Prospects and Implications of a US-EU FTA

Abstract

Ever since the 1990s, there has been a stream of unofficial studies and reviews discussing the possibility of a US-EU FTA. The average tariff rates for manufactured goods, however, in the US and EU are each a mere 2.0% and 2.4%, and both possess largely open economies. In this context it was generally accepted that a FTA between two parties would not bring about impact in terms of export growth. Accordingly, the US and EU have been concentrating on pursuing FTAs with emerging countries. In trade relationships with developed countries they have, meanwhile, focused on abolishing non-tariff barriers; they continued to discuss on liberalization in services and initiated several regulatory cooperations by industry, rather than on comprehensive FTAs. Key achievements in bilateral cooperation between the two sides are the US-EU MRA (1998), the EU-US Open Skies Agreement (2007) and the formation of consultative groups on different issues and industries under the auspices of the Transatlantic Economic Council. Industrial circles from both sides have from time to time brought up the necessity of a US-EU FTA, but the feasibility of an actual agreement has been considered low. However, the global financial crisis and the European debt crisis have led to the develop-ment of economic and political contexts that support the cause for a comprehensive FTA between the two economies. Such changes can be discussed in both internal and external contexts.