Officials in the U.S. and the European Union are nearly finished laying the groundwork for talks leading to a free trade agreement, Reuters reported:

The United States and the European Union are wrapping up final preparations for talks on a free-trade agreement that would encompass half the world’s economic output, Europe’s tradechief said on Saturday, while warning of “difficult negotiations.” … He gave his clearest signal yet that Brussels and Washington are ready to embark on the accord.

The United States and the European Union already have low tariffs on their goods, but what businesses really want is access to each others markets through common regulations. They would like to see a pact, for example, in which a car tested for safety in the United States would not have to be tested again in Europe, and a drug deemed safe by Brussels would not have to be approved by the U.S. government as well.

EurActiv quotes an anonymous source saying the green light is expected this February:

A senior industrial source – who preferred to remain anonymous – told EurActiv that a EU-US High Level Working Group is ready to report to Trade Commissioner Karel De Gucht and US Trade Representative Ron Kirk “in early February”.

The EU and the US economies account together for about half the entire world GDP and for nearly a third of world trade flows.

“There is a very good chance that we will start negotiations for a US-EU comprehensive trade deal in the very near future,” said Fabian Zuleeg, the European Policy Centre’s (EPC) chief economist.

This could be huge. If EurActiv’s reporting is correct, we can probably expect some mention of the pending talks in the president’s State of the Union address on February 12th. DealBook says the report’s delay has fed the perception that Obama isn’t very interested in the deal, and spoke with the U.S. trade representative:

Mr. Kirk declined to go into detail about what specific issues might be delaying a report by what is known as a high level working group, which he leads along with Karel De Gucht, the trade commissioner of the European Union. A favorable recommendation by the group would set in motion the process of negotiating a comprehensive agreement.

But Mr. Kirk noted that members of Congress with farmers as constituents far outnumbered those whose districts included big companies like Boeing or Apple that would benefit from a trade deal. ‘‘Agriculture tends to be a challenging issue,’’ he said.

To understand why that’s a sticking point, consider that Europe actually exports several billion dollars’ more in farm products to the U.S. than the other way around. The USTR notes that “barriers to access for key U.S. agricultural exports continue to be a source of particular frustration,” particularly harsh EU restrictions on GM foods. If some sort of agreement allowing for more open competition is reached, American farmers would likely crush their competitors on the other side of the Atlantic. In other words, anti-GMO greens and European farmers will probably be quite unhappy with whatever emerges from the negotiations.

That aside, the vast majority of stakeholders will strongly support such a deal. It would boost the GDP of both parties; European and American manufacturers both benefit, and American labor won’t protest because wages and benefits are higher in Europe.

And how is it going to be sold to the rest of us? “Save Europe.” You know, like the Marshall Plan, as conceived by Milton Friedman.