Free-trade talks between the United States and the European Union that could boost their collective economies by up to $200 billion a year started in Washington today.
Despite conflicts over the recent NSA government surveillance scandal and a long-running disagreement between the US’s Boeing and Airbus in Europe, progress got underway towards what would be the world’s biggest free-trade deal.
The proposed Transatlantic Trade and Investment Partnership pact would cover about 50 per cent of global economic output, 30 per cent of global trade and 20 per cent of global foreign direct investment.
Joseph Francois, who ran the Centre for Economic Policy Research’s studies on the impact of the agreement, told the Independent that the effect on productivity and efficiency could boost the GDP of the UK alone by £4-10 billion a year.
He said: “Historically these talks are an important step in modernising the trading system. We have two big global players with a shared goal of boosting productivity and reducing trade and investment frictions.”
He added that in the long run successful talks, which would remove tariffs and cut down on regulations, would create jobs on both sides of the Atlantic.
The US and the EU are already each other's top trade and investment partners, with two-way trade between the bodies estimated at around $650 billion last year.
US Trade Representative Mike Froman said: “We go into these negotiations with the goal of achieving the broadest possible, most comprehensive agreement that we can.”
In order for a deal to be struck, both sides will need to agree on regulations for a disparate range of sectors, from agriculture to computer and information services.
And the latter has become the latest stumbling-block, with the revelations that the US uses customer data from many internet companies to identify potential threats to national security.
“It's made a difficult negotiating issue even harder,” said Jeffrey Schott, a senior fellow at Washington’s Peterson Institute for International Economics.
He added that the potential gains from an overall agreement are so big that there’s still a good chance one will be reached.
Meanwhile, the elephant in the room at the talks is the world's largest trade dispute over billions of dollars in subsidies for US aircraft manufacturer Boeing Co and its EU rival, Airbus.
They continue to battle it out in the World Trade Organisation dispute settlement system, and Schott warned that unless they reach terms we could see a bizarre situation where they end up spitefully raising duties on each other’s goods, as everyone else is trying to free up transatlantic trade.