The European Parliament yesterday (23 October) cleared the way for the EU executive to open negotiations with the United States to move towards a transatlantic free trade agreement, but not at any price.
Countries increasingly are pushing bilateral and regional trade agreements to bypass the deadlocked Doha multilateral trade talks. After concluding a successful trade deal with South Korea last year, the European Union is now looking at the United States and Japan.
MEPs say the EU-US gross domestic product could be boosted by €163 billion by 2018 if half the non-tariff barriers were removed. The EU-US trade volume was €700 billion in 2011 and bilateral investment approached €2.4 trillion.
MEPs gave the European Commission authority to open negotiations in the first half of 2013, removing one roadblock for the EU-US high-level working group on growth and jobs, set up by EU leaders and US President Barack Obama to deliver its opinion on whether to move forward towards a free trade agreement (see background).
However, voting by an overwhelming majority on the report drafted by centre-left MEP Vital Moreira, chair of the international trade committee, MEPs said that the EU’s interests must be protected, especially in the farm sector.
"Agreement is not going to be easy and there are very divergent interests between the US and Europe over, for example, agriculture, maritime transport, GMOs and cloned animals, but we believe that these difficulties can be overcome," said Moreira.
Disputes over farm products
In 2011, agricultural products represented 5.3% of EU exports to the US and around 6% of total imports from the US. The share of US products among total EU imports of agricultural products was 8.5%.
Generally the EU agricultural sector complains that significant trade impediments exist in the form of technical barriers and sanitary and phytosanitary requirements applied to plants, meat and dairy products.
The EU beef import ban in the US and the high tariffs on US beef and pork exports to the EU, along with disputes over genetically modified crops, have stoked frustration on both sides.
Businesses supportive of a trade deal have stressed that existing non-tariff barriers are the major impediments to opening markets. Bilateral efforts to remove those barriers – the Transatlantic Economic Council and the High-Level Regulatory Forum – have not been fully successful.
“It is unrealistic that the necessary regulatory convergences required for an FTA could be achieved, given the various layers of regulatory decision-making in the US,” said MEP Yannik Jadot, trade spokesperson for the Greens in the European Parliament.
The Greens, who opposed the report, also voiced concern about the definitions of 'public services' in eventual service liberalisation negotiations and climate change policy.
“We should not simply sweep these fundamental disagreements under the table to facilitate easier negotiations,” said Jadot.
The EU-US working group is due to deliver its final report by the end of 2012. European Commission President José Manuel Barroso and European Council President Herman Van Rompuy, along with the American president, will then decide whether to launch negotiations.
"The US and Japan are partners and friends of Europe, and we must strengthen our ties. Increased trade and investment between us will support job creation, economic growth and competitiveness," said S&D spokesperson on trade, MEP Bernd Lange.
"After the stalemate of the Doha round which failed to reach a multilateral trade agreement, the way to move forward is through bilateral trade agreements. Any FTA should include reciprocal opening of markets in goods, services, investment and intellectual property rights, as well as the removal of non-trade barriers."
At the 2011 EU-US Summit, leaders instructed the Transatlantic Economic Council to establish a high-level working group on jobs and growth, led by US Trade Representative Ron Kirk and EU Trade Commissioner Karel De Gucht.
This working group is tasked with identifying policies and measures to increase EU-US trade and investment to support job creation, economic growth and international competitiveness.
?Upon completing its analysis, the working group will also consider and recommend the practical means necessary to implement any policy measures identified. These could include enhanced regulatory cooperation and negotiation of one or more bilateral trade agreements.
- European Parliament: Free trade with the US, yes but not at any price