- Transatlantic Free Trade Agreement Presents Opportunity for US and EU Businesses
- February 20, 2013
- Law Firm: Mayer Brown LLP - Chicago Office
During his State of the Union address, President Obama announced the administration’s decision to launch formal US-EU trade negotiations, based on the recommendation of the US-EU High Level Working Group on Jobs and Growth (HLWG). Companies with transatlantic businesses interests should quickly identify trade and regulatory priorities in order to use the upcoming negotiations to reduce or eliminate trade barriers, such as by seeking changes to standards, to create a more favorable business climate.
Since November 2011, the HLWG has been analyzing policies and measures to increase EU-US trade and investment. In a report released on February 11, 2013, the HLWG announced its conclusion that a comprehensive trade agreement that addresses a broad range of bilateral trade and investment issues, including regulatory issues, and that contributes to the development of global standards and rules, would yield the greatest result.
A transatlantic free trade agreement (FTA) would have a tremendous economic impact. Europe is already the United States’ largest economic partner, with more than $600 billion in annual trade (compared to American trade with China of about $500 billion). A transatlantic FTA would create the largest free trade area in the world, covering approximately 40 percent of global commerce, and could generate more than $5 trillion in trade, investment and sales. According to a study by the US Chamber of Commerce “eliminating these tariffs [in a transatlantic FTA] would boost two-way trade by $120 billion within five years” and add $180 billion to the new bloc’s combined GDP.1
The agreement will be “comprehensive” and will open further transatlantic trade in goods and services by reducing tariffs and eliminating non-tariff trade barriers. Moreover, both parties also intend to harmonize standards and regulations, open public procurement markets, increase the protection of investments and intellectual property, and enhance regulatory cooperation and standards convergence. The United States and the European Union will be seeking input from the private sector on top priorities for the negotiations.
Companies should begin work immediately to identify:
Key products or services that are, or could be, traded;
Specific regulatory policies, standards, or practices that affect transatlantic trade; and
Areas where greater cooperation between the United States and the European Union would increase business opportunities.
A number of mechanisms exist to communicate these priorities to the teams of US and EU experts who will be negotiating the agreement, but it is critical to convey this information early to ensure inclusion in the scope of the negotiations.
1 US Chamber of Commerce, "Transatlantic Economic and Trade Pact."