Europeans hope that eliminating friction in US-European trade would provide a badly needed economic stimulus.

Corporations and business groups on both sides of the Atlantic are also pushing hard for a pact. While tariffs on goods traded between the EU and U.S. average less than 3 percent, companies that do a substantial amount of trans-Atlantic business could see major profits from a relatively small increase in trade volume.

While China has been at the forefront of the political debate in the United States, U.S. trade with Europe is much greater, totaling $485 billion in goods in the first nine months of this year, compared with $390 billion in trade with China. Exports of U.S. goods to Europe totaled $200 billion through September, according to U.S. government data, while China imported $79 billion worth of U.S. goods. Economists estimate that a EU-U.S. free trade agreement could add at least 1.5% to annual growth on both sides of the Atlantic.