The European Union’s national leaders today said that they would like to establish a free-trade zone with the United States, a deal that would be the biggest in the world.

The leaders used their summit, otherwise dominated by discussion about the Union’s long-term budget, to state their “support for a comprehensive trade agreement” with the US and emphasised that negotiators should “pay particular attention to achieve greater transatlantic regulatory convergence”.

The message was underscored by José Manuel Barroso, the European Commission’s president. “We need to move forward,” he said after the summit, adding that opening up trade would be a “powerful leverage for modernisation of our economies”.

The statement may dispel US concerns about the resolve of the EU to enter what would be highly complex talks. The US’s own resolve could become clearer on 12 February when US President Barack Obama will give his State of the Union speech. He may choose to go one step further than his deputy, Joe Biden, who said on Saturday (2 February) that agreement on starting talks is “within our reach”.

The possibility of talks has received the strong backing of business lobbies on both sides of the Atlantic.

The EU’s leaders highlighted the EU’s other trade ambitions, saying that the EU expects a trade deal to be agreed with Canada “very shortly” and the EU is determined to follow up a deal agreed with Singapore in December with a similar liberalisation of trade with other Asian countries. Barroso also said that negotiations with Japan will start “soon”. EU negotiators won a mandate from the EU’s member states in November.
 
The prospect of a deal with the United States would, however, overshadow the other agreements that the EU is currently pursuing. Biden on Saturday described the potential of such a deal as “almost boundless”. The US and the EU account for about half of the world’s economic output and one-third of its trade. Herman Van Rompuy, the European Council’s president, today said that “trade can help us achieve as much for growth and jobs as all the growth investment made possible thanks to our MFF [long-term budget] deal” agreed at the summit.

The lead US and EU trade negotiators – Karel De Gucht, the European trade commissioner, and Ron Kirk, the US trade representative – met in Washington, DC on Tuesday (5 February). The EU-US High-Level Working Group on Jobs should soon issue a report on the feasibility and scope of a possible deal. It was, however, widely expected to have been released before the summit, freeing leaders to announce that they would follow its recommendations and open formal talks. Preparatory documents for today’s EU summit had also indicated that there might be unspecified “developments” before the summit.

Today’s statement by EU leaders in effect anticipates that the report will recommend that a deal is feasible as well as desirable.

The emphasis placed by EU leaders on “regulatory convergence” highlights that the greatest current barriers to trade lie behind the border.

However, the emphasis on harmonising regulation – ensuring that rules and standards are compatible – also indicates how substantial the challenge will be.

The possibility of a talks beginning in itself marks a watershed in a trade relationship that has for years turned on disputes such as the sale of US genetically modified organisms to the EU and health measures taken on poultry farms.

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