Europe and the US have a long history of trade spats – from GM seeds to chlorinated chickens – but both sides insist parochial concerns should not be allowed to derail an agreement
The UK could be the biggest winner in Europe from a transatlantic trade deal between the European Union and the US.
Prime minister David Cameron said on Monday that an EU-US pact would "turbocharge the transatlantic economy" by delivering up to £10bn a year to the UK, or £380 to every British household.
Luckily for Cameron, the UK could outshine the rest of Europe, with a 10% boost to economic output per head and 400,000 jobs in the long-term, according to the Bertelsmann Foundation, based in Germany.
The crisis-hit economies of southern Europe, Portugal, Italy, Greece and Spain, would also do well with above-average gains to employment. France, which trades less with the US, is among the countries with the least to gain, raising questions about French approval of the deal. All EU member states and the European parliament will have to approve the deal, which negotiators hope to conclude by the end of 2014.
The idea of a grand transatlantic trade pact has been in existence for a few decades, but has only become a priority following a slump in world trade, loss of faith in the prospects for a global trade deal through the Doha round, and an economic crisis that has laid low many European economies.
Although tariffs between the EU and the US are low (less than 3% on average), the volume of goods exchanged across the Atlantic – one third of global trade – means that a free-trade area would be a significant bloc. The EU is also keen to say goodbye to swingeing duties on high-value European produce, such as cheese and champagne.
The bulk of the talks will focus on bringing EU-US regulations into line. This could mean that American medicines that have passed US safety regulations would not face a second barrage of checks once they arrive in Europe. Or a British airline flying from London to Los Angeles would be allowed to pick up passengers in New York – a practice currently banned because European airlines are not allowed to run domestic flights in the US.
From genetically-modified seeds to chlorinated chickens, the EU and the US have a long history of trade spats. Both sides insist that 'parochial' concerns should not be allowed to derail what could be the biggest trade agreement ever. The UK government has said that an EU-US trade deal could boost Europe's economy by £100bn and the US by £80bn. The Bertelsmann Foundation thinks that the US is likely to be the biggest winner, with a long-term boost to its gross domestic product per capita of 13.4%, compared to 5% for the EU.
An EU-US free trade agreement would also create other winners and losers. European and US negotiators have been talking up £100bn in gains for the rest of the world, as an uptick in trade fires demand for raw materials from all corners of the globe. But traditional trading partners, such as Canada and Mexico and some north African countries, could lose out from easier transatlantic trade, according to Bertelsmann, although the world as a whole should gain.