Although the recent G-7 meeting in Biarritz, France was more noteworthy for highlighting the divisions that exist between the US and EU on issues ranging from Russia to climate change, there was also some potentially upbeat news on cross-Atlantic relations. President Trump, speaking at the closing press conference, expressed his view that a US-EU trade agreement could be “very close”.

Trump and European Commission President Jean-Claude Juncker had agreed to launch these negotiations in July of 2018 at the White House, pledging to “work together towards zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods”. The joint statement went on to say that both sides will work to reduce obstacles resulting from differing standards and increase trade in several specific sectors, including soybeans. There is not however any reference to agriculture as a whole being included, although there is a reference to opening markets for “farmers and workers”.

Not surprisingly, both sides have chosen to interpret the ambiguous wording in ways that suit their interests. The US is adamant that agriculture be included in any deal; the EU is equally adamant about its exclusion – and negotiations have remained stuck in a holding pattern.

The mixed signals, along with the very real substantive challenges that any US-EU trade negotiation would have to overcome, means that prospects for a US-EU deal are unclear. There are however three important reasons why such a trade agreement would make sense, and should be earnestly pursued by both sides:

1. Sheer economic scale and philosophical commonality

The US and the EU are the two largest economies in the world, jointly accounting for about 50 percent of global GDP and encompassing roughly 830 million citizens. They already enjoy the largest economic relationship in the world, with $1 trillion in bilateral trade – and that could be increased by $26 billion under a trade agreement.

The US and EU share similar development levels, have market economies, democratic systems of governance, strong rule of law and property rights, as well as high quality labor and environmental standards. This means that many of the pitfalls that have complicated trade relations between developed and developing countries, as well as market and non-market economies, could be avoided. And both the US and EU have been historical stewards of the multilateral, rules-based trade system. Given this high degree of compatibility and commonality, the rationale for a trade agreement between these economies is self-evident.

The imperative to pursue such an agreement is now especially high. The multilateral system is in disarray, trade barriers are on the rise, and the credibility of market economies is being challenged like never before. A trade agreement which mutually strengthens the philosophies and systems which the US and the EU have traditionally shared would inject some much-needed stability and confidence into the faltering post-war framework on trade, economics and cross-Atlantic cooperation. And it would send a useful signal about the staying power of market economies and the value of expanding trade, especially where sufficient mutual interest and compatibility exists.