Did February 12 mark the end of the “Asian Century”, barely a decade after it began?

Delivering his State of the Union Address, U.S. President Barack Obama declared his key goals for trade policy in his second term as leader of the world’s biggest economy.

“To boost American exports, support American jobs, and level the playing field in the growing markets of Asia, we intend to complete negotiations on a Trans-Pacific Partnership(TPP),” Obama said in the address. “And tonight, I am announcing that we will launch talks on a comprehensive Transatlantic Trade and Investment Partnership with the European Union – because trade that is free and fair across the Atlantic supports millions of good-paying American jobs.”

The Obama administration previously set the goal of completing negotiations on the 11-member TPP by October, ahead of rival free trade agreements (FTAs) planned in Asia such as the “Regional Comprehensive Economic Partnership” encompassing 16 nations or the mooted trilateral FTA between regional powers China, Japan and South Korea.

The TPP would represent around 26 percent of global gross domestic product, presenting a sizeable bloc that critics contend would act to curb China’s increasing economic influence.

But an FTA between the United States and the European Union (EU) would present an even bigger rival to Asia, accounting for more than 40 percent of global GDP and about 50 percent of inward and outward foreign direct investment stock. Both sides are already the other’s biggest trading partner.

While the EU’s well-publicized financial crises of 2012 have made it a seemingly unlikely partner, the potential economic gains are too big for even the most parochial politicians to ignore.

According to economists, harmonized standards and zero tariffs could boost GDP on both sides of the pond by up to 2 percent and create 2 million new jobs – a tantalizing prospect for a number of eurozone nations with high unemployment rates.

Within days of Obama’s re-election, European leaders including German Chancellor Angela Merkel and British Prime Minister David Cameron reportedly urged the US president to push for a trade pact.

Talks between the United States and EU are expected to start in June, following a long history of failed attempts between the two traditional allies.

Writing in PublicServiceEurope.com, European lawmaker Catherine Bearder described an FTA with the United States as the “real prize”.

“Until now, the two founding fathers of the WTO have spent the years since its inception in 1994 bickering like children on issues such as subsidies for Boeing and Airbus, imported bananas and beef hormones…Out of the ashes of Doha, this squabbling seems to have been set aside and there is now real momentum heading towards the launch of free trade negotiations," she wrote in June 2012.

Ultimately, Obama’s push for a transatlantic FTA could be vital to the outcome, which may prove critical for both sides as they struggle to emerge from their respective economic downturns.

‘Cold politics’ gets colder

Meanwhile, in Tokyo on Wednesday, officials from China and South Korea joined their Japanese counterparts for working-level talks on their own proposed trilateral FTA. The three powers are eyeing South Korea as the site of their first round of formal negotiations to be held in late March or early April.

However, while “cold politics, hot economics” has long been the mantra for the relationship between Asia’s three biggest economies, recent clashes over the sovereignty of various island chains should prove challenging for trade diplomacy.

“I'm not very optimistic about the prospects of a Japan-China-Korea FTA given the chilly political relations of those countries lately. FTAs are political and those countries need to listen to domestic public opinion,” Devin Stewart, Senior Fellow at the Carnegie Council, told The Diplomat.

Stewart was more optimistic on agreements being reached between the traditional Northern Hemisphere allies from both the transatlantic and Asia-Pacific regions.

“Both the EU transatlantic agreement and the TPP come from thinking about how to set and promote liberal values through economic activity. Both would serve to set high standards for economic integration as well as encourage non-entrants to adopt higher standards,” he said.

He continued, “In that sense, they are aimed in part to balance against China's influence and its state capitalism. These initiatives may serve as a peaceful strategy to promote liberal values…as long as they do not spark something like another Cold War.”

Through his State of the Union Address, Obama may have dealt a powerful blow to Asia’s ambitions. Apparently, the Old World is not yet ready to surrender to the power of the new.