Will Free Trade Talks With EU Pay Off?

Free trade negotiations are expected by early summer, and with both the U.S. and European Union economies dragging over the past years, it makes sense for the two to take care of business as soon as possible, with talks expected to finish in two years’ time.

Deals between the U.S. and EU are expected to be mutually beneficial, with the EU economy expected to see 86 billion euros of additional annual income and a 0.5 percent boost in the economy. The U.S. would likely benefit a little less, with 65 billion euros of additional annual income and a 0.4 percent economic boost. These increases would be achieved by around 2027.

President Barack Obama is in strong support of deals with the EU, as they have the potential to support millions of jobs in America. However, Vice President Joe Biden made it clear that the U.S. would have to be careful in negotiations to avoid a stand-still like the one that took place in the Doha round of world trade talks in 2001…

There are several areas that will likely face contention. If talks broach the subject of agriculture, issues about genetically modified foods and hormones used on livestock in the U.S. could create a sour point for the discussion. Issues regarding subsidies for Airbus and Boeing (NYSE:BA) could also pose problems for effective negotiations, as the subject has long been in dispute. Focus for agreements is likely to be centered around matching standards and regulations.

Division among the member countries of the EU could slow down or stop talks in certain areas. Those countries hit hardest by the euro zone debt crisis may be less agreeable to various free-trade proposals, whereas the northern counties are more likely to show interest in the proposals.

There is a lot hanging in the mix between the U.S. and EU — the combination makes up half of the world’s economic output and a third of its trade flows.

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