January 8, 2013 6:11 pm

A trade deal for Europe and US

Timing for transatlantic talks is as good as it will ever get

It may be almost as rare as an appearance of Halley’s Comet. But when the stars are this aligned for a trade deal between the US and the EU, leaders should seize the moment.

For the past year, officials have been working on a potential transatlantic trade round – a process that would encompass more than half the world’s economy. The daunting list of sensitive items that bedevils trade between the two blocs has delayed the report by a few weeks. But the signs are that it is almost ready. President Barack Obama should give a final push so that he can include it in his State of the Union speech later this month.

There would be two lasting benefits to such a project – and a health warning on the negotiations. First, it would enable Washington and Brussels to set the terms for the rest of the global economy. There are plenty of trip wires hindering the free flow of goods and services across the Atlantic. But both blocs are fundamentally committed to the rule of law and democratic capitalism. By embarking on a project that would aim eventually to integrate their two market economies, the US and the EU would have the chance to set the template for countries such as China that take a sharply different approach to property rights. The pay-off would also be geopolitical.

Second, the project would revitalise US-EU relations at a time of slow – or non-existent – growth on both sides of the Atlantic. As a bonus, it would give UK Prime Minister David Cameron a selling point for Britain’s presence inside the EU and his G8 presidency. For Washington, it would restore symmetry to foreign policy at a time of the much-ballyhooed “pivot to Asia” – a rebalancing, incidentally, that is unlikely to result in a big transpacific trade breakthrough in the near future. The US and Europe share core interests. They need to be acted upon.

But it will also be important not to let ambition distort reality. The White House rightly says the process must be finished on “one tank of gas” – in contrast to the ill-fated Doha round on trade with the developing world that has taken a decade to die.

To meet the likely mid-2014 deadline, the talks must therefore set realistic outcomes. For example, regulatory harmonisation looks unachievable – far better to aim for mutual recognition. The terms of the talks matter: they should be presented as the first step in a dynamic process rather than as a conventional trade round. This project should be for keeps.

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