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Issue #584 | Breakbulk Quarterly

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2014 Media Kit
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EU, US leaders launch trade talks, France digs in on culture

By: | at 08:00 PM | Channel(s): International Trade  

The United States and the European Union launched talks to create one of the world’s most ambitious free-trade zones, as France again underscored its determination to protect its movies and culture.

A trans-Atlantic free trade agreement was first considered three decades ago but was knocked down by France in the 1990s. Europe has now managed to get Paris onside, opening the way to a deal that could boost the EU and U.S. economies by more than $100 billion a year each.

“This is a once-in-a-generation prize and we are determined to seize it,” said British Prime Minister David Cameron, flanked by U.S. President Barack Obama and leaders of European Union institutions before a Group of Eight summit in Northern Ireland.

The United States and Europe account for almost half of the world’s total output and a third of its trade.

France had threatened to block the start of talks until the EU’s other 26 governments accepted its demand to shield movies and online entertainment from competition from Hollywood and Silicon Valley. Paris eventually won at least a temporary exclusion for such industries.

Tensions came to a head again on Monday after European Commission President Jose Manuel Barroso told a newspaper that opposition to opening Europe’s culture industry to competition was “reactionary” and part of an anti-globalisation agenda.

French President Francois Hollande said the comments had been a “bit of a shock, a bit of a surprise” and France would not allow the issue back on the negotiating table.

Barroso, aware of the upset in Paris, stressed he believed help was needed for some forms of culture which “are not exactly like other sorts of goods.” But, with an eye on Washington, he said audiovisual services could yet be put on the table.

“I hope this is understood by our American partners,” he said.

Obama warned against narrowing the scope of the talks. “It is important that we get it right and that means resisting the temptation to downsize our ambitions or avoid tough issues just for the sake of getting a deal,” he said.

Those tough issues are likely to include agriculture.

The American Farm Bureau Federation, representing big U.S agricultural interests, urged Washington to do away with the “endless array of non-tariff barriers” in Europe to its exports, including for genetically modified crops.

While U.S. and EU negotiators are aware that a final deal will be tough to clinch, they are also conscious of the rising power and influence of China and the need to deepen Western economic integration in order to compete with Asia.

‘Political Will’
The United States and the European Commission, the executive arm of the 27-country European Union, hope for a free-trade deal by the end of 2014 - a tight deadline in complex international trade talks that usually take many years.

“We must maintain that political will in the months ahead,” Cameron said.

The London-based Centre for Economic Policy Research estimates a pact - to be known as the Transatlantic Trade and Investment Partnership - could boost the EU economy by 119 billion euros ($159 billion) a year, and the U.S. economy by 95 billion euros.

However, a report commissioned by Germany’s non-profit Bertelsmann Foundation said the United States may benefit more than Europe. A deal could increase GDP per capita in the United States by 13 percent over the long term but by only 5 percent on average for the European Union, the study found.

Businesses on both sides would like an agreement in which a car tested for safety in the United States would not have to be tested again in Europe, and a drug deemed safe by Brussels would not have to be approved as well by the U.S. government.

Following the collapse of global trade talks in 2008, both the United States and Europe have sought to strike as many free-trade agreements as possible, and Brussels alone is negotiating with more than 80 countries.

The first round of EU-U.