Brussels: The European Union and the US have decided to launch negotiations on a transatlantic trade and investment partnership, which will create the world's largest free trade zone.
The two sides have initiated the procedures to start the negotiations after several failed attempts earlier with the aim of working out a "ground-breaking free trade agreement in trade and investment partnership" across the Atlantic, European Commission President Jose Manuel Barroso said.
"It will be biggest bilateral trade deal ever negotiated," he told a news conference in Brussels on Wednesday.
Barroso made the announcement shortly after US President Barack Obama expressed his support for a EU-US free trade agreement in his state of the union address to Congress on Tuesday.
The President said a transatlantic FTA would "boost American exports, support American jobs and level the playing field in the growing markets of Asia".
"The future deal between the world's two most important economies will be a game-changer," Barroso said, adding "Together, we will form the largest free trade zone in the world."
The negotiations on a EU-US FTA will set the standards not only for the future transatlantic trade and investment, including regulatory issues, but also for the development of global trade rules, according to the commission president.
The proposed free trade deal will give a strong boost to the economies on both sides of the Atlantic, which are struggling with slow growth, high unemployment and high levels of debt.
"It will be a comprehensive agreement going beyond tariffs, internal markets and barriers," Barroso said.
In a joint statement issued simultaneously in Washington and in Brussels, President Obama, Barroso and European council President Herman Van Rompuy said that a free trade agreement between the EU and the US will not only expand trade and investment across the Atlantic, but will also contribute "to the development of global rules that can strengthen the multilateral trading system".
"It is estimated that when the agreement is up and running, the European economy will get a stimulus of 0.5 percent of the GDP, which translates into tens of billions of euros of income every year and tens of thousands of new jobs every year, Barroso said.
The exchange of goods and services between the EU and the US is estimated to be more than 450 billion euros a year.
The commission president expressed optimism that the negotiations could get under way before Ireland's current rotating presidency of the EU expires at the end of June.
He said the final report published on Wednesday by a joint EU-US working group established in 2011 to explore the possibilities for a free trade agreement provided a good framework for future negotiations.
EU Trade Commissioner Karel De Gucht said such a transatlantic economic alliance will be "ground-breaking" and the time is ripe to launch the negotiations and to move forward because both sides want to generate growth, create new jobs and overcome their debt crisis.
However, the negotiations will be complex and difficult and it may take two years to complete, he said.
The main focus will be on dismantling the remaining tariffs and other barriers to trade and to overcome the differences between the two sides in market access.
This will be in areas such as public procurement, services and investment besides the need to settle disputes over standards, certifications and technical regulations, the commissioner said.
The transatlantic trade and investment partnership will aim to go beyond the classic approach of removing tariffs and opening the markets on investment, services and public procurement, the joint statement said.
In addition, it will focus on aligning rules and technical products standards which currently form the most important barrier to transatlantic trade.
The transatlantic trade relation is the backbone of the world economy.
Together, the EU and the US account for about half of the world GDP (47 percent) and one-third of global trade flows.
Each day, goods and services worth around 2 billion euros are traded bilaterally, contributing to creating jobs and growth in the two economies, the statement said.
Latest estimates show that a comprehensive free trade agreement between the EU and the US could bring overall annual gains of 0.5 percent increase in GDP for the EU and 0.4 percent increase in the GDP for the US by 2027.
This would be equivalent to 86 billion euros additional annual income for the EU and 65 billion euros added annual income for the US economy, the statement said.