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EU and US free-trade talks launched EU and US free-trade talks launched
(about 1 hour later)
  
The European Union and the US will begin formal talks on a free-trade agreement, paving the way for the biggest trade deal in history.The European Union and the US will begin formal talks on a free-trade agreement, paving the way for the biggest trade deal in history.
European Commission President Jose Manuel Barroso made the joint announcement following President Barack Obama's State of the Union address.European Commission President Jose Manuel Barroso made the joint announcement following President Barack Obama's State of the Union address.
A deal would bring down trading barriers between the two biggest economies in the world.A deal would bring down trading barriers between the two biggest economies in the world.
EU-US trade is worth around 455bn euros (£393bn; $613bn) a year.EU-US trade is worth around 455bn euros (£393bn; $613bn) a year.
Mr Obama announced US support for talks as part of his annual address to Congress on Tuesday, saying a free-trade deal would "boost American exports, support American jobs and level the playing field in the growing markets of Asia".Mr Obama announced US support for talks as part of his annual address to Congress on Tuesday, saying a free-trade deal would "boost American exports, support American jobs and level the playing field in the growing markets of Asia".
In a joint statement, US and EU leaders said trade between the US and EU supported millions of jobs on both sides of the Atlantic.In a joint statement, US and EU leaders said trade between the US and EU supported millions of jobs on both sides of the Atlantic.
"We are committed to making this relationship an even stronger driver of our prosperity," the statement said."We are committed to making this relationship an even stronger driver of our prosperity," the statement said.
The EU estimates that a "comprehensive and ambitious agreement" will boost annual GDP growth by 0.5%.The EU estimates that a "comprehensive and ambitious agreement" will boost annual GDP growth by 0.5%.
One aim of the free-trade agreement would be to eliminate or reduce tariffs - taxes that apply to imported goods.
For both the EU and US average tariffs are already low, below 3%. But further reductions could nonetheless stimulate additional trade and there are some areas where tariffs are much higher, notably food.
Beyond that, the negotiations would try to reduce regulatory barriers to trade. That is more complex, but the experience of Europe's internal market shows it is sometimes possible.
The desire for bilateral trade liberalisation, on both sides of the Atlantic, reflects the failure of negotiations for a global deal in the World Trade Organization.
Those talks were launched 11 years ago and are nowhere near concluding. The big powers are anxious to use any opportunity to boost their economic performance.
It is not clear how long the talks will take, but similar trade deals have involved years of negotiations.It is not clear how long the talks will take, but similar trade deals have involved years of negotiations.
'Protectionist pressures'
The idea was discussed following the formation of a working group in 2011, and the formal talks may begin in the summer, EU Trade Commissioner Karel De Gucht said.The idea was discussed following the formation of a working group in 2011, and the formal talks may begin in the summer, EU Trade Commissioner Karel De Gucht said.
He said the deal would focus on bringing down remaining tariffs and other barriers to trade, and standardise technical regulations, standards and certifications.He said the deal would focus on bringing down remaining tariffs and other barriers to trade, and standardise technical regulations, standards and certifications.
Free trade between the US and the EU has been under informal discussion for years.
Previously politicians have been discouraged from pursuing free trade deals for fear of exposing domestic industries to greater competition from abroad.
But Steve Davies from the Institute of Economic Affairs, a think tank, said the economic crisis in Europe has injected more urgency into the talks.
"It's happening now because there has been seriously depressed growth in the EU, and this will be good news for economic growth," he said.
"On the American side, the critical factor is that Obama is now in his second term, so he doesn't have the protectionist pressures from US businesses to worry about."
Mr Davies said agriculture was likely to be particular area of contention, along with intellectual property, which could lead to political wranglings on both sides of the Atlantic.