his study examines the potential gains from a transatlantic zero-tariff agreement on trade in goods.
he idea of deeper transatlantic economicintegration has become more attractive in recent years.
he hopes for anambitious multilateral trade deal in the Doha Round negotiations havediminished; few countries appear ready to accept ambitious liberalisation on theglobal level. Leaders have increasingly turned to bilateral or regional tradeinitiatives, but few of them are capable of delivering sizeable gains to bigeconomies like the European Union and the United States.-
ransatlantic economic integration is not likely to spell the end of the DohaRound or the World
rade Organisation (W
O). In fact, it could have the oppositeeffect. Like big regional initiatives in the past (e.g. the EU Common CommercialPolicy, the EU single market and the NAF
A), a transatlantic free trade accord,properly designed, could give the W
O and its members the jolt they need to get on track again.-
ariffs between the EU and the US are comparatively low (they average at 5-7percent). But transatlantic free trade in goods could still deliver sizeable gains.Existing tariffs prevent trade and import competition.
he EU and US economiesare big, and bilateral trade is to a large degree composed of intra-firm trade. Boththese factors suggest potential trade gains of great magnitude. As a significant part of the trade is intra industry, competition could increase as a consequence of liberalised trade.-
effect on GDP from a transatlantic zero-tariff agreement is estimatedto be 0.01 percent for the EU and 0.15 percent for the US.
accounting for improved productivity and reduced trade facilitation costs areestimated to be
for the EU (or $46 to $69billion) and
for the US (or $135-$181 billion).-
measured as national income effects are moreevenly distributed between the two economies.
he static effect is
forthe EU and
for the US.
are estimated tobe
for the EU and
for the US.-
change in EU exports
to the US is
(or $28 billion) in astatic scenario and around
(or $69 billion] in the dynamic scenario.
he US is estimated to increase exports to the EU by
(or $23 billion) inthe static scenario and
(or $53 billion) in the dynamic scenario.-
he purpose of the study is to examine if the potential gains from a transatlantictrade accord is big enough to motivate such an initiative. Based on the results of the simulations in this study, the answer is Yes.