Toward a free trade treaty between the European Union and the United States?

Marie José Garot. Professor. IE Law School

19 June 2013

The creation of an enormous market comprised of 800 million consumers has just begun. But in order for this idea to work, the European Union will have to show that it really is united.

In his address on the State of the Union on February 12, 2013, President Obama announced his desire to set up a free trade agreement with the European Union.  The idea in itself is not new. A High Level Group focused on employment and growth, comprised of representatives from the United States and from the European Union, has been working on this project since 2011. Two days before Presidente Obama’s address, said High Level Group presented its final report, which recommended that negotiations be opened up. For Europe’s part, given that trade policy is a policy that is exclusive to the European Union (rather than individual member states), it will be the European Commission (and in particular the Trade Commissioner, De Gucht) who will be in charge of negotiating with the United States, under the mandate of the Council of Ministers and the close monitoring of the European Parliament, which will have to give its approval to the negotiated agreement.

What is at stake here? From the economic point of view, the creation of an enormous market comprising 800 million consumers in which the free circulation of goods and services should be guaranteed. The European Commission believes that liberating trade between the EU and the US would increase the EU’s wealth by 0.5% by 2027 (without specifying which member states could benefit the most…).  The US and Europe are already economic partners of the highest order. Together, they make up almost half of the world’s GDP (47%), and a third of world trade flows.  Hence wouldn’t it be marvelous if the agreement could completely disprove Commissioner Michel Barnier’s prediction that by 2050 there will be no EU member states among the richest 8 countries in the world?

In addition to the economic benefits of a free trade zone agreement between the EU and the US, it could also increase the influence of these two powers in a global and multilateral world. If, in spite of divergences in technical standards, plant protection requirements, protection of the environment, etc., the US and the EU are capable of reaching an agreement, their model based on rules accepted democratically by their citizens will recover a certain amount of status on the world stage, which is also worth a great deal.

But, as we know, in spite of the ambitious agenda set by Brussels (the aim is to have an agreement within two years), there is still a long way to go. The first hurdle is to determine the object of the discussion: Should all products be included, both agricultural and non-agricultural? And what about “cultural” services? There are already dissenting voices in the EU. Last week fourteen states, including Spain, under the leadership of France, asked that the audiovisual sector not be included in negotiations.  UK Prime Minister Cameron on the other hand has stated that everything can be brought to the negotiating table. Although negotiations between the two parties have not yet begun, it is predictable that before negotiating with the US, EU member states will have to negotiate among themselves. It is therefore clear that as far as the EU is concerned, its cohesion and solidarity among member states is also at stake when it comes to determining negotiating terms. It is not only leadership that will be necessary, but also responsibility and a forward-looking mindset, which also count for a great deal!

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