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The EU and the United States are to negotiate the biggest free trade agreement ever, a global "game-changer," boosting growth and providing much-needed jobs, European Commission head Jose Manuel Barroso said Wednesday.
An accord between the world's two largest trading entities would be "ground-breaking ... a game-changer," which will add 0.5 percent to the EU economy every year once it is in place, Barroso said.
Better still, "it’s a boost to our economies that does not cost a cent," he said, noting that after previous obstacles and objections, both sides were now ready for a deal.
The EU and US economies account for nearly half of global economic output and about a third of global trade, meaning an agreement will have profound implications for all, especially emerging giants such as China, Brazil and India for whom trade is a key development driver.
The negotiations will hinge on market access, and regulations and non-tariff barriers, both of which are often used to protect domestic markets, with agriculture likely to prove especially difficult as both sides jealously guard their farming interests and exports.
Barroso hailed President Barack Obama's commitment after he announced the talks overnight in Washington, saying an accord would be "an assurance that we mean business."
"It shows that the EU and the United States are strategic partners who are ready to go the extra mile to strengthen their economies."
Barroso said it was important to "get the ball rolling" as soon as possible, hoping that talks could begin in the first half of this year under Ireland's direction as current holder of the EU's six-month rotating presidency.
"The sooner we start, the sooner we can reach a succesful conclusion."
EU Trade Commissioner Karel de Gucht said "ideally, we want to finish this dossier within two years."
Obama told Congress on Tuesday in his State of the Union address that he had agreed to open the talks "because trade that is free and fair across the Atlantic supports millions of good-paying American jobs."
British Prime Minister David Cameron welcomed the move, saying a deal would create jobs and boost prosperity.
"Breaking down the remaining trade barriers and securing a comprehensive deal will require hard work and bold decisions on both sides," Cameron said, adding that as current head of the G8 countries he would do all he could to support an accord.
Asked whether an EU-US accord would undercut the work of the World Trade Organization, whose efforts to secure a global trade liberalisation deal have foundered, Barroso said he recognised the issue but that it could not be allowed to stand in the way.
The EU was very much in "very much in favour of a global approach. We have done everything to achieve an agreement" at the WTO, he said, but "if we do not want trade liberalisation to be stalled, we have to go through this bilateral process ... as our partners are doing."
"This free trade agreement could have a big impact on global (trade) rules," he said, adding that the EU will continue to support the WTO process.
A joint statement noted that the two parties "will have the opportunity not only to expand trade and investment across the Atlantic but also to contribute to the development of global rules that can strengthen the multilateral trading system."
With two-way trade worth $646 billion last year, the idea of an accord was revived against a backdrop of stalled growth and huge job losses in the world's two biggest trading entities in the aftermath of the 2008-09 global financial crisis.
Apart from Canada, the EU is engaged in a whole series of free trade negotiations, having begun talks with Japan and signing an accord with Singapore late last year.