While "made in China" products become wide-spread in the U.S and China-U.S trade continues to grow, the trade between the European Union (EU) and the U.S is actually the driving force behind world trade figures. Indeed, the EU-U.S trade is the largest trade in the world and comprises one-third of all trade, determining the shape of the global economy. Now, the debt crisis in Europe and the desire for American growth are pushing both sides to consider knocking down the barriers to trade. A trans-Atlantic trade talk is underway.
The talk will take place this spring and will address many disagreements regarding trade tariffs, intellectual property rights, and service regulations. Although the tariffs between the two are already low, the huge volume of annual trade in goods between the U.S. and Europe would yield heavy overall savings. Eliminating all tariffs would increase the trade volumes among small business and help to the further the trade surplus between the two. A free-trade agreement would not cost taxpayers any money, “This is the great, untapped stimulus.” Karan Bhatia, a former deputy U.S. trade representative, said. For Europe, eliminating frictions in EU-U.S trade would provide some immediately needed economic growth as it currently experiences economic nightmares. For the U.S, the benefits are even greater since the free-trade agreement would be a way to pry open Europe’s agricultural markets and allow the U.S. to introduce Genetically Modified (GM) crops to Europe.
However, GM food problems yield the biggest obstacle to any deal between the EU and the U.S. Only two GM foods have been approved for EU cultivation: a corn plant developed by Monsanto and a potato developed by Base. By exporting GM food, America has been criticized by the Europeans because of deep-seeded mistrust among the public on GM crop technology and their potential health side-effects. EU has developed many regulations against importing GM crops from the United States. America has aggressively tried to get the GM crops approved by the EU but has had little success thus far. Mr. De Gucht said that the U.S. should not expect too much progress on this issue. De Gucht states, "What you cannot erase in any agreement is our cultural and political differences."
Although the agriculture issue is a controversial component in the trade talks, there is no doubt that the EU and the U.S should make an agreement to eliminate the trade barriers on other goods and services. The benefits of eliminating tariffs are unequivocal and reciprocity is expected. What other gains will the EU and the United States receive if these trade talks are successful? Let us know what you think by leaving a comment below!