Media playback is unsupported on your device Media caption David Cameron: "We're talking about what could be the biggest bilateral trade deal in history"

UK Prime Minister David Cameron has announced plans for what could be "the biggest bilateral trade deal in history" between the EU and the US.

He announced the start of formal negotiations on a trade deal worth hundreds of billions of pounds, aimed at boosting exports and driving growth.

Mr Cameron said a successful agreement would have a greater impact than all other world trade deals put together.

The talks were announced ahead of the G8 summit in Northern Ireland.

US President Barack Obama said the first round of negotiations would take place in Washington in July. They aim to conclude by the end of 2014.

Analysis The French have already expressed misgivings about parts of the trade deal. They are worried that if they cannot protect their film industry from Hollywood's dominance, their unique artistic culture will be undermined. After intense talks with other EU countries last week, it seems the French have persuaded the negotiators to honour what they call a cultural exclusion. That leaves the way open for other sectors to say they are also exceptional and should not be included in the trade deal. The French claim the Americans want to exclude financial services from the free trade negotiations. The Americans have not acknowledged that publicly but it is a reminder that behind closed doors the discussions might be very difficult.

Mr Obama said he was confident of reaching an agreement.

"There are going to be sensitivities on both sides... but if we can look beyond the narrow concerns to stay focused on the big picture... I'm hopeful we can achieve [a deal]."

'Once in a generation'

Mr Cameron said the deal could be worth £100bn to the EU economy, £80bn to the US and £85bn to the rest of the world.

He said the pact could create two million jobs, and lead to more choice and lower prices in shops.

"This is a once-in-a-generation prize and we are determined to seize it," said Mr Cameron.

European Commission President, Jose Manuel Barroso. who will lead the negotiations with President Obama, said that integrating the EU and US economies would not be easy but "we will find convincing answers to legitimate concerns".

"We'll find solutions to thorny issues, we'll keep our eyes on the prize and we will succeed," he said.

Herman Van Rompuy, the president of the European Council, said: "Together Europe and the United States are the backbone of the world economy. Opening up that space further for opportunities for business and consumers is simply common sense."

The trade talks had been under threat from a potential veto from France, but on Friday EU ministers agreed to French demands to exclude the film and television industry from the talks.

Media playback is unsupported on your device Media caption Obama: "I'm hopeful we can achieve... high standard comprehensive agreement"

Some had argued that omitting the media business from the trade talks even before they had begun could prompt the US to seek exemptions for other sectors.

Possible hurdles?

The timeframe for the talks to conclude - 18 months - may surprise some, given that similar trade deals in the past have involved years of negotiations.

The formal launch of the talks has been on the cards for some time.

Free trade between the US and the EU has been under discussion for several years, and a US-EU working group was established in 2011 to discuss the prospect of a free trade agreement.

The EU has said the deal will focus on bringing down remaining tariffs and other barriers to trade, and standardise technical regulations and certifications.

Currently the US and EU impose relatively low tariffs on goods traded between them, but analysts say other barriers are often in place to prevent European companies competing in the US and vice versa.

G8 facts Informal, exclusive body aimed at tackling global challenges

Established in 1975 in Rambouillet, France

Original members: France, Germany, Italy, Japan, UK, US

Later members: Canada (joined at 1976 summit, San Juan, Puerto Rico), Russia (joined at 1998 summit, Birmingham, UK) Profile: G8 Can summit live up to ambitious agenda?

One example is found in the car industry, where the EU and the US employ equally strict - but differing - safety standards, meaning that European car makers must meet both before they can sell cars in the US market, putting them at a disadvantage.

Agriculture is also expected to be a significant bone of contention.

The European farming industry is already heavily subsidised through the Common Agricultural Policy, and the European agriculture minister has already expressed reservations about the impact a free-trade deal might have.

The US government is also likely to come under pressure from domestic businesses who have in the past called for protectionist measures to prevent the market from being swamped by cheaper Chinese imports.

G8 agenda

The trade announcement came ahead of a two-day meeting of G8 leaders in Lough Erne, County Fermanagh. In other developments:

Joining the UK and US for the 39th Summit of the Group of Eight are Germany, France, Italy, Russia, Canada and Japan.

The wide-ranging agenda focused on the global economy on Monday, and on Tuesday will turn to tax transparency and counter-terrorism issues.