An economic world game-changer (Part 2)

I am slowly devilling out the implications of the proposed Free Trade Agreement between the US and the EU, no easy task as this immensely important topic has gone  largely unreported.

 

Already there are signs of movement, with the imminent lifting of trade restrictions on the import of beef imposed by both sides, dating back to the ‘mad cow disease’ panic in 1997.

 

What is particularly significant is that there is a strong sense of urgency; the Americans say they want it done ‘on one tank of gas’, all done and dusted within 2 years.

 

This is of crucial importance for UK domestic policy; it will all precede Dave’s negotiations with the EU on the future of the Union and the outcome of the referendum to which he is irrevocably committed. I shall come back to the political significance of all this when I have got a handle on it.

 

The free trade zone created by a deal would be massive, accounting for half of world GDP and about a third of world trade, and the US and the EU are the biggest investors in each other’s economies.

 

Existing tariffs are pretty small, and it is beginning to look as if the greatest benefit would be relief on non-tariff barriers to trade.

 

One great leap forward would be allowing EU companies to bid for American procurement contracts, a potentially hugely lucrative market.

 

Another would be in services. For example, EU airlines are not allowed to carry passengers between American cities, or take over American airlines. BA will be salivating at the prospect; it has been stalking a US carrier for years.

 

But it may be that the biggest gain will be in getting rid of regulatory restraints on trade. No longer would pharma have to go through two lengthy and complex safety testing, and to date there is no agreement at all regarding new technologies.

 

A big stumbling block might be agriculture, especially in such areas as GM crops (on which the EU is paranoid) and hormones in beef.

 

There is everything to play for.

Late news: Obama's State of the Nation speech ' I am announcing that we will launch talks on a comprehensive Transatlantic Trade and Investment Partnership with the European Union — because trade that is free and fair across the Atlantic supports millions of good-paying American jobs'.