EU and US consider free trade pact

After years of battling each other on trade issues, US and European officials are contemplating joining forces in what could be the world’s largest free trade pact in an attempt to boost their struggling economies.

Discussions are in the most preliminary of stages and there would be major obstacles to overcome, such as sharp differences on agriculture, food safety, and climate change legislation. Still, top EU and US officials have said they want to see it happen.

And America’s main labour group, often the biggest opponent of US trade pacts, says it wouldn’t stand in the way.

Last month, during a speech on trans-Atlantic relations, Hillary Clinton, the US secretary of state, signalled the Obama administration’s interest.

“If we get this right, an agreement that opens markets and liberalises trade would shore up our global competitiveness for the next century, creating jobs and generating hundreds of billions of dollars for our economies,” she said.

EU officials, including commissioner for trade Karel De Gucht, have also expressed enthusiasm. Both sides are awaiting a report within weeks by a working group they appointed to study the issue. A positive recommendation could lead to talks early next year.

The interest on a big free trade deal in Washington is somewhat surprising. US free trade negotiators have had a tough slog since the politically fraught debate over the NAFTA agreement with Mexico and Canada in 1991. Since then, it has become increasingly difficult to push big deals through Congress amid opposition from labour groups.

Efforts to negotiate further reductions in tariffs between the more than 150 countries in the World Trade Organisation also have stalled in recent years, in part over disagreements between the US and the EU.

Negotiators would face a host of tricky issues that have previously led to trans- Atlantic trade spats. The two sides currently are fighting over the EU’s carbon trading scheme that could penalise airlines not meeting EU standards. There are also disagreements over intellectual property enforcement and food safety issues.

More broadly, agricultural issues — including EU restrictions on the use of genetically modified foods and pesticides, — are likely to challenge negotiators.

US Labour unions have opposed previous US free trade deals with developing countries, arguing that US workers would be at a competitive disadvantage because inferior environmental and labour standards in those countries allow for lower wages.

But the giant US labour umbrella organisation, the AFL-CIO, says it wouldn’t have those concerns in a deal with the EU, arguing that European social welfare and environmental standards exceed those in the US.


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