Business groups from the U.S. and the European Union last week called on U.S. and European leaders to move forward with the creation of a barrier-free trans-Atlantic market. In an email interview, Fredrik Erixon, the director of the European Center for International Political Economy, discussed the prospects for a U.S.-European Union free trade agreement (FTA).
WPR: What impact would a FTA have on U.S.-EU trade, and what sectors would be most affected?
Fredrik Erixon: It would have a positive influence on trade, jobs and growth on both sides of the Atlantic. If you eliminate or reduce trade restrictions between two of the biggest economies in the world, with almost $700 billion in two-way trade, the gains will be substantial. That’s the basic economics of bilateral trade agreements: If you do them with small economies, the benefits will be small, but if you do them with big economies, the gains will be big. The biggest gains would probably come from slashing nontariff barriers and opening up the service sector to the same degree of crossborder integration as in the goods sector. The entire economy would be affected, not only those sectors that would be liberalized.