logo logo

European leaders float free trade agreement with US as talks on global deal languish

Washington Post, USA

European leaders float free trade agreement with US as talks on global deal languish

By Associated Press

26 January 2012

DAVOS, Switzerland — British Prime Minister David Cameron gave his support to the idea of a free trade deal between the European Union and the U.S. on Thursday, suggesting that a trans-Atlantic pact could deliver a much-needed boost to global commerce.

His call for a bilateral deal with Washington follows similar comments by German Chancellor Angela Merkel on Wednesday, and comes amid widespread admission among global leaders that the so-called Doha round of free trade talks is dead.

“Let’s get free trade agreements with India, Canada and Singapore finalized by the end of the year,” Cameron said, according to an advance copy of a speech he planned to deliver to the World Economic Forum in Davos, Switzerland.

Global leaders meeting in the Alpine ski resort have traditionally repeated the mantra that the Doha round, launched in Qatar’s capital in 2001, is the best way to promote world trade.

“Last year, at this very forum, world leaders called for an all-out effort to conclude the Doha round in 2011,” said Cameron. “We said it was the make-or-break year. It was. And we have to be frank about it. It didn’t work.

Britain’s prime minister cited bilateral trade deals the EU is exploring with India, Canada and Singapore, saying they could add €90 billion (116.5 billion) to the bloc’s economies.

“Let’s also look at options for agreement between the EU and the US, where a deal could have a bigger impact than all of the other agreements put together,” he said.

Trade experts immediately poured cold water on the idea of a trans-Atlantic trade deal.

“Running around looking for palliatives in the light of the death of Doha is governance of the headless-chicken variety,” said Jean-Pierre Lehmann, Professor of International Political Economy at the IMD business school in Lausanne, Switzerland.

Former EU trade chief Peter Mandelson said the proposal was understandable given the lack of progress on Doha, but called it “optimistic” in the light of the enormous hurdles that would have to be overcome.

“It would have to focus not on tariffs but on very many non-tariff barriers, technical specifications, differences in regulation,” Mandelson told The Associated Press. “They are the hardest things to agree and those two negotiating partners are the hardest two to find agreement.”

The head of the World Trade Organization, Pascal Lamy said some differences between Washington and Brussels would be difficult to bridge.

“Agriculture? Good luck,” he told reporters in Davos. Lamy noted that both the U.S. and the EU have been fruitlessly negotiating bilateral deals with other trade blocs for decades. “I don’t think that bilateralism will be the major formula for success,” he said.

Still, Cameron’s words echoed those of Germany’s Merkel a day earlier. In her keynote speech at the forum’s official opening Wednesday, she told political and business leaders that there was much room for greater trans-Atlantic trade.

“The European Union and the United States are each other’s most important trading partners with a trade volume of over €600 billion ($776.5 billion) and the potential of our cooperation has not yet been tapped,” she said.

Any move to forge a bilateral deal between the two trading powers would be sure to anger smaller countries, who have demanded an ‘all or none’ approach to global trade.

It could also be viewed as a signal that the World Trade Organization, where the Doha round has been negotiated over the past 11 years, is becoming irrelevant.

“The proposed EU-USA FTA could be the death of the WTO. It would be seen as the really rich ganging up and perpetuating discrimination against the emerging and developing countries, thus widening the already far too wide chasm between North and South,” said Lehmann.