Making the Atlantic Great (Again)? Prospects for New U.S.-EU Trade Negotiations
The idea of a free trade agreement between the United States and the European Union can seem at once inevitable and impossible. Over the last twenty-five years, as the EU has grown from fifteen to twenty-eight member states to become an economic superpower, the multilateral trading system enshrined in the World Trade Organization has turned more ungovernable. As a result, the logic of leveraging a transatlantic economic pact that would encompass nearly half of global GDP to bolster and reform the seventy-year-old rules-based, liberal economic order has become increasingly compelling.
At the same time, however, the very complexity involved in bringing together two economic giants, roughly equal in size, each convinced of the superiority of its commercial, financial, and regulatory model, presents a daunting task to practitioners of economic statecraft. It should not be forgotten that even without a free trade agreement (FTA), the transatlantic economy has become deeply integrated to the tune of more than $1 trillion in annual trade in goods and services, a foreign investment stock of $5 trillion, and 9 million jobs directly created by U.S. and EU companies in each other’s market. Given this impressive market-driven inter-weaving of the two economies, it is legitimate to ask whether the U.S. and the EU need to be in a hurry to formalize their relationship through an FTA.