The United States will open talks with Europe to launch what would be the world's largest free trade zone, US President Barack Obama announced Tuesday in his State of the Union address.
Answering mounting calls from the European Union to pursue a grand trade pact to spur growth on both sides of the Atlantic, Obama said the proposed treaty would help boost American exports and jobs.
"Tonight, I am announcing that we will launch talks on a comprehensive Transatlantic Trade and Investment Partnership with the European Union -- because trade that is free and fair across the Atlantic supports millions of good-paying American jobs," Obama said in his signature annual speech.
Covering an area where two-way trade amounted to $646 billion last year, a transatlantic pact could leave behind stalled efforts at a new global deal under the Doha round of World Trade Organization negotiations.
But analysts said it could also serve a greater role of bringing the two sides together as the bonds created by the NATO mutual defense treaty have loosened in recent years.
"There are drivers that go beyond the immediate economic considerations and trade considerations," said Andras Simonyi, managing director of the Center for Transatlantic Relations at Washington's Johns Hopkins School of Advanced International Studies.
Proposed years ago, the US-EU trade pact idea has been revived recently as both sides of the Atlantic seek avenues for growth and job creation for their weak economies.
"We are very happy, we have worked to prepare the negotiations for a year," the EU's ambassador to the United States, Joao Vale de Almeida, told AFP.
"We are very happy to see the president agrees... We will have a much greater influence if we are together."
Analysts have said the White House wants to fast-track talks as a bookend to the drawn-out Trans-Pacific Partnership, another free trade project Obama has pushed but which missed the end-2012 target for completion.
Obama added Tuesday that he would continue to pursue completion of the TPP, saying it was important "to boost American exports, support American jobs and level the playing field in the growing markets of Asia."
Both come amid frustration over the stalled Doha round of world trade liberalization talks, Simonyi told AFP.
With the TPP still struggling to gain real traction, a transatlantic free trade agreement "is what will set the standards for trade, investment and regulations globally," he said.
Goods pass between the two sides with import tariffs mostly below three percent, but some on protected industries run as high as 20 percent.
Eliminating those barriers could boost exports from both sides.
But Simonyi said it could serve a higher purpose, replacing the NATO defense treaty as the glue holding the two sides together.
"I think it's important to keep the trans-Atlantic relationship going. It has been searching for the driver for a long time."
"We are in touch with both sides on a pretty high level and, for the first time we really feel, both in the United States and in Europe that the leading forces want this to happen."
A European diplomat said that the idea could push emerging economic giants like China to be more open.
"It is based on the idea that, in launching an ambitious accord between the two regions that dominate global commerce, they will push the emerging countries to open up more than they were willing to in WTO negotiations," the diplomat said.
The US Chamber of Commerce also endorsed Obama's announcement.
"We have long called for such a pact to eliminate tariffs, ensure compatible regulatory regimes, and address investment, services, and procurement," said the Chamber's senior vice president, Myron Brilliant, in a statement.
"We urge both US and European officials to move swiftly in negotiating a high-standard agreement that will foster economic growth and job creation for all our citizens."