BEIJING, July 8 (Xinhua) -- The United States and the European Union (EU) start Monday the first round of negotiations over a bilateral free trade deal that could be the world's biggest in history.
Given that the United States and the EU together account for nearly half of global economic output and a third of global trade flows, there is no doubt that the Transatlantic Trade & Investment Partnership (TTIP) will have a major impact not only on the two hefty economies themselves, but also on the landscape of global trade.
Proposed decades ago, the U.S.-EU free trade negotiations finally get started thanks to the pressing need for an economic boost on both sides of the Atlantic in the aftermath of the latest international financial crisis and the ensuing sovereign debt crisis.
It is estimated that the TTIP will generate an annual benefit worth over 100 billion U.S. dollars for each side by removing trade barriers, opening up the service sector and promoting investment.
The two sides expect the deal to add 0.5 percentage point to the EU's economic growth rate and 0.4 percentage point to that of the United States by 2027, which are considerable compared with the current sluggish growth in the two economies.
Though most U.S. and European analysts set a positive tone for the bilateral effect of the TTIP, its broader impact on the global trade system is mixed.
By launching negotiations on a bilateral free trade deal, Washington and Brussels are showing their commitment to trade liberalization.
However, they also send a clear signal that the two trading powers would like to go their own way and prefer a bilateral approach as the Doha Round of global trade talks remain deadlocked after negotiations for more than a decade.
The benefits of the bilateral approach are obvious. It would be much easier for the United States and the EU to find a compromise than for the 159 members of the World Trade Organization (WTO).
But what is more important is that the United States and the EU, with their economic and trade clout, can join hands to dictate the future rules of global trade and force others to follow. That is why the two sides have put harmonization of standards and regulations high on the agenda.
In parallel with the transatlantic negotiations, the United States is also pushing for a similar free trade deal in the Asia-Pacific region -- the Trans-Pacific Partnership (TPP). The two-wing strategy will give Washington an unmatchable advantage over its partners in building the future global trade regime.
All these moves add to the fear that bilateral and regional arrangements may prevail over the tottering global trade talks, which would break the world into different trading blocs and complicate the global efforts to search for a common rulebook for international trade.
This is not to say that a bilateral free trade deal or a regional arrangement will definitely run counter to global trade liberalization. Some of them can provide useful input for the global rulebook if reconciled with the rest of the world.
But if crafted purposefully to gain an upper hand and force others to follow, they may stoke rivalry and turn out to be problematic rather than facilitating.
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