Working Paper

Why a Marketplace Must Not Discriminate: The Case against a US-EU free Trade Agreement


  • Langhammer
  • R.J.
Publication Date

The paper discusses the pros and cons of a Transatlantic free trade area (TAFTA) against the concept of an informal trade-facilitating marketplace between Europe and the US. It finds considerably more cons expecially since TAFTA would be expected to have ever more discriminatory effects to the detriment of dynamic non-member economies mainly in Asia but also in food-exporting regions. Efficiency-enhancing effects are argued to be achievable under a marketplace concept which does not separate insiders from outsiders. It is also shown that in foreign direct investment (FDI) and FDI-related service trade TAFTA seems redundant as in recent years bilateral capital and trade flows have proven to be buoyant without preferential treatment.

Kiel Institute Expert


JEL Classification
F13, F15

Key Words

  • free trade area
  • multilateral trade policy
  • Multilaterale Handelspolitik
  • Regional trading arrangement