Europe's top trade official said Saturday that a proposed trans-Atlantic trade pact would be the best way to boost the sagging economies of both the United States and European Union.
"On both sides, we are still suffering the effects of the earthquake that hit our economies in 2008," EU Trade Commissioner Karel De Gucht told an audience at Harvard University.
"This is the cheapest stimulus package you can imagine."
On February 13 Washington and Brussels announced the start of talks on creating the Transatlantic Trade and Investment Partnership, a trade and investment pact that would create the largest free trade zone in the world.
The aim is to have negotiations done by 2014, before a new European Commission is seated.
"Trade is an indispensable ingredient of prosperity," De Gucht said.
"It brings new customers for our exporters, cheaper components for our producers and more competition to make all our companies more efficient.
"For Europe, the income effects of the deal that we are now trying to achieve should be between 0.5 percent and 1.0 percent of GDP, meaning hundreds of thousands of jobs."
De Gucht said the path will be difficult, given many differences on products like US exports with genetically modified organisms, which are rejected in Europe.
"This negotiation will not be straightforward. And after it is concluded the political process to ratify it will not be straightforward, either," he said.
"The easiest part will be removing the duties that remain on goods. The average tariff barriers are already low, between 3 percent and 5 percent, but there is no reason they should not go to zero."
"The other issues will be harder, but if can tackle them the payoff will be a big one."
He said the pact is necessary since the failure of the World Trade Organization members to reach a new global trade deal in the Doha Round of talks.
"The core of (the WTO's) negotiating agenda is blocked, largely because of differences of view between developed powers -- like the US and the European Union -- and the rising stars," De Gucht said.
"An EU-US partnership can act as a policy laboratory for the new trade rules we need -- on issues like regulatory barriers, competition policy, localization requirements, raw materials and energy."