A giant transatlantic free trade area took a step closer to realisation yesterday as the European Commission president José Manuel Barroso pledged to start talks with the United States as early as June.
Mr Barroso yesterday set a date for talks over the historic trade bloc in the first half of the year. It came less than 24 hours after the US president Barack Obama made a renewed call to establish a free-trade area with Europe in his State of the Union address to United States Congress.
"Trade that is fair and free across the Atlantic supports millions of good-paying American jobs," Mr Obama said in what was viewed as his strongest commitment yet to trade negotiations with the EU.
Such a deal, if agreed, would bring together all 27 member nations of the European Union and the US, which between them represent more than half of the world's economic output.
A free-trade agreement is designed to eliminate tariffs normally imposed on cross-border trade and to centralise regulations, licensing and other administrative overheads.
"It's of global significance as from the US perspective in the context of a stronger euro, it makes it cheaper to buy American goods," said Raza Agha, the chief economist for the Middle East and Africa at VTB Capital.
Given the complexity of merely negotiating all such elements that currently exist between the 27 countries to be included in any US-EU agreement, no deal is expected in the near future.
"A free-trade agreement between the US and the EU would be the most ambitious and far-reaching trade agreement ever accomplished as it would concern the two largest economies in the world, "said Philippe Dauba-Pantanacce, a senior economist for the Middle East and North Africa at Standard Chartered Bank.
"But it is very unlikely that we could see a final deal on such a grand plan any time soon, let alone the question of the feasibility of such a deal. But at least it means a growing cooperation on trade, investment and regulatory issues."
The GCC has also long talked of negotiating a free-trade agreement with the EU, but there has been little progress on such a deal.
Charles Davis, the head of macro economics at the Centre for Economics and Business Research in London, said the proposed US-EU deal was encouraging for a GCC accord.
"From the perspective that the EU has never moved as one bloc in this way before, if it does go ahead with this US agreement it would certainly be a very good thing for encouraging similar alliances with regions like the GCC," he said.
* with reporting by Tom Arnold