US, EU in Pow Wow on Trade

The possibility of a Brussels-Washington trade and investment pact received new momentum last week, following the release of an EU-US report which found that a broad, comprehensive bilateral deal was the option with “greatest potential” for supporting jobs and spurring economic growth on both sides of the Atlantic.

The report was prepared by the EU-US High Level Working Group on Jobs and Growth, which was tasked by Washington and Brussels last November to explore trade and investment expansion within the world’s largest trading partnership as both sides seek to remedy their ailing economies. This interim report is a precursor to a final recommendation that will be forwarded to US and EU leaders later this year.

The report outlined a series of areas where Washington and Brussels could likely find convergence; however, it noted that other subjects would require additional substantive work before the working group could make a more definitive recommendation regarding whether the two sides should ultimately pursue a bilateral deal.

Though the US-EU trade partnership already exceeds US$500 billion annually, the US Chamber of Commerce estimates that reducing trans-Atlantic trade barriers could increase annual trade volume by up to US$120 billion.

Tariffs, IPRs, regulatory issues

Provided that both sides do decide to pursue a bilateral deal, the report suggested that negotiators aim to eliminate all duties on bilateral trade, starting with a large elimination of tariffs on some tariff lines upon the pact’s entry into force, and phasing out all but the “most sensitive” tariffs within a short time frame.

Negotiators should also work to develop a set of “21st century rules” focusing on areas such as trade facilitation and customs; trade-related aspects of competition and state-owned enterprises; trade-related aspects of labour and environment; small- and medium-sized enterprises; supply chains; and access to raw materials and energy, the report said.

In the area of services, both sides would aim to “bind the existing autonomous level of liberalisation of both parties at the highest level of liberalisation captured in existing FTAs,” while at the same time working to address remaining market access barriers and taking into account the sensitive nature of some sectors.

With regards to intellectual property rights (IPRs), both sides “agree[d] that it would not be feasible in negotiations to seek to reconcile across the board differences in the IPR obligations that each typically includes in its comprehensive trade agreements.”

Washington and Brussels have examined options for lowering trade barriers between them in the past, only to find difficulty in achieving consensus in areas such as regulatory standards and health protections. These issues were also addressed in the report, which noted that a potential deal could include ambitious chapters that would be “SPS-plus” - SPS referring to sanitary and phytosanitary standards, or food safety and animal and plant health - and “TBT-plus,” with TBT referring to technical barriers to trade.