Within a few months, the U.S. and European Union will formally launch free-trade talks. Now is the time to think big.

After years of neglect, this trade relationship is ripe for improvement. Europe is suffering through a prolonged economic downturn and America needs all the growth it can get. Liberalizing trade is a sure way to give business a boost. Both sides have strong incentives to make progress. It can’t happen soon enough.

As a matter of principle, there should be no barriers to imports and exports between the U.S. and Europe. But we recognize the political realities that have kept trade encumbered. Some of the issues that divide these two huge trading blocs won’t just go away.

Europeans remain wary of America’s genetically modified food, for instance. Americans have different standards for approving prescription drugs. Rules for headlights, seat belts and other auto parts need to be harmonized. The negotiations are liable to get complicated.

Not every trade issue is so terribly difficult, however. Here’s a simple idea that would make a big difference: Get rid of the system of tariffs and duties that needlessly obstruct trade across the Atlantic.

There is no reason why the U.S. and Europe should impose these taxes on goods just because they happen to cross the ocean. What a coup it would be to jump-start trade talks by saying: No more!

No more tariffs and duties on the vast majority of goods being traded. Zero ’em out.

America did just that with Canada and Mexico in the North American Free Trade Agreement. America can do it with Europe too, giving an immediate boost to economic growth and job creation. As is, every American pays a price for this obsolete protectionist system.

Tariffs and duties are the taxes imposed on imported goods as they enter a country. In effect, they increase the cost of a product. They generally make foreign products less competitive than those made domestically. Embodied in a complex set of rules known as the harmonized tariff schedule, they make no economic sense: Why, for example, does the U.S. slap a 37.5 percent duty on waterproof, steel-toed boots made in Europe?

Most EU and U.S. tariffs are much lower, averaging as little as 2 percent of a product’s declared value. But because the volume of trade is so enormous, a zero tariff deal would save more than $10 billion in duties every year. According to a study by Bloomberg Government, U.S. exporters would avoid an estimated $6.4 billion paid on goods sent to the EU, while Europeans shipping goods to the U.S. would save at least $4.1 billion.

For industries such as chemicals, machinery and cars, which pay the most in tariffs and duties, a zero deal would make a big difference.

The bottom-line benefit is difficult to quantify. The European Centre for International Political Economy, in conjunction with the U.S. Chamber of Commerce, estimates that a trans-Atlantic zero-tariff agreement would boost combined EU-U.S. gross domestic product by $180 billion within five years. That would be a significant expansion of the European and American economies. The Midwest heartland, with its concentrated production of motor vehicles and farm products, would do particularly well in a zero-tariff environment.

A free-trade agreement between the U.S. and Europe should start with eliminating tariffs and duties, but it should not stop there. The tough work of tearing down regulatory barriers and harmonizing standards has the potential for an even greater payoff. For too long, and for no good reason, free trade has eluded the U.S. and Europe. Let’s make a deal.

(Chicago Tribune)

(MCT Information Services)