ISAS Briefs

The United States, under President Barack Obama, has taken the initiative to revive an old idea: to create a free trade area encompassing the European Union and the United States. According to the timeline accepted on both sides of the Atlantic, negotiations aimed at creating such a bloc will begin in late-spring of this year and conclude in two years. José Manuel Barroso, President of the European Commission, described this effort as a “game-changer”. This will unite two trading partners that account for nearly half of the world economic output and 30 per cent of world trade. The stock of shared investment adds up to $3.5 trillion. “Together, we will form the largest trade zone in the world…It is a boost to our economies that does not cost a cent of taxpayer money,” he said.2 If the returns on the creation of the trading bloc are so large and the cost so little, why has this idea taken so long to mature? If such a trading bloc does emerge how will it impact Asia? This paper attempts to answer these two questions.