not all [EU block] members would profit from it equally.

The problems surrounding upcoming EU-U.S. free trade negotiations epitomize Europe's enduring dilemma: The national interests of the bloc's various members will make it difficult to form a unified stance. Europe's economic crisis and its declining population have forced EU leaders to try to promote domestic economic growth by exporting to non-European markets. Given the European Union's historical and cultural links with the United States, targeting the U.S. market with a free trade agreement is a logical move.

For its part, the United States hopes to benefit from such an agreement, which likely would narrow Washington's trade deficit with Europe and boost U.S. exports. And the fact that all EU members are willing to enter negotiations with the United States shows that they, too, understand the potential benefits of a free trade agreement. However, the bloc is divided on the terms of the agreement because not all members would profit from it equally.

Analysis

On June 14, members of the European Union officially gave the EU Commission the mandate to negotiate a free trade agreement with the United States on their behalf. Formal negotiations begin in July, and both sides want to complete negotiations before the end of 2014.

The United States and the European Union already have a fairly robust economic relationship. They are the world's two largest economies; they constitute 40 percent of the world's economic output; they have the world's largest bilateral economic relationship, which accounts for roughly 33 percent of global trade; and the United States is the European Union's largest source of and destination for foreign direct investment.

In light of the ongoing European crisis and Washington's re-engagement with Asia, Brussels and Washington see a free trade agreement as a way to strengthen the transatlantic alliance while the European Union strengthens its economies through increased trade. The European Union estimates that an agreement that cut tariffs and reduced nontariff barriers would increase U.S.-bound exports by 30 percent, adding an additional 120 billion euros ($160 billion) to the bloc's annual gross domestic product.

The United States stands to gain an estimated 100 billion euros a year. Since tariffs between the two are already low, the European Union estimates that 80 percent of benefits from a free trade agreement would be the result of addressing nontariff trade barriers by unifying regulation and liberalizing services, trade and public procurement. Through unified transatlantic regulation, the two sides also hope to set global regulatory standards.

However, it is often more difficult to eliminate nontariff barriers than tariffs. In the upcoming negotiations every country will put forward specific concerns pertaining to national legislation. This has already become clear, with the French demanding that audiovisual goods, such as film and TV, be excluded from the negotiations. Agricultural goods will be another contentious area. Europe's Dilemma However, there are considerable hurdles to the ambitious plan of having a comprehensive agreement ready by the end of 2014. Indeed, the Europeans face a dilemma. As domestic demand stagnates, Europe has an interest in gaining easier access to external markets through free trade agreements. But those same agreements would bring greater competition to some European economic sectors and countries that already struggle to compete in the common European market.

Also complicating a potential agreement are the divergent national interests of EU members. EU institutional structures dictate that trade deals can be implemented only by de facto consensus among all its members. Since the enforcement of the Lisbon Treaty in late 2009, trade agreements technically need to be approved only by a qualified majority among EU members (not to mention ratification by the EU Parliament). However, in practice a consensus among countries would likely be required, as exemplified by Italy's threat in 2010 to block the free trade agreement with South Korea. Individual countries that want to block the agreement would find ways to do so; for example, they could argue that the agreement affects cultural diversity or that some areas are the responsibility of individual members.

This means that any member can veto negotiations. Some countries, such as Ireland, the United Kingdom, the Netherlands and Germany, have export-driven economies and already trade extensively with the United States. These countries therefore are traditionally more open to free trade agreements and global competition, and they are especially interested in stronger ties with the United States. Other countries -- France, for example -- rely more on domestic consumption than on exports to drive growth and therefore are less enthusiastic about the free trade agreement.

Previous free trade negotiations between the European Union and other countries illustrate just how long diverging interests can prolong negotiations. In November 2012, EU countries permitted the EU Commission to launch negotiations for a free trade agreement with Japan. France and Italy reportedly agreed to start negotiations only after the EU Commission ensured it would negotiate special protection for the European car industry. France recently called upon Brussels to review a 2011 free trade agreement with South Korea because of increased South Korean automotive exports to Europe.

Of course, some elements in the United States might also resist the agreement. Washington has indicated that it will try to protect its financial and insurance industries, and the U.S. public may be hesitant to ease public procurement rules to give the Europeans greater access to U.S. companies.

Harmonizing Trade

Notably, the Europeans have pursued a transatlantic free trade agreement before. In 2009, the EU and Canada began negotiations, hoping they would be concluded by 2011. Those negotiations continue. The delay reportedly stems from divergent views on agricultural goods and financial services. The negotiations with Canada will be important to watch: What happens there could inform the upcoming EU-U.S. negotiations, since the United States and Canada have harmonized their own bilateral trade.

The European Union was created two decades ago to be the world's leading economic bloc. But the ongoing crisis has fragmented the bloc politically, threatening its very survival. The negotiations over a trade deal with the United States may offer the European Union prospects for economic growth, but it will likely strain political unity further before a deal can be reached.