To avoid a trade war, the European Union, and the United States, agree to a develop a trade relationship that includes no subsidies or tariffs. By reducing to zero trade barriers, the allies hope to promote fair trade in the $1 trillion worth of goods and services both sides trade annually.
In a joint statement released Wednesday, the two sides shared plans for the European Union and the United States to increase trading opportunities in several areas, including soybeans, chemicals, and medical products.
This is positive news in the wake of an International Monetary Fund report that indicates trade wars could derail global economic growth. To protect global economic growth projections, estimated at 3.9 percent for 2019, the IMF encouraged cooperation to enhance and promote growth. At the same time, the IMF prompts countries to increase financial reserves to prepare for possible downturns in the economy due to higher risks and volatility.
The EU and the U.S. are leading the way in cooperation on trade, with an agreement to strengthen relations by working as a team on reforming World Trade Organisation policies that they believe affect unfair trade, such as theft of intellectual property and industrial subsidies.
According to the IMF, the United States’ economy is expected to grow at a steady rate of 2.7 percent in 2019. The European-area economy is projected to grow at rate of 1.9 percent in 2019.
European Union and the United States account for more than half of the total gross domestic product (GDP), with 830 million citizens combined. GDP is a measurement of the financial value of all goods and services produced within a certain time frame.
As both sides work to solidify the details of the agreement, with the help of a working group of advisors, the zero-for-zero trading framework could trigger increased economic growth that would benefit citizens of both sides.