Issue link: https://read.dmtmag.com/i/120608
U.S., EU Push for World's Biggest Free Trade Alliance TRENDS AND TIDBITS The United States and European Union aim to start negotiating a vast Transatlantic free trade pact by June, though the recently confirmed plan faces many hurdles before it might help revive the world's top two economies. A deal would be the most ambitious since the founding of the World Trade Organization (WTO) in 1995, embracing half of world output and a third of all trade. It reflects impatience with the lack of a new global agreement to cut tariffs and ease commerce. But after a year of preparatory discussions between Brussels and Washington, major differences remain, such as EU resistance to importing U.S. foodstuffs that are genetically modified. "This is potentially a very big deal," said Michael Froman, White House deputy national security adviser for international economic affairs, a day after President Barack Obama endorsed talks with the 27-nation bloc in his State of the Union address. In Brussels, EU Commission President Jose Manuel Barroso said: "These negotiations will set a standard, not only for our future bilateral trade and investment, including regulatory issues, but also for the development of global trade rules." Once the U.S. Congress is notified and all 27 EU states assent to the talks going ahead, the sides hope for a deal by the end of 2014 – a tight deadline in international trade talks. A decade of argument among all world governments in the Doha round of trade negotiations has so far resulted in deadlock. "If we want to go down this IDA UNIVERSAL March-April 2013 road, we want to get there on one tank of gas and we don't want to spend 10 years negotiating what are well known issues and not reach a result," Froman said in a conference call with journalists. RISKS The collapse of Doha disappointed hopes that a worldwide cut in tariffs and other barriers to trade could boost the global economy. Creating preferential trade agreements (PTAs) between states, such as an EU-U.S. deal, may achieve some of the same ends, but many experts are concerned that breaking the world into blocs could end up creating new obstacles to global trade. "The more problematic side of myriad different PTAs is that they create a hodgepodge of different regulations, standards and norms that can evolve into serious non-tariff barriers," said Keith Rockwell, chief spokesman at the Geneva-based WTO. He said it was too early to say what the impact of an EUU.S. deal would be. U.S. and EU officials countered the criticism by saying their deal would set global standards for the world to follow in lowering a wider range of trade barriers. However, creating jobs and economic growth on either side of the North Atlantic provide the main rationale for their alliance, given both economies are struggling to break free from almost five years of downturns and stunted recovery, as well as increasing competition from China and other emerging economies. The deal has support at the highest level, give a name check by Obama in his recent speech to Congress and cast as a central pillar of Britain's presidency of the G8 this year. Under an agreed outline for the deal, the two sides expect it to add 0.5 percent to the EU economy and 0.4 percent to the U.S. EU Commission President Jose Manuel Barroso economy by 2027, or 86 billion euros ($116 billion) a year for the Europeans and 65 billion euros for the Americans. But EU Trade Commissioner Karel De Gucht has warned that the talks will be tough, with no "low hanging fruit." Import tariffs between the two are already not high - an average of 4 percent. Negotiations will focus on harmonizing standards, from car seat belts to household cleaning products, and regulations governing services. These help ensure exporters can compete. AGRICULTURAL MUD One of the key sticking points is likely to be agriculture, even though the deal will not tackle the politically poisonous issue of farm Trenda continued on page 17 15