EU/US : EXEC'S WORKING DOCUMENT RECOMMENDS COMPREHENSIVE TRADE DEAL.

Negotiating a comprehensive and ambitious free trade agreement (FTA) with the United States would be the best option for the EU, a European Commission staff working document states.

The draft 50-page report seen by Europolitics studies several options regarding the potential opening of FTA negotiations with the US - option A: no policy change at all; option B: tariff, services or procurement only agreements; and option C: a comprehensive trade deal.

"There is a clear-cut case for the EU to enter into negotiations for a comprehensive and ambitious FTA as the preferred option," the report concludes as it argues that as a result, all regions of the world will see welfare gains in terms of increased national income. "An ambitious FTA between the EU and the US is expected to raise total world income by 325 billion, of which 86 billion are expected to materialise in third countries," it notes. Therefore "such an initiative can reasonably be described as substantially supporting the world economy and contributing to the overcoming of the great recession'.

But the argument of the two largest economies helping the world surmount the crisis is clearly not the only reason a comprehensive trade deal is recommended. Indeed, both parties would gain tremendously from signing and ratifying such an FTA. Together, the EU and the US account for about 40% of the world gross domestic product (GDP) and one third of total world trade. And a 2% rise in EU GDP would follow the conclusion of a comprehensive FTA.

ASIAN SHADOW

While there is no doubt that both the US and the EU economies would be boosted by the FTA, an incentive to...