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US-EU free trade talks begin

July 8, 2013

After nearly two years of preparation, the United States and the European Union have finally begun talks on a free-trade agreement. But the talks are overshadowed by a spying scandal and face major regulatory hurdles.

Image: AP

The United States and the European Union on Monday started talks on the so-called Transatlantic Trade and Investment Partnership (TTIP). While the two major trading blocs have already lowered direct tariffs, non-tariff barriers (NTB) are at the center of the negotiations.

"We go into these negotiations with the goal of achieving the broadest possible, most comprehensive agreement that we can," US Trade Representative Mike Froman told Reuters news agency.

Hurdles on the way to free trade

The trade talks had the "highest priority" for Chancellor Angela Merkel, German government spokesman Steffen Seibert told a news conference in Berlin last Thursday.

The negotiations have been divided into 15 different working groups which will deal with issues such as agricultural market access and electronic commerce as well as investment and competition policy. The two sides have set an 18-month time frame for an initial deal.

"We don't want to spend 10 years negotiating what are well-known issues and not reach a result," US negotiator Froman told Reuters.

Sensitivities and hurdles

The US-EU trade partnership would create the world's biggest free-trade zone covering nearly 50 percent of global economic output, 30 percent of global trade and 20 percent of the world's foreign direct investment. Trans-Atlantic trade alone was worth $646 billion (503 billion euros) last year.

The London-based Centre for Economic Policy Research in London estimated that TTIP could add about 119 billion euros annually to the EU economy, and 95 billion euros for the United States.

However, the negotiations face significant hurdles, and a series of national sensitivities need to be overcome.

France, for example, demanded that state-backing for its film and television industry be excluded from the talks. In addition, the US is under pressure for its policy of preferring national and local contractors in public tenders.

Snooping scandal

Moreover, the talks are overshadowed by a recent trans-Atlantic row over revelations that the US National Security Agency (NSA) tapped telephone conversations and Internet records in Europe.

In May, US whistleblower Edward Snowden unveiled details about a large-scale NSA eavesdropping program which had secretly gleaned information also from US allies in Europe, including Germany, France, as well as EU institutions and embassies.

On Saturday, German Chancellor Angela Merkel said bugging was not what friends do as the Cold War was over. Merkel demanded explanations from Washington, but did not say the free-trade talks should be abandoned or postponed.

Last week, France called for the TTIP negotiations to be put off while talks on resolving the data scandal, which also began Monday, had not yet finished. But ultimately, the 28-nation EU decided to go ahead with the free trade talks.

uhe/kms (AFP, Reuters, dpa)