EU leaders have thrown their weight behind talks aimed at securing a comprehensive trade agreement with the US.
In a communique adopted following the EU budget summit on Friday (February 8), the European Council reiterated its “support for a comprehensive trade agreement” with the United States.
Any talks are likely to focus more on harmonising regulatory standards than on reducing already low tariff barriers, with the Council calling on trade talks to pay “particular attention to ways to achieve greater transatlantic regulatory convergence.”
The move, which puts the US at the top of long list of trade talks expected to take place in 2013, is the latest sign that the EU sees trade as its most effective answer to austerity. The leaders’ statement added that “an ambitious trade agenda can lead in the medium term to an overall increase of 2 percent in growth and to the creation of 2 million jobs.”
Meanwhile, leaders said they expect a trade deal with neighbouring Canada to be concluded “very shortly,” while negotiations with Japan expected to be launched in Tokyo at the upcoming EU-Japan summit.
Although the summit in Brussels was dominated by protracted negotiations on the EU’s near €1 trillion budget for the next seven year framework, the European Commission has estimated that an EU-US trade deal could be worth €275 billion per year – more than double the size of the bloc’s annual budget.
EU trade commissioner Karel de Gucht is currently in North America for talks with Canadian trade minister, Ed Fast, and US trade representative Ron Kirk in a bid to fast-track the pace of negotiations. Talks with Canada are on the verge of completion, while EU officials are hopeful that President Barack Obama will mention the EU-US plan in his state of the union address next Tuesday (February 12).
During a speech in Munich last week, US vice-president Joe Biden talked up the prospect of a trade deal “getting done.” He said that an accord “would be good for growth, job creation, and be good on both sides of the Atlantic; it would strengthen our global trading system; and it would, importantly, help us strategically.”
Bilateral trade agreements have become the new vogue in EU policy as the bloc’s 27 member states attempt to drag their economies out of recession and away from austerity. However, only four of the EU’s 29 trade agreements already in force (Mexico, South Africa, Turkey, South Korea) are with countries in the G20
Andrew Burns, senior economist for the World Bank, told this website that although economists have reservations about the benefits of bilateral trade deals “these trade agreements have, on balance, been trade creating not diverting.”
But nearly five years after the start of the financial crisis, governments are still yet to repeal a large number of measures to restrict trade.
The World Trade Organisation reported that in the seven months up to May 2012, 182 instruments to restrict or distort trade were adopted by governments. It also claims that only 18 percent of the trade restricting measures adopted by G20 countries since 2008 have been scrapped, amounting to a total loss of 3 percent of world trade – equivalent to some €350 billion.