By STEVE BINDER
WASHINGTON, D.C. — Stalled for years over differences about food regulations and other issues, talks to complete a comprehensive free trade agreement (FTA) between the United States and European Union (EU) were jump-started last week during President Barack Obama’s State of the Union speech.
While Obama’s brief mention that he wants to see a Transatlantic Partnership FTA with Europe before his presidency ends signaled the restart of official talks, what perhaps is a more significant driver are stagnant economies here and in Europe, leaders from both say.
After Obama’s speech, the president of the European Commission told reporters overseas a new FTA would be “a game-changer” for both entities. “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,” said Jose Manuel Barroso.
The EU’s trade commissioner, Karel De Gucht, believes a new pact could be in place within two years and that such a deal “will have a worldwide impact.”
The United States and the European contingent already make up the largest trading partners in the world, exchanging nearly $700 billion in goods annually, according to the U.S. Chamber of Commerce.
Although not typically a fan of all trade agreements, Chamber officials called renewed talks “encouraging” and something it supports.
A recent Chamber study concluded a formal U.S.-EU trade deal would increase annual trade between the two by about $120 billion within five years, a 17 percent increase. It also would add about $180 billion to the U.S.-EU gross domestic product (GDP), according to the study.
The European Commission estimates a new pact could increase annual GDP by 0.5 percent in the EU and 0.4 percent in the U.S. by 2027.
A place for agriculture
More than a quarter of the increased annual trade could come from the trade of agricultural goods, but only if there is significant movement on issues of genetically modified products, which the EU now bans. The union also bans the import of beef treated with hormones.
In a letter to outgoing U.S. Trade Representative Ron Kirk last week, U.S. Sens. Max Baucus, a Montana Democrat, and Utah Republican Orrin Hatch wrote securing approval from Congress for a trade deal would require the opening of European markets to American agriculture.
They also warned that agreement on strong intellectual property protection would be required.
Ratifying trade deals were among Obama’s chief accomplishments during his first term; three new FTAs with South Korea, Panama and Colombia took effect last year.
And in December, Congress signed off on legislation establishing permanent normal trade relations with Russia, although that legislation contained human rights provisions Russian leaders have strongly criticized.
Recent moves by Russia have included banning the adoption of its country’s children by Americans, and banning beef and pork products from the United States that contain the additive ractopamine (see related article in this issue).
Federal lawmakers view the moves as retaliation for passage of the trade bill’s human rights language.
Negotiations also are continuing to establish a Transpacific Partnership (TPP) trade deal among 12 countries that includes the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
A TPP deal would take a back seat to an FTA between the United States and Europe in terms of size, but it still would rank as the second-most extensive trade agreement among the 20 FTAs in which the U.S. engages.
Obama’s principal international economics advisor, Michael Froman, told The Associated Press an EU deal “could both dramatically increase jobs and growth in the U.S. as well as in Europe, further integrate our economies and help set global rules that could help strengthen the multilateral trading system.” He also noted while a two-year time frame to get a deal done seems aggressive, it’s doable because the makeup of the current European Commission leadership changes in 2015. “We don’t want to spend 10 years negotiating what are well-known issues, and not reach a result,” he said.