EU-US free trade talks get underway

Claims of American surveillance cast shadow over opening of discussions on potentially lucrative deal

The United States and the European Union, after nearly two years of preparation, start talks today aimed at securing a free-trade agreement to squeeze new economic growth out of the world's largest trade and investment relationship.

"We go into these negotiations with the goal of achieving the broadest possible, most comprehensive agreement that we can," US trade representative Mike Froman told Reuters.

But in the months since president Barack Obama and European leaders announced a decision to pursue a landmark trade deal, revelations about US government surveillance of phone and internet records have cast a shadow over the start of talks.

Charges that Washington was spying on the EU soured the atmosphere further, with France suggesting the opening round be delayed for two weeks before softening its stance so talks could proceed.


The United States and the European Union are already each other’s top trade and investment partners, with two-way trade that totaled more than $646 billion last year.

The proposed Transatlantic Trade and Investment Partnership pact would be the world’s biggest free-trade deal, covering about 50 per cent of global economic output, 30 per cent of global trade and 20 per cent of global foreign direct investment.

The Centre for Economic Policy Research in London has estimated an ambitious agreement that eliminates tariffs and reduces regulatory barriers, once fully implemented, could boost US and EU economic growth by more than $100 billion a year.

This week's talks, led by assistant US trade representative Dan Mullaney and his EU counterpart, Ignacio Garcia Bercero, are expected to be mainly organisational, with negotiators split up into 15 different groups to deal with issues ranging from agricultural market access to electronic commerce to investment and competition policy.

One big EU interest is getting exemptions from US “Buy American” requirements on public works projects, while the United States wants the EU to reduce barriers to genetically modified crops that have frustrated US farmers for years.

Former EU trade commissioner Leon Brittan called for a US-EU free trade agreement in 1995, but it took the rise of China, the death of world trade talks and the havoc of the global financial crisis to make the time finally right.

Even then, the two sides have tiptoed up to the talks. A high-level working group examined the issue for more than a year before releasing its recommendation in February for negotiations on a comprehensive trade and investment agreement.

US officials, chastened by a decade of fruitless negotiations in the Doha round of world trade talks, said they wanted to be certain of reaching a deal, and reaching it quickly, before launching talks with the EU.

“If we’re going to go down this road, we want to get it on one tank of gas,” Froman said earlier this year when he was Obama’s international economic affairs adviser. “We don’t want to spend 10 years negotiating what are well-known issues and not reach a result.”

For now, one tank of gas for both sides means reaching a deal before the current European Commission, the executive branch of the EU, finishes its term at the end of 2014.

But many trade experts believe the talks could stretch into 2015, requiring at least one refill along the way.

Since tariffs across the Atlantic are relatively low, much of the negotiations will be focused on reducing and preventing regulatory barriers to trade in areas ranging from agriculture and autos to chemicals and pharmaceuticals.

“There are sensitivities on both sides that will have to be addressed. But we think the prospect of a broad and comprehensive agreement gives us our best opportunity for achieving something that has eluded us before,” Mr Froman said.