While the idea of such a close partnership between two of the world’s largest economies may seem daunting, the US and EU already have the world’s most integrated economic relationship. US investments in the EU are three times higher than the US investments in Asia. With over 645 billion US dollars in imports and exports between the US and EU is the EU is America’s largest trade partner and tariffs between the US and EU are significantly lower then between their other trade partners.
The current trade relationship between the US and the EU may sound pretty good already but there are still many obstacles that limit the trade between the two partners. These obstacles lie primarily in “non-tariff barriers” which are created by the differences in the regulatory systems used by the US and the EU.
The US and EU have very different regulatory systems especially in the area of food and agriculture. The differences in the systems are often due to culture differences in how European and Americans view health risks and food safety. A compromise in the systems would have to be found if the free trade agreement is to be realized. However, a solution can be found and with the potential of economic growth that could add 0.5% to Europe’s GDP and 0.4% to the US GDP, the benefits of such an agreement are clear.
DC
Sources:
US/EU: Bilateral Trade Deal is Promising, Distant Goal.
United Kingdom:
Oxford Analytica Ltd, 2013.
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