Free trade between EU and USA

On Monday 17th June during the 39th G8 summit in Northern Ireland the United States and European Union confirmed that they will launch negotiations on one of the world's most ambitious free-trade agreements, promising thousands of jobs and speedier growth on both sides of the Atlantic.

Such a plan was first considered three decades ago but knocked down by Francein the 1990s. Europe has now managed to get Paris onside, opening the way to a deal that could boost the EU and U.S. economies by more than $100 billion a year each.
The first round of negotiations will take place in Washington on July 8, the White House said in a statement.
The United States and Europe account for almost half of the world's total output and a third of its trade. A free-trade deal therefore holds the prospect of massive economic gains and accompanying jobs.
While both U.S. and EU negotiators are aware that a final deal will be tough to clinch, they are also conscious of the rising power and influence of China and the need to deepen Western economic integration in order to compete with Asia.
Issues over media protection and "cultural exception" could still complicate negotiations.
France had threatened to block the start of talks until the EU's other 26 governments accepted its demand to shield movies and online entertainment from competition from Hollywood and Silicon Valley.

The United States and the European Commission, the executive arm of the 27-country European Union, hope for a free-trade deal by the end of 2014 - a tight deadline in complex international trade talks that usually take many years.

The London-based Centre for Economic Policy Research estimates a pact - to be known as the Transatlantic Trade and Investment Partnership - could boost the EU economy by 119 billion euros ($159 billion) a year, and the U.S. economy by 95 billion euros.
However, a report commissioned by Germany's non-profit Bertelsmann Foundation and published on Monday, said the United States may benefit more than Europe. A deal could increase GDP per capita in the United States by 13 percent over the long term but by only 5 percent on average for the European Union, the study found.
 

According to DW journalist Bernd Riegert who has published this week: "where there are so many winners, there are also bound to be a few losers that are left behind. Especially since the volume of world trade will not see a rapid increase with a deal between the US and Europe; it will just be redirected. 

The large trading blocks will only end up dealing more with each other, while exports to other world regions and especially imports from Latin America, Asia and Africa into the new super free trade zone could decrease. This is according to a study by the renowned Ifo Institute in Munich.

The study said that if tariffs between the US and Europe are eliminated, then states in West Africa, that traditionally trade with France or Belgium, will be at a disadvantage. 

Suppliers from the developing countries would be displaced by American companies. Even Canada and Mexico, which have so far joined the North American Free Trade Agreement with the US, would lose out, with their market shares taken over by Europe.

Other losers would be China and Australia, as products exported from these countries into the new free trade zone would become more expensive. Countries like Brazil, Kazakhstan and Indonesia, however, could belong to the winning side as they would be able to unload their raw materials in a much larger market".


Time and experience will indicate us the benefits and incovenients of that trade agreement and also the major winners.