Transatlantic Free Trade Zone: A promising, but difficult venture

At around 5%, global trade has been growing at an annual rate that is almost twice as fast as global economic output (+2.7% a year) over the past ten years. Exports have evidently shown much more dynamic development than domestic demand, i.e. consumption and investment. So we do not need to resort to economic theories in order to highlight the fact that the expansion in international trade has been one of the main drivers behind growing prosperity levels.

For a few years now, most of the world's industrialized nations have been grappling with anemic growth. On average, their real gross domestic product has shown growth of only 0.2% a year over the past five years, whereas the emerging markets have been clocking up growth of 5.0%. So it comes as no surprise that the industrialized nations struggling with weak growth are trying to up their contribution to world trade growth. Various strategies could be considered in this respect: measures to boost macroeconomic productivity, efforts to obtain free access to foreign markets or policies aimed at devaluing a country's own currency. The latter has become a hotly debated topic, branded "the currency war", in recent months, with some countries, and Japan in particular, being accused of using their monetary policy to actively promote devaluation.

So especially given this debate, the fact that policymakers are looking into other ways of boosting growth comes as a welcome development. The decision made by the EU and theUSto enter into negotiations on a transatlantic trade and investment partnership is a key initiative within this context. 

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