U.S., Europe to Begin 18-Month Process Toward Deal on Trade, Tariff, Non-Tariff Barriers

Obama said the U.S. also intends to "complete negotiations on a Trans-Pacific Partnership," saying the two deals are important because "trade that is fair and free ... supports millions of good-paying American jobs."

The launch of the European trade talks was immediately lauded by U.S. Chamber of Commerce President Thomas Donohue and the President of BUSINESSEUROPE Jürgen Thumann (here). Donohue said a deal is important for jobs and business: "The stars are finally aligned, and we urge the U.S. and EU governments to move forward swiftly to negotiate a high-standard agreement that will foster economic growth and job creation for all our citizens."

"An EU-US agreement presents an unmatchable opportunity to boost competitiveness, jobs and growth that are needed in our economies," Thumann said. "Now a new challenge is at hand and we are ready to assist our governments to get this deal done quickly." UPS said a transatlantic partnership "would open up new dynamic trade opportunities for small, medium, and large enterprises on both sides of the Atlantic, while boosting U.S. exports and creating new U.S. jobs" (here).

The U.S. and Europe have been working toward launching the talks for a year via the U.S.-EU High Level Working Group on Jobs and Growth co-chaired by U.S. Trade Representative Ron Kirk and European Trade Commissioner Karel De Gucht, said Kirk in a briefing with reporters. "I believe there is the political will on both sides to do this," Kirk said. He said there hasn't been a new comprehensive trade agreement between the U.S. and Europe in decades, but he believes this is "a historic opportunity to address the legacy issues that have frustrated us" in previous attempts to agree on trade.

"This is potentially a very big deal," said Michael Froman, assistant to the U.S. president and deputy national security advisor, in the briefing. He said he believes that this round won't be the same as in the past, when "there has always been issues that tripped us up."

Possibly confirming the political will, the U.S. and Europe issued a joint statement (here) saying they're committed to expanding "further our transatlantic trade and investment partnership, promoting greater growth and supporting more jobs. A high-standard Transatlantic Trade and Investment Partnership would advance trade and investment liberalization and address regulatory and other non-tariff barriers."

Richard Bruton of Ireland, chair of the EU Trade Ministers Council, added that "EU leaders have last week signalled their support for an EU-US free trade agreement."

But Kirk said it needs to be "an ambitious, high-standard Transatlantic Trade and Investment Partnership." He said it will deal with "the full climate of tariff issues," but noted that tariffs are "in most cases, relatively modest" between the U.S. and Europe. The big issues, he indicated, will be non-tariff barriers.

Eliminating non-tariff barriers will involve achieving "regulatory coherence," Kirk said, including eliminating technical standards that serve as barriers to trade. That is how the new deal will differ from a traditional free trade agreement, he said in response to a question: "We will work with Europe to not only liberalize trade, but deal with some of the new generation issues" such as intellectual property.

Negotiating the deal is likely to be a lengthy process, Kirk and Froman indicated, but Froman said they "want to do it on one tank of gas." He said that means "we don't want to spend ten years and not get results." The goal, Froman said, is to complete the agreement during the current European Community presidency, which ends at the end of 2014.

"We know this is ambitious [for a schedule]," Froman said. "But these are well-known issues and we have spent the last year working on how to address them."

The next step will be for the administration to formally notify Congress about the trade talks, which starts a 90-day consultation period. The EC also needs to get formal approval for the member countries.

Trade Lawmakers Supportive, Seek Trade Promotion Authority Legislation

Lawmakers voiced support for the initiative. “Negotiations will not be easy, but they have enormous potential to open new opportunities for us to sell our goods and services in the EU,” said House Ways and Means Committee Chairman Dave Camp (D-Mich.). The announcement “also reaffirms the need for bipartisan Trade Promotion Authority legislation to provide a clear framework for Congressional consideration and implementation of trade agreements,” said Camp in a press release (here).

Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Orrin Hatch (R-Utah) outlined what they consider priorities for U.S.-EU negotiations in a Feb. 12 letter to Kirk (here). Among the priorities listed by the Senators were strong intellectual property rights protections and the lowering of trade barriers for American agricultural products. Baucus and Hatch also said they plan to move toward a renewal of Trade Promotion Authority, which expired in 2007.

Negotiators should also seek better regulatory harmonization between the U.S. and EU, the Senators said. But, “any efforts towards these ends must not weaken regulatory commitments, such as through adoption of the so-called precautionary principle,” the letter said. “Therefore, a high standard U.S.-EU FTA will necessarily promote greater openness and transparency in regulatory processes, prohibit practices that discriminate or create non-tariff barriers to U.S. exports, and promote acceptance of the full-range of international standards.”

Trade associations, including the Business Roundtable (here), the Emergency Committee for American Trade (here), and National Association of Manufacturers (here) were also supportive of the efforts. -- Mike Feazel, Tim Warren