Even as it becomes commonplace to think the future belongs to the emerging world, the old economic powers can still pack a punch. The ambitious decision by the US and the EU to launch trade liberalisation talks promises a prize whose political value is even greater than its considerable economic benefits.
Often, bilateral trade agreements are double-edged swords: they promote trade between the participants, but risk displacing beneficial trade with third parties. Ideally, multilateral deals are better. But the Doha trade round shows that global trade liberalisation can remain an ideal for a long time.
In this case, the goal is to intensify trade between the world’s two biggest economies, which between them make up half of the world economy and account for a third of its trade. Any trade-displacing effects would be too small to outweigh the economic benefits of a successful trade deal – especially when Europe, and to a lesser extent the US, struggle to grow.