by Ray Fleming

The inclusion in President Obama's State of the Union speech of an agreement between the US and the European Union to start negotiations for a deal that would create the largest single free trade zone in the world was excellent news.

The idea was first discussed in 2011 and a working group has been doing preliminary work but formal discussions are now expected to begin in July this year. In Brussels Jose Maria Barroso, the EU Commission President, welcomed the development. The economic relationship between the US and the EU is already the world's most active with trade worth 455 billion euros a year but there is plenty of room for further expansion. The timing is right because at the start of a final second term in office President Obama will be better able to deal with the usual US protectionist pressures that oppose free trade. As in all free trade negotiations there will be difficult obstacles to clear away.

President Obama's green light in his speech may help to explain his recent insistence with David Cameron that Britain should remain a full member of the European Union. The prime minister may reply that he intends to remain in the EU's “common market” but the wider perception is that a deal of the kind now envisaged will strengthen the role of the EU as a whole in global affairs generally.