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No plans for a US-EU free trade pact

No Plans for US - EU Free Trade Pact - EU Official

REUTERS | 5 March 2004

WASHINGTON (Reuters) - A top European Union trade official ruled out chances on Friday of the world’s two largest economic powers, the United States and the EU, negotiating a free trade agreement.

"We’re not looking forward to free trade negotiations with developed partners at this point in time,’’ Karl-Friedrich Falkenberg, director of the European Commission’s trade office, told a group of lawyers and lobbyists. The commission is the EU’s executive branch.

Washington and Brussels have busily pursued bilateral and regional free trade pacts with countries around the world.

Two months ago, Spanish Prime Minister Jose Maria Aznar said the two economic heavyweights should set a goal of a transatlantic free trade pact by 2015.

But Falkenberg said the EU’s No. 1 trade priority was a successful conclusion of world trade talks. After a disastrous meeting last September in Cancun, Mexico, those negotiations have shown renewed life in recent months.

Brussels believes leading developed nations — such as the United States, the 15 members of the EU, Canada, Japan and Australia — should negotiate tariff reductions through the World Trade Organization, rather than bilaterally, he said.

"One of the underlying reasons for that is not to totally undermine the WTO,’’ Falkenberg said.

The United States and the EU have long been the driving forces behind world trade negotiations. A decision by the two to launch bilateral free trade talks would likely set off alarm bells among many smaller trading partners.

Even so, Falkenberg said the EU would continue working with United States and developed countries on bilateral initiatives aimed at reducing regulatory trade barriers.

Falkenberg spoke just days after the EU slapped a 5 percent duty on $4 billion worth of U.S. exports because Washington missed a deadline for repealing corporate tax breaks declared to be illegal export subsidies by the WTO.

The duties will increase by 1 percentage point per month for the next year unless the United States repeals the measures.