The chancellor has called for the removal of trade barriers between Europe and the US.

In a speech to American and British businessmen in New York on Thursday, Gordon Brown spoke of "the shared history that shapes our countries and links our destinies" and argued in favour of the creation of a free-trade zone between the European Union and the United States.

Enlisting the support of John F Kennedy, who said that a united Europe could work with the US to lower trade barriers, Brown pointed to figures showing the annual trade in goods, services and foreign direct investment between the US and the Europe is approaching a trillion dollars.

Total US investment in Europe amounted to $520 billion at the end of 1999 while EU direct investment in the US totalled over $600 billion, said the chancellor.

Questioning whether Europe and the US had made the most of the end of the Cold War, Brown called for "a new transatlantic alliance for prosperity".

Brown said such a move would boost trans-Atlantic trade by £350 billion and cement relations between the world's two most powerful trading blocs.

"I am certain that we must think transcontinentally as well as continentally. Today, between us, Europe and America account for 55 per cent of world trade, 60 per cent of trade in services and, remarkably, 80 per cent of world wealth," he said.

Brown also issued a warning against regional free trade agreements which could undermine the EU-US partnership. "I fear that both the EU and US are, inadvertently more than by design, moving towards according each other almost 'least favoured nation' status in each other's markets," he said.

He is calling for a new study into the benefits of removing trade barriers, similar to the Cecchini report which investigated the effects of the single market.

Brown said that the next round of World Trade Organisation talks should scrap industrial tariffs between EU countries and the US.

"We should go in to the next WTO round promising genuinely to reduce our industrial tariffs to zero on a strictly most-favoured-nation basis on condition that a critical mass of the rest of the world agrees to do the same," he said.

"Britain does not have to choose, as some would suggest, between America and Europe, but is instead well positioned as a vital link between America and Europe," said the chancellor.