Will New Free Trade Negotiations Spur Growth in the U.S. and Europe?

Economies in the European Union and the United States have both suffered economic downturns. In a bid to jointly increase economic output, the EU and U.S. are looking to strengthen their trade relations with talks beginning early next year. With the transatlantic goods trade worth about $700 billion a year, streamlining regulations, lowering tariffs, and creating a more efficient mechanism to navigate intellectual property rights could boost Europe’s gross domestic product by half a percent a year in the long run, according to European Commission estimates.

Reuters is reporting that the outcome of any talks are not likely to surface before the November 6 presidential election, with some sources pointing toward the spring. Trade negotiations are notoriously slow, and sometimes plagued by dated concerns. For example, a 15-year ban on EU beef imports that originated as a result of mad-cow disease remains in effect. Genetically engineered crops, foods, and seeds, which come packaged with high potential for controversy, are likely to be left off the table. Monsanto (NYSE:MON) might have to wait.

Catalysts are critical to discovering winning stocks. Check out our newest CHEAT SHEET stock picks now.

As momentum behind the Doha Round of negotiations diminishes, a push for a new system of dynamic trade agreements increases, aimed at accelerating both transatlantic trade, and revitalizing the Doha Round. A 2010 study by the European Centre For International Political Economy suggests that eliminating tariffs could boost the gross domestic product of the EU by 0.3 to 0.5 percent, and 1 to 1.5 percent in the U.S.

“Tariffs reduce the competitiveness of companies which use imported goods for assembling and re-exporting final products,” noted researchers.

Automotive trade remains one of the strongest relationships between the regions, and the industry in Europe has been particularly hard hit. American manufacturers like Ford (NYSE:F) and General Motors (NYSE:GM) are struggling, alongside European car makers, against regional decreases in demand and redundant regulations. Undoing policies such as those that require cars tested in the United States for safety to be re-tested in Europe could save both sides as much as 15 percent, according to the European Commission.

“There are more reasons today for the U.S. and the EU to conclude a comprehensive deal than before, if only because they are no longer together, as they were before, in a position that allowed them to set the agenda in the multilateral trade negotiations,” said Hugo Paemen, co-chair of the European-American Business Council, to EurActiv.

Investing Insights: 3 Earnings Releases You Must Know Now.