With one phrase in the State of the Union address, President Obama supported the negotiation of a free trade agreement with the European Union:
"(We) will launch talks on a comprehensive Transatlantic Trade and Investment Partnership with the European Union," he said, "because trade that is fair and free across the Atlantic supports millions of good-paying American jobs."
The previous week, the 27 heads of government and state of the European Union supported the negotiations. This was the result of groundwork carried out during the year by a High Level Working Group on Jobs and Growth.
As described by the president of the European Commission, Jose Manuel Barroso, these statements open the door to negotiations to set up "the biggest free trade agreement ever done." This was officially confirmed on Feb. 13 in a joint statement by the leaders of the U.S. and E.U., who said each will initiate the internal procedures necessary to launch negotiations on what is called the Transatlantic Trade and Investment Partnership.
The magnitude of this endeavor is illustrated by the fact that both economies represent one-half of world production, with trade among themselves amounting to one-third of world trade, equivalent to more than $2 billion per day. Therefore, the transatlantic trade agreement will have profound influence on global trading rules.
Tariff reduction is not the most complex issue in these negotiations, because average tariffs are already low, at around 3 percent. Rather, the complexity of the negotiations resides in the abolition of nontariff trade barriers, such as subsidies to agriculture, or in the conciliation of environmental or antitrust regulations. Even so, the objective is to complete the negotiations by the end of 2014.
Isaac Cohen is an international analyst and consultant, a commentator on economic and financial issues for CNN en Espaņol TV and radio, and a former director, UNECLAC Washington Office.
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