EU, US to negotiate free-trade agreement

EU, US to negotiate free-trade agreement

Europe and the United States are set to launch trade talks early next year to deepen the world’s largest trading relationship, EU and U.S. officials say, potentially unleashing billions of euros of new transatlantic business.

Together, the bloc and the U.S. account for about half the world’s economic output and nearly a third of world trade. But a debt crisis in Europe and elusive American growth are pushing both sides to consider knocking down the final barriers to trade. A deal could increase economic output by 122 billion euros ($158 billion) a year for Europe alone and add 0.52 percent to the EU’s gross domestic product in the long term, according to European Commission estimates, benefiting industries ranging from chemicals to automakers.

An expert group co-chaired by EU Trade Commissioner Karel De Gucht and U.S. Trade Representative Ron Kirk will in December issue a report recommending pursuing talks, EU and U.S. officials say. They do not expect the outcome of the U.S. Nov. 6 presidential election to influence discussions, though the campaign limits their ability to speak publicly about it.“The report will recommend the negotiation of a comprehensive agreement between the United States and the European Union,” said a senior EU official who declined to be named, echoing other European diplomats and members of the European parliament interviewed by Reuters.“Talks could begin in the spring,” a second official said.

EU leaders at a two-day summit in Brussels from today will also commit to “working towards the goal of launching in 2013 negotiations on a comprehensive transatlantic trade and investment agreement,” according to draft summit conclusions. U.S. officials in Washington told Reuters that talks would go ahead, but that there would be no announcement until after the election. EU-U.S. commercial links are unrivaled. Transatlantic trade in goods and services is worth $700 billion a year. Total U.S. annual investment in the European Union is higher than in all of Asia, while EU investment in the United States far outstrips EU investment in India and China combined.

A deal would be the most ambitious in a new generation of sophisticated agreements that go beyond tariffs to to include intellectual property rights, services and regulation.

Eliminating barriers in the automotive sector, which makes up the largest chunk of EU-U.S. trade, could bring a 15 percent fall in costs for both sides, the Commission estimates. “It would be very useful for us,” Sergio Marchionne, chief executive of Fiat and Chrysler, told Reuters in a visit to Brussels last week, saying the deal could make it easier to exchange car components across the Atlantic.

‘One tank of gas’

Businesses on both sides would like a deal in which a car tested for safety in the U.S. would not have to be tested again in Europe, and a drug deemed safe by Brussels would not have to be approved as well by the U.S. Firms who make household appliances, lighting and wiring equipment say prohibitive costs of certifying products for different requirements in Europe and the U.S. make it impossible currently to export, according to a public consultation by Brussels-based lobby group Business Europe.