Administrations go big on potential free trade pact
By Brian Beary in Washington | Thursday 21 June 2012
“A comprehensive agreement [...] would, if achievable, provide the most significant benefit of the various options we have considered.” This conclusion, contained in the 19 June interim report of the EU-US High-Level Working Group on Jobs and Growth, which for the past six months has studied potential avenues for a new transatlantic free trade agreement (FTA), was immediately endorsed by US President Barack Obama, European Commission President José Manuel Barroso and EU Council President Herman Van Rompuy. The report’s co-author, Trade Commissioner Karel De Gucht, has called this “extremely encouraging,” adding “we are now entering the last leg of mapping out how we should tackle any eventual negotiation to boost growth and jobs through our trade partnership”. The EU Ambassador in Washington, Joao Vale de Almeida, was equally upbeat, underscoring the “high level of ambition and the comprehensive nature of what we want to achieve”. Almeida noted how the report recommended tackling “traditionally difficult areas,” such as agriculture (which will presumably include restrictions on genetically modified organisms and hormone-treated foods), government procurement and services.
De Gucht and his American counterpart, US Trade Representative Ron Kirk, seem to be steering away from an idea earlier floated by some in the business community that the two partners push for a more limited agreement - for example, zero tariffs on goods. The interim report says that the long-term goal is to eliminate all duties on bilateral trade and the “phasing out of all but the most sensitive tariffs in a short time frame”. In addition, it calls for regulatory convergence to be broached in a future agreement, including chapters on sanitary and phytosanitary (SPS) measures and technical barriers to trade (TBT). It recommends greater market opening in both services and investment, and at all levels of government procurement. However, on intellectual property rights, it says that it “would not be feasible to reconcile differences” in the regulatory frameworks. The High-Level Working Group will consult stakeholders in the coming months before making a final recommendation to EU and US leaders for their next summit, due to take place in late 2012.
Should EU-US FTA talks be launched, the economic stakes will obviously be enormous. The US is the EU’s largest trading partner, with transatlantic trade reaching 445 billion euro in 2011. Despite the dominance of China in the global narrative about trade, China in fact is the EU’s second largest trade partner, lagging slightly behind the US, with EU-China trade totalling 429 billion euro in 2011. The EU had a trade surplus with the US in 2011, with EU exports to the US at 260 billion euro and imports at 184 billion euro.