US to launch free trade talks with EU

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 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 on Tuesday.

Covering an area where two-way trade amounted to US$646 billion last year, a transatlantic pact could leave behind stalled efforts at a new global deal under the Doha round of World Trade Organisation 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 defence treaty had loosened in recent years.

"There are drivers that go beyond the immediate economic considerations and trade considerations," said Andras Simonyi, managing director of the Centre 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.