EU-US progress on cutting trade barriers but disputes remain

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The European Union and the United States made progress on eliminating regulatory obstacles hampering their economic relations, officials said on 9 November after the first meeting of the Transatlantic Economic Council. However, a number of disputes related to biodiesel, poultry and customs procedures continue to fray the relationship.

While the first meeting of the Transatlantic Economic Council (TEC) did not yield any substantial results, officials said some advances had been made in the negotiations, which are aimed at clearing away technical regulations and standards that substantially raise costs for companies wishing to trade and invest across the Atlantic (EURACTIV 2/05/07).

Among others, the two sides neared a deal on the mutual recognition of accounting standards that would remove a time-consuming requirement for businesses operating on both markets to hold two sets of records. 

They also reached a preliminary agreement on common technical standards for pure biofuels, but came no closer to resolving a complaint from EU biodiesel producers regarding “unfair” US subsidies to American producers (EURACTIV 17/10/07). 

Another sticking point during the meeting was a long-standing dispute over EU restrictions to poultry imports from America due to health concerns. The failure to resolve this issue is a sign that it may not be so easy to iron out the differences in European and American laws, which tend to stem from political sensitivities or from strong lobbying on both sides – as is the case, for example, regarding genetically-modified foods. 

American Economic Council Director Allan Hubbard, who co-chaired the meeting with Commission Vice-President Günter Verheugen, said the poultry issue was “an extraordinary frustration to America”. The Commission said it would “act to definitively resolve the long-standing issue…before the next US-EU summit” in April next year. 

US legislation that would require foreign ports to scan every container destined for the US as of 2012 was another source of tension. EU Customs Commissioner Laszlo Kovács said the law would create “enormous problems in trade” and be “enormously costly”, especially for some of Europe’s older ports. Officials noted that advances on this issue would not be likely until after the November 2008 US Presidential election. 

Asides from bilateral issues, the two sides also discussed the “challenge” of adapting to China’s rise in the global economy. Verheugen said the debate had focused on questions such as: “How do we react if and when we recognise that China does not fully respect the rules, to put it very mildly”. 

Hubbard added: “When China does not follow intellectual property rules and regulations, that affects not only the US – it affects Europe.” They pondered a joint approach to getting China to respect global trade rules more fully. 

The Commission noted that the summit was “only the start of what will be a long and fruitful process”. 

Future meetings are expected to deal with a number of trade disputes that act as a “persistent irritant in what is otherwise a fairly smooth transatlantic economic relationship”.

In particular, the battle currently being fought out in the World Trade Organisation over government subsidies to aircraft manufacturers Airbus and Boeing  (EURACTIV 27/09/07) could be on the agenda at the start of next year, when it is hoped a negotiated solution can be achieved, officials commented. 

EU Trade Commissioner Peter Mandelson said: “There is a desire to deal with these irritants through negotiation rather than litigation.” He added that the new approach within the TEC could help resolve these kinds of friction by linking separate trade disputes and putting them “on a ledger, marking down each one, three wins for you, three wins for us”. 

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