Bottom Line: A pending free-market deal between the US and the European Union could open up a massive transatlantic market that could account for 56% of global imports and exports and ostensibly could help Europe out of its economic limbo—but at the cost of some European legislative norms that Brussels isn’t keen to give up. The bigger beneficiary will be the US.
Analysis: With this deal, US exports to Europe could increase by up to 20% thanks to a removal of customs duties that come along with a free-trade agreement. By contrast, the European Union GNP growth will be about 0.5% as a result of the deal. The real problem with the deal for Europe is that it would mean undoing some strict regulations that have for long guided its internal trade—regulations governing quality control, health safety and transparency. Also at issue will be American-style genetically modified foods and “enhanced” foods. But what’s key to understand here is that the European Commission actually proposed the deal to the US. France remains the odd man out, not keen on its market being flooded with American products, particularly of the Hollywood nature. While the US is going for every market in this deal, the French say audiovisual must be exempted or it will derail the talks. The deal is the brainchild of European Commission head Jose Manuel Barroso.
Recommendation: Most of the EU countries will support the deal, with the exception of France, which will push for higher sanitary regulations in line with EU standards and the audiovisual exceptions, and Italy is also bemoaning what this would mean for its exclusive domestic food products for which it is famed. However, France doesn’t wield as much power as it claims over this deal and French corporations support it, so this is a lot of hot air. While the deal will largely have EU official support, it will find less public support. On 14 June, the EC could grant Barroso the power to negotiate this deal with the US on behalf of EU nations, and he is targeting November for the completion of talks.