White House clears way for start of trade talks with EU

Obama.jpg

The White House on Wednesday (20 March) formally notified Congress of its plans to begin trade talks with the European Union, an effort to leverage the world's largest trade and investment relationship to create new economic growth.

"A high-standard comprehensive trade agreement with Europe is something that will be enormously beneficial for the US economy and the EU in terms of creating new export opportunities [and] boosting jobs," Acting US Trade Representative Demetrios Marantis told reporters in Washington.

President Barack Obama announced plans to negotiate the pact in his speech to Congress in February. But US practice is for the administration to send lawmakers a formal notification at least 90 days before beginning talks.

Lawmakers and business groups welcomed the news, but said it heightened the need for the administration and Congress to work to together to pass "trade promotion authority."

That legislation would allow the White House to submit the US-EU trade deal – once it is completed in one or two years – to Congress for a vote without any amendment.

However, the trade promotion authority bill also gives Congress a chance to craft negotiating objectives for the US-EU talks and another set of US free trade talks with 10 countries in the Asia-Pacific region slated for conclusion this year.

Because tariffs across the Atlantic are relatively low, the hard work of the negotiations will be smoothing out regulatory differences that have stunted trade in areas such as agriculture, chemicals, pharmaceutical and autos.

"A trade accord is not a magic potion for prosperity, but it can contribute to economic recovery by removing even relatively low barriers across a large volume of bilateral trade," the Washington-based think tank said.

At a Senate Finance Committee hearing on Tuesday, lawmakers repeatedly pressed Marantis on the need for a "comprehensive" pact that would tear down longstanding EU barriers to US farm products and contain strong intellectual property rights protections for US goods.

"Our past negotiations with the European Union have shown just how difficult this task can be. Let's hope that we can get it done this time," said Senator Orrin Hatch of Utah, the top Republican on the Finance Committee.

Two-way goods and services trade between the United States and the EU totals about €775 billion annually. The two sides also have combined foreign direct investment in each other's market of about €2.9 trillion.

But bilateral trade between the two large, mature economies has grown slowly in recent years because of the effects of 2008-2009 financial crisis and competing subsidy and regulatory policies, the Peterson Institute for International Economics noted in a recent policy brief.

Subscribe to our newsletters

Subscribe