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David Cameron sets free trade agreement as his G8 priority

The Guardian | Tuesday 1 January 2013

David Cameron sets free trade agreement as his G8 priority

PM to push for Europe-US deal despite problems of past muted response in Washington and his vulnerable position in the EU

Juliette Jowit and Ewen MacAskill

David Cameron has made the establishment of a free trade agreement between Europe and the US a key priority during the UK’s leadership of the G8 group of richest nations this year.

In a letter to fellow national leaders in the group, whose economies make up more than half the world’s output, the prime minister said expanding free trade was one of three areas he wanted them to focus on.

As well as making progress with discussions ahead of trade deals with Canada, Japan and Russia, Cameron wants the even bigger prize of an agreement, at least in principle, on a deal with the US. Such a treaty could reduce duties on goods traded between European Union members and the US or at least lower "non tariff" barriers such as harmonising standards for certain goods.

Cameron also wants national and EU leaders to co-operate in a crackdown on tax evasion and insist on more transparency from developing nations which receive aid.

The UK leadership, which hosts the main G8 summit at Lough Erne in Northern Ireland in June, is also making a virtue of prioritising issues which do not necessarily involve expensive commitments from member states at a time when governments are trying to curb spending.

"This G8 will not be the kind of summit where we simply whip out a chequebook at the eleventh hour, pledge some money and call it a success," writes Cameron. "What we are talking about are long-term changes in our countries and the rules that govern the relationships between them. With ambition on this scale, I am convinced that success depends on us starting a debate on these changes now."

An EU-US trade agreement has been mooted for some time but has not made much progress in the US, especially on Capitol Hill. Cameron faces the problem that the deal is not strictly a G8 issue, and the PM’s position and influence in the EU is also vulnerable while debate rages at home about the UK’s membership of the organisation.

Development groups are also likely to warn that more G8 deals which exclude developing nations from expanding trade or tie them to unaffordable commitments could harm those nations’ growth.

However, Whitehall sources point to existing EU support, including a speech by the trade commissioner, Karel De Gucht, in November, and say the aim is to end the year discussing details of how, not if such an agreement can be implemented. Benefits to EU members of an "ambitious" deal are estimated at around €65bn (£53bn).

"With Europe and America together accounting for a third of global trade, perhaps the single biggest prize of all would be the beginning of negotiations on an EU-US trade agreement," writes Cameron.

"These are vital opportunities for global growth, and I hope that we in the G8 can offer leadership – in particular by working with businesses in every sector of our economies to mobilise support for these deals and by using the openness of our direct engagement as leaders to address the sticking points frankly and to fix them."

Nick Dearden, a spokesman for the Jubilee Debt Campaign, said he was concerned Cameron’s focus on trade deals would harm developing nations in three ways: by excluding them from the benefits of such deals or by tying them to unaffordable commitments such as buying British arms, and by strengthening the international power of the financial sector – likely to be one of the major beneficiaries.

"Given the financial crisis we have seen, given the role of the City of London in creating that crisis, and the ongoing trade system, what Cameron should be doing is trying to rein in the financial and new-liberal free trade agenda, not go full steam ahead with extending it," said Dearden.

In the US there is substantial opposition to the North American Free Trade Agreement between the US, Canada and Mexico, despite it being in force for nearly 20 years, especially from Republicans and trade unionists who blame it for the loss of jobs.

There is not the same hostility towards an agreement with Europe: some groups representing agriculture have expressed unease but overall the response has been muted.

On tax, the PM wrote to fellow leaders: "No one country can, on its own, effectively tackle tax evasion and aggressive avoidance. But as a group of eight major economies together we have an opportunity to galvanise collective international action.

"We can lead the way in sharing the information to tackle abuses of the system, including in developing countries, so that governments can collect the taxes due to them. We can work together to sign more countries up to the international standards. And we can examine the case for strengthening those standards themselves – whether by improving existing standards or looking at new ones."

The UK presidency, which rotates with the other seven core G8 members Canada, France, Germany, Italy, Japan, Russia and the US, will last one year, and as well as the headline meeting in June includes a number of preparatory summits

 source: The Guardian