By Kirill Bezverkhy | VOR
The European Union and the United States are holding secret talks on the creation of a joint trade and economic union. According to news media reports, Washington and Brussels are in talks to strike an unprecedented deal on creating a trans-Atlantic market. The purpose of such an initiative is to offset the potential of the Old and New Worlds against the rapidly developing markets of the BRICS group of countries, particularly India, China and Russia.
The idea of economic integration between the EU and the US was first suggested by Germany. Chancellor Angela Merkel put forward this initiative in 2007. Back then, the plan received no approval from Washington and was shelved altogether, following the 2008 crisis.
According to unofficial reports, the participants in the clandestine talks are discussing mutual investments and common standards in taxation, medicine and other areas. Meanwhile, experts warn about the difficulties that lurk behind such integration. They make it clear that a trade union of the two regional economies should not hurt European and American high-tech companies. Analyst Mikhail Neyzhmakov comments.
“A large number of corporations on both sides could benefit from such a union. However, since the EU and the US both produce high-tech products and are competing in this area, they might end up damaging their own corporations by creating a free economic zone and offering free access to each other’s markets.”
A trans-Atlantic economic zone would spur economic growth in the US and the EU. According to experts, abolition of taxes will guarantee a 0.5% GDP growth in the EU and a 1.5% in the US. Exports would increase by nearly one fourth in both the EU and the US. The European Union and the United States could thus form an effective counterbalance to the BRICS economies.
Europe and the United States have been losing their positions on foreign markets over the past few decades. Maxim Bratersky of the Higher School of Economics, comments.
“Over the past 10-15 years, Europe has become less competitive compared to China and India. However, it has been losing only in a particular set of sectors, where European workers can be replaced by Chinese, or Vietnamese. As for a whole range of other sectors of the economy, Europe retains fairly strong positions on the markets.”
Most analysts are skeptical about a US-EU economic union. Nevertheless, given the current trend for economic integration in various corners of the world, such a union remains an option. The 21st century could well become an era of economic alliances in the course of which the US and Europe will join forces against the rest of the world, including Asia.