US-EU Plans Trade Pow Wow

In the early days of the New Year, EU leaders have continued their push for the launch of trade talks with the US, as the trade community awaits news in the coming weeks of whether a bilateral EU-US working group will indeed recommend that the two sides begin negotiating a trans-Atlantic deal.

UK Prime Minister David Cameron - who has long been an advocate for launching these negotiations - has in recent weeks publicly ramped up the pressure in favour of launching the talks. In a 2 January letter to fellow G-8 leaders he pledged that trade, including an EU-US deal, would be a top priority as his country takes on the group’s presidency.

The next summit of G-8 leaders - which includes eight of the world’s largest economies, specifically Canada, France, Germany, Italy, Japan, Russia, the UK, and the US - is slated to be held in Northern Ireland in mid-June.

“On trade, there is a huge amount on the table in the coming year - including a possible deal between the EU and Canada, the opening of negotiations between the EU and Japan, and Russia deepening its integration into the global trading system as it enters its second year of WTO membership,” Cameron noted, adding that a WTO trade facilitation deal by December’s ministerial conference in Bali - if achieved - would also be a major win for this year.

Cameron had made headlines early last year during the annual World Economic Forum in Davos, Switzerland, when he argued that 2011 - in his words, a “make or break year” for concluding the WTO’s Doha Round of trade talks - didn’t yield the intended results. Instead, he said at the time, the EU would need to strive for concluding more bilateral deals, including a possible US pact that “could have a bigger impact [than] all of the other agreements put together” - a stance that he has often reiterated since.

Notably, in recent weeks Ireland has also said that its own presidency of the EU - which will last for the first six months of this year - “will place a special focus on the EU-US trade relationship, with the aim of working towards a formal Council mandate for the start of negotiations on a new comprehensive EU-US Trade and Investment Agreement.”

An EU-US deal has also been publicly backed by German Chancellor Angela Merkel, and the European Council voiced its support for the talks after an EU summit last autumn, though a formal Council mandate is still required. The European Parliament has itself voted on a non-binding resolution in favour of starting the talks.

Along with advocating in favour of negotiations with Washington, the EU has been lately pushing to conclude trade talks on a deal with Canada, despite the two sides having missed their end-2012 deadline for finalising the pact. The 27-country bloc has also decided to take on talks with another major trader - Japan.

Working Group report delayed

The EU-US High-Level Working Group on Jobs and Growth - a group tasked with evaluating ways to deepen trans-Atlantic trade and investment - had been expected to issue recommendations in December regarding whether the two sides should begin negotiating a comprehensive bilateral deal. The final recommendations are now expected this month, though a formal release date has not been announced.

An interim report released by the group last June had already indicated that such a pact would likely be the best option for creating jobs and fostering growth for both trading partners.

However, while US officials have - like their EU counterparts - similarly stressed the need for deeper trade ties between the two sides, sources say that Washington has been a bit more guarded on the subject of actually kicking off negotiations, given long-standing sticking points between the two sides on issues such as regulatory standards. US officials have also stressed that negotiations should only begin if it seems clear that a deal can be clinched within a reasonable timeframe.

Both sides have conceded that trade talks, if launched, will not be easy. “There are no quick fixes for the complex issues that still hamper trade between the most developed economic blocs in the world,” EU Trade Commissioner Karel De Gucht said in November. “And it will not be easy for Europe to engage fully in such negotiations either.”

While the two sides currently trade €700 billion annually in goods and services - making up the world’s largest trading relationship - and already have low tariffs, analysts say that even small advances in liberalisation in areas such as non-tariff barriers could yield major results. With the US having only just resolved its latest “fiscal cliff” scare, and the EU facing continued economic struggles, a bilateral pact has been touted by its proponents as a way to increase jobs and growth across the Atlantic, particularly amid the rise of emerging economies.