President Barack Obama on Tuesday (12 February) called for talks on a far-reaching free trade agreement with the European Union, throwing his weight behind a deal that would encompass half the world's economic output.
"Tonight I am announcing that we will launch talks on a comprehensive Transatlantic Trade and Investment Partnership with the European Union because trade that is free and fair across the Atlantic supports millions of good-paying American jobs," Obama said in his annual State of the Union speech.
The United States and the EU already have the largest economic relationship in the world, and one of the most complicated. A pact would unite the United States, the world's largest economy, with four other countries in the top 10: Germany, France, Britain and Italy.
Faced with slow growth on both sides of the Atlantic and rising competition from China and other emerging economies, the long-time allies in late 2011 began looking at ways to build on their existing relationship.
Last week, EU leaders endorsed trade talks with the United States, putting it at the top of a larger agenda that includes negotiations with Canada and Japan.
The EU recently lifted bans on imports of US live swine and beef washed with lactic acid to help build confidence that it can address US agricultural concerns.
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Leaders of the Senate Finance Committee, in a letter to U.S. Trade Representative Ron Kirk earlier on Tuesday, welcomed those steps but said any agreement must also reduce EU restrictions on genetically modified crops, poultry treated with chlorine washes to kill pathogens and meat from animals fed the growth stimulant ractopamine.
"A strong, comprehensive trade and investment agreement with the EU has the potential to create significant good-paying jobs for Americans," but negotiations will be tough, Representative Dave Camp, the Republican chairman of the House of Representatives Ways and Means Committee, said in a statement welcoming Obama's announcement.
The US Chamber of Commerce, an early proponent of trade talks with the EU, applauded the news and urged swift negotiation of a high-standard pact.
The U.S.-EU talks also are expected to tackle new areas, such as setting rules to govern the free flow of information across borders. That is an increasingly important priority for big US internet companies like Google, Facebook and Amazon but could be hard for EU members France and Germany to accept because of privacy concerns.
BUSINESSEUROPE President Jürgen R. Thumann commented on Obama's speech:
"BUSINESSEUROPE is pleased by the strong political support President Barack Obama gave to the launch of EU-US trade and investment negotiations in his State of the Union Address. An agreement will significantly boost economic growth on both sides of the Atlantic, strengthen the competitiveness of our main industries and restore transatlantic leadership in trade."
British Prime Minister David Cameron said:
"It's great that President Obama has set out his determination to agree a trade deal between the EU and the United States.
"We discussed this issue on Monday and we are both committed to launching negotiations this year. A deal will create jobs on both sides of the Atlantic and make our countries more prosperous.
Breaking down the remaining trade barriers and securing a comprehensive deal will require hard work and bold decisions on both sides. But I am determined to use my chairmanship of the G8 to help achieve this and to help European and American businesses succeed in the global race."
The Irish Minister for Foreign Affairs & Trade, Eamon Gilmore said in a statement:
"Securing a negotiating mandate for a comprehensive free-trade agreement with the United States was a top priority for the Government when we established the jobs and growth agenda for the Irish Presidency of the EU.
Coming on the back of last week’s agreement on the Multi-annual Financial Framework, where the EU made significant progress on its own governance, this now opens up enormous untapped potential for a new phase in Europe’s economic relations with the US.
I anticipate that these negotiations will begin during the Irish Presidency, and we will of course make the most of Ireland’s close relationship with the US to get talks off to a good start.
I look forward to engaging in constructive dialogue with our US colleagues as we begin working on this together.”
Two-way goods trade between the United States and the EU now totals more than $600 billion, or €447 billion, annually. Services trade, including sales by majority-owned U.S. or EU companies in each other's market, adds about $1.2 billion.
American companies have invested around €1.4 trillion in production, distribution and other operations in the EU, far more than in China or anywhere else in the world. EU companies have invested about €1.2 trillion in the United States.
Since most tariffs between the United States and the EU are already low, reducing regulatory barriers to trade in areas like agriculture and chemicals is expected to be the most challenging aspect of the talks.
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