In President Barack Obama’s 2013 State of the Union address, he indicated U.S. support for potential free trade pact when he said: “Trade that is free and fair across the Atlantic supports millions of good-paying American jobs.” Obama intends to make Trans-Atlantic Trade and Investment the centerpiece of his second term agenda. The Potential Trade Pact also found some committed supporters in Europe, such as German Chancellor Angela Merkel and U.K. Prime Minister David Cameron – both being business leaders and associations on their respective continents. Even AFL-CIO and other labor unions gave the green light to go ahead with the negotiations. Officials said talks could begin as early as June with a goal of reaching the final deal by the end of 2014.
Advantages of the Free Trade Pact:
- Based on the study conducted by the U.S. Chamber of Commerce, eliminating trans-Atlantic tariffs could add $180 billion to combined EU-U.S. gross domestic product over a period of five years. Removing half of the non-tariff barriers to trade would add a further 3% to GDP on both the EU and in the U.S.
- Since subsidiaries of large companies such as supply chains play a huge role in the transatlantic trade, this agreement would allow them to lower their costs and position themselves as formidable global competitors against new multinationals from emerging markets.
- The pact could be conducive in bringing about global rules and standards in a wide range of industries. It could also serve as a guideline for potential trade negotiations with emerging economies such as India and China on regulations, tariffs and investment rules.
However, there are several challenges to overcome during the negotiations of the agreement. The major bone of contention issues revolve around U.S. genetically modified food and hormone-treated beef, the battle over subsidies for Europe’s Airbus and U.S.’s Boeing, EU concerns over Internet privacy and flow of electronic data, as well as getting rid of impediments on investment and bidding for public procurement contracts.
A deal will help to jumpstart the ailing European economy to restore growth and bring down deficits, boost American exports, support jobs by enhancing competition, reduce regulatory barriers and level the playing field in the growing market in Asia.