UK wants Atlantic free trade zone

Mr Brown wants trade tariffs lifted

Chancellor Gordon Brown will call for the creation of a free trade zone between the United States and the European Union.

It would mean the scrapping of tariffs between Europe and America.

Mr Brown will tell businessmen in New York on Thursday that such a move could boost transatlantic trade by as much as £250bn.

Instead of the end of the Cold War inviting a weakening of transatlantic ties, this is the time for a new era of enhanced engagement

Gordon Brown

The call comes as sensitive negotiations continue between the United States and the EU over the agenda for the next round of trade talks in Qatar.

The World Trade Organisation has said that countries have until the end of July to agree the agenda if it is to go ahead with plans for trade liberalistion discussions - a move world leaders in Genoa called the most important step in keeping the world from recession.

Brown's plea

Mr Brown he wants his plan to be an inspiration to others to lower barriers to trade.

It could pave the way for an end to trade barriers between other countries and the two trading blocs, Mr Brown will tell Britain-America Business Incorporated.

"Instead of the end of the Cold War inviting a weakening of transatlantic ties, this is the time for a new era of enhanced engagement between America and Europe - a new transatlantic alliance for prosperity as important to our long-term economic strength as Nato has been and is to the cause of peace," according to the text of his speech.

Ending trade tariffs between the two would bring the multi-billion boost for firms on both sides of the Atlantic.

However, other nations fear that bi-lateral talks between the world's two biggest trading blocs could in effect shut them out of any decision-making over the future of world trade.

Developing countries, who are already sceptical about the benefits of a new trade round, are expected to be particularly alarmed by the new proposal.

Probe trade barriers

Mr Brown believes the precise benefits of the move should be examined by a study similar to that carried out before the ending of trade barriers in Europe.

"A new Cecchini-style report that investigates the potential benefits of a fully open trading and commercial relationship between Europe and America," he will say.

"We should go in to the next WTO [World Trade Organisation] round promising genuinely to reduce our industrial tariffs to zero on a strictly most-favoured-nation basis on condition that a critical mass of the rest of the world agrees to do the same."

He will also suggest moves such as increased recognition of professional qualifications and making it easier for European banks to operate in the US.

Mr Brown will advocate the two trading blocks "set an example" by removing other barriers to trade.

He will argue that the EU and the US Government exchange more information on issues such as consumer protection and food safety.

But he will warn that deepening the transatlantic economic relationship "should not and must not" damage trade with other nations.

'Pivotal role'

Britain could play a "pivotal role" between fellow EU members and America as the new relationship is discussed.

"It is in the interest of British interests and jobs not to detach Britain from Europe or America but, instead, to build stronger links in both directions," he will say.

The EU and the US have been engaged in an acrimonious series of trade disputes over the past few years.

Earlier this week, the EU brought action against the United States in the World Trade Organisation over US anti-dumping laws, which it is claimed disadvantage foreign firms.

And the EU and the US are split over whether to broaden the trade round to include issues such as competition policy, the environment, and labour standards in developing countries.

High-level talks are taking place this week between EU officials and the US trade representative in an attempt to bridge the gap before the deadline.