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Issue #587

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2014 Media Kit
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US, EU start free-trade talks despite spying concerns

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

The United States and the European Union began talks on a landmark bilateral free trade agreement, despite European concerns about U.S. spying that had threatened to delay the start after nearly two years of preparation.

U.S. Trade Representative Michael Froman touted the economic benefits a deal would bring, not just for the United States and Europe but for the global trading system.

“We have the opportunity to complement one of the greatest alliances of all time with an equally compelling economic relationship,” he said in remarks to the two delegations as the talks got under way in Washington.

“And we have the opportunity to work together to establish and enforce international norms and standards that will help inform and strengthen the multilateral, rules-based trading system.”

President Barack Obama and European leaders announced a decision in February to pursue a trade pact, but revelations about U.S. government surveillance of phone and Internet records have since soured relations.

Charges that Washington was spying on the 28-nation EU have further strained relations, with France suggesting that the opening round of the talks be delayed for two weeks before softening its stance so they could could proceed.

U.S. internet companies, meanwhile, are concerned that EU privacy rules could increase their costs and make them less competitive by restricting the flow of data across borders.

“The reason why we decided to hold the talks now is that we are convinced that this deal is good for Europe,” European Trade Commissioner Karel De Gucht told reporters in Geneva.

“We are convinced that this trade agreement will result in more jobs and more growth.”

An EU official said that in parallel to the main talks on Monday, high-level U.S. and EU experts met, also in Washington, to address intelligence oversight, intelligence collection, privacy and data protection issues.

The proposed Transatlantic Trade and Investment Partnership pact would be the world’s biggest free-trade deal, covering about 50 percent of global economic output, 30 percent of global trade and 20 percent of global foreign direct investment.

The Centre for Economic Policy Research in London has estimated that an ambitious agreement that eliminates tariffs and reduces regulatory barriers could boost U.S. and EU economic growth by more than $100 billion each a year.

The United States and the European Union are already each other’s top trade and investment partners, with two-way trade that totaled more than $646 billion last year.

Business groups on both sides of the Atlantic support the proposed deal, but consumer, food-safety and environmental advocates expressed concern in a letter to Obama and European leaders on Monday that an agreement could weaken important government regulation.

One Tank of Gas
This week’s talks are expected to be mainly organizational, with negotiators split up into 15 different groups to deal with issues ranging from agricultural market access to electronic commerce to investment and competition policy.

One big EU interest is getting exemptions from U.S. “Buy American” requirements on public-works projects, while the United States wants the EU to reduce barriers to genetically modified crops that have frustrated U.S. farmers for years.

Former EU Trade Commissioner Leon Brittan called for a U.S.-EU free-trade agreement in 1995, but it took the rise of China, the death of world trade talks and the havoc of the global financial crisis to make the time finally right.

Even then, the two sides have tiptoed up to the talks. A high-level working group examined the issue for more than a year before releasing its recommendation in February for negotiations on a comprehensive trade and investment agreement.

U.S. officials, chastened by a decade of fruitless negotiations in the Doha round of world trade talks, said they wanted to be certain of reaching a deal, and reaching one quickly