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Last updated: February 13, 2013 9:16 pm
The EU and the US on Wednesday vowed to complete talks on a new trade agreement within two years, as the two trading powers outlined an ambitious timeline for a project that boasts huge commercial potential but is also rife with complications.
The idea for a transatlantic trade pact, touted by US president Barack Obama during his State of the Union address on Tuesday night, has been discussed for decades . But US and European politicians are now desperate to present voters with tangible plans to revive growth and create jobs, while forging a united front in the face of competition from China and other emerging markets.
José Manuel Barroso, European Commission president, described an agreement uniting two trading partners which account for nearly half of world economic output as “a game-changer”.
“Together, we will form the largest trade zone in the world ... It is a boost to our economies that does not cost a cent of taxpayer money,” Mr Barroso said.
Michael Froman, who advises Mr Obama on international economic policy, added: “This could both dramatically increase jobs and growth in the US as well as in Europe, further integrate our economies and help set global rules that could help strengthen the multilateral trading system”.
Karel De Gucht, the EU trade commissioner, noted that any technical and legal standard adopted by the EU and US could become a global benchmark. “That is of foremost importance for our industries,” he said.
The two-year time-line set out by Mr De Gucht – and endorsed by the US – coincides with the end of the current European Commission’s term. If the trade deal is not completed by 2015, its prospects could be uncertain under a new EU leadership team.
Any agreement would also have to be approved by the EU’s 27 member states, the European parliament and the US Congress.
Washington has been reluctant to launch talks if they are unlikely come to fruition, wasting administrative resources and political capital. “We have said if we want to go down this road we want to get there on one tank of gas,” Mr Froman said. “We don’t want to spend ten years negotiating what are well-known issues and not reach a result.”
Securing a meaningful EU-US deal will be difficult. Tariffs are already low and the two sides have vowed to eliminate those that remain, meaning that the talks will focus on non-tariff barriers and regulatory standards.
Washington and Brussels have already waged epic battles over everything from aircraft subsidies to chlorine-rinsed chicken and hormone-treated beef. While EU and US officials have been trying to iron out some of their differences in advance of the talks, substantial differences remain.
Mr De Gucht acknowledged that there was “no low-hanging fruit”, but emphasised the potential benefits for both sides: “We are focused on the future. This is not a negotiation that has as a prime aim to find ... a solution for chlorine chicken. What we want to do is make an internal market between the US and the EU.”
Previous transatlantic trade initiatives have largely disappointed. Hugo Paemen, a former EU ambassador to Washington, noted that the US might invest more effort in boosting trade links with Asia. In his address on Tuesday night, Mr Obama touted a separate project known as the trans-Pacific partnership before he mentioned the EU-US deal. “Clearly, the motivation on the European side is bigger than on the American side,” Mr Paemen said.
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