Froman – De Gucht Talk on US-EU Trade Pact by Year End, Though Hurdles Remain

Talks between the US and EU for a comprehensive trade and investment pact are set to kick into higher gear, following a highly-anticipated “political stocktaking” meeting between the two sides’ top trade officials. Though the negotiations are said to be “on track,” both sides cautioned that the biggest challenges are yet to come.

The meetings, held between US Trade Representative Michael Froman and EU Trade Commissioner Karel De Gucht in Washington on Monday and Tuesday, come eight months into the negotiating process, and after three rounds of initial negotiations between the two partners.

Though these early talks have reportedly been productive, the real difficulties lie ahead, as the two sides dig into their larger differences - such as on regulations and standards - and start negotiating tariff reduction levels.

De Gucht: Time to “step up a gear”

When the negotiations were launched last year, officials on both sides of the Atlantic had said that they hoped to finish them by late 2014. Now, however, the tone has changed, with EU chief negotiator Ignacio García Bercero saying in Berlin last week that the talks are unlikely to be completed this year.

Even so, officials have maintained that the negotiations must ratchet up a notch in order to avoid losing their current momentum.

Market access offers exchanged

In the week ahead of the Froman-De Gucht meeting, both sides exchanged initial market access offers, though officials have said that these are purely a starting point for discussion.

The EU’s initial offer would lift 96 percent of current tariffs, with the exception of sensitive items such as beef, poultry, and pork, which would see the US being provided with larger quotas instead. Three percent of tariff lines would see a phase-out of tariffs, rather than immediate elimination.

Media reports have indicated that the EU was not pleased with the level of tariff reductions mentioned in the US offer, with De Gucht telling journalists in Washington on Tuesday that the EU’s “ambitious” offer was, in Brussels’ view, “not matched at this moment in time by what has been put on the table by the US.”

Tariffs between the two sides are already low, and experts say that the largest gains will come from harmonising their regulations and standards. Even so, the size of their respective markets means that reducing these tariffs further could still lead to huge gains.

Exchanges of services offers will be next, De Gucht confirmed on Tuesday, without specifying when the two sides would be swapping these.

Washington, meanwhile, announced this week a new Public Interest Trade Advisory Committee that would provide expert input into the negotiations on areas such as public health, development, and consumer safety.

Several EU officials, however, have lately made a public call for negotiators to keep the T-TIP talks comprehensive, in order to ensure the maximum gains from such a pact.