Malmstrom: Trade deal needed to maintain Europe's living standards

As recently as the 1990s, EU economies accounted for over 20 percent of world GDP, a proportion which is likely to be halved by 2025 as countries such as China and India continue to enjoy rapid economic expansion.

The US is also seeing its share of world trade decrease but its growth rate has been stronger than Europe's and is likely to remain so, reducing its rate of decline against other countries.

However, an EU-US trade agreement would still be the biggest in history.

With no prospect of any progress from the Doha round at the World Trade Organisation (WTO), the EU and US are seeking to negotiate a series of free trade agreements with other G20 economies in a bid to set regulatory standards that would serve as a framework for future trade and investment pacts around the world.

"We can forge a new partnership between Europe and the United States to defend the values and standards we share," said Malmstrom.

"The more that the EU and the US can agree on regulation, or on rules about the interaction between trade, labour and the environment the more we will be able to shape global rules around those issues together," added Malmstrom.

Such arguments have been made by trade negotiators and economists for a number of years, but EU lawmakers have tended to focus on the tangible economic benefits of an EU-US pact as they seek to persuade a sceptical public of its merits, claiming that it could add 0.5 percent to the bloc's output and be worth an extra €100 billion per year.

"If we want to keep our way of life we need to set the rules now," trade expert Hosuk Lee-Makiyama, Director of the European Centre for International Political Economy, told EUobserver.

"This is our last chance - that's where Europe stands," he said, adding that "the truth is that Europe needs TTIP a lot more than the US".

Trade officials will gather in Brussels in December for the eighth round of talks since negotiations began in July 2013.

Negotiators are hoping to agree on a text in 2015 which would then require ratification by national governments and the European Parliament.

Malmstrom refused to be drawn on whether controversial investment state dispute settlement (ISDS) clauses will be part of TTIP, telling MEPs that although the Commission would proceed with "caution" on the issue she had "no announcement to make".

The mechanism allows companies to take legal action against governments if their decisions risk undermining their investments. Critics suggest that investor claims could prevent governments from passing legislation in fields such as environmental and social protection.

The meeting was organised by the centre-left Socialist and Democrat group which has vowed to oppose TTIP if it includes the clauses.