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.
"We are very happy. We have worked to prepare the negotiations for a year," the EU's ambassador to the US, Joao Vale de Almeida, said. "We are very happy to see the President agrees … we will have a much greater influence if we are together."
Analysts said that the White House wanted to fast-track talks as a bookend to the drawn-out Trans-Pacific Partnership (TPP), another free trade project Obama has pushed, but which missed the end-2012 target for completion.
Obama said he would continue to pursue completion of the TPP, describing it as 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 liberalisation talks.
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", Simonyi said.
Goods pass between the two sides with import tariffs mostly below 3 per cent, but some on protected industries run as high as 20 per cent.
Eliminating those barriers could boost exports from both sides.
But Simonyi said it could serve a higher purpose, replacing the Nato defence 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."