Multilateral agreements best serve the interests of world trade. But they can be hard to reach, as the drawn-out Doha trade round reminds us. Frustration with lack of progress spawns bilateral free-trade deals, which are better than nothing but promote two-way trade at the cost of trade ties with other nations. That said, the announcement that the US and Europe are to make another bid to seal a trade liberalisation agreement has to be seen, on balance, as positive for the global economy.
A deal to form the world's biggest free-trade alliance would promote trade between economies that account for half the world economy and one-third of its trade. A joint US-EU report recommends that talks begin by the end of June with the goal of substantive progress within two years.
President Barack Obama threw his weight behind them in his state-of-the-union address, saying it would put millions of unemployed Americans in jobs. The report estimates a deal would boost Europe's economy by around 0.5 per cent, or US$116 billion, and America's by 0.4 per cent, or nearly US$90 billion, by 2027.
Since tariffs are already low between the two sides, talks will focus on non-tariff barriers to trade, such as mutual recognition of health and safety rules. This would open the way to more competition and be good for consumers. This is the most ambitious deal since the founding of the World Trade Organisation in 1995. If it is open and transparent, it could be a benchmark for other countries.
It will not be all plain sailing. European Commission president Jose Manuel Barroso has already served notice that Europe will not compromise on basic rules regarding consumer health, for example on genetically modified crops or the use of hormones in agriculture. Talks begun with Canada in 2009, which have foundered on farm exports, intellectual property and public procurement, are a reminder of the obstacles that lie ahead.