MADRID – US President Barack Obama’s announcement that negotiations will begin on a comprehensive “Transatlantic Trade and Investment Partnership” has generated excitement on both sides of the Atlantic. After a restless month in which it appeared that momentum for talks had dissipated, the announcement has renewed hope that a transformative agreement between the United States and the European Union can be reached.
Though commentators and policymakers have noted the numerous challenges inherent in such a pact, the general mood is one of optimism, reflected in US Secretary of State John Kerry’s comments in Berlin during his first overseas trip since taking office. But, in order to prevent negotiations from stalling over sensitive topics, such as subsidies and food safety, key political actors should first convene to resolve core differences. If combined with continued senior-level engagement, such an approach could make or break the deal.
The economic benefits of a trade agreement between economies that, together, account for more than 50% of global output and maintain nearly $4 trillion in cross-border investment are evident. Such an agreement could also transform transatlantic ties more broadly.
An ambitious transatlantic trade pact that is fully compatible with World Trade Organization standards and accepting of third parties should aspire to more than laying the groundwork for an “economic NATO.” Indeed, it should seek to create the foundation for a free-trade area of the entire Atlantic basin, with membership extending to Africa and Latin America.