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US and EU see opening for free-trade pact

The Washington Times | Sunday, May 5, 2013

U.S. and EU see opening for free-trade pact

Deep financial crises changing opinions of Europeans

By Tim Devaney

Trade officials on both sides of the Atlantic say there is a short "political window" to negotiate a free-trade agreement between the United States and European Union.

The idea of a trans-Atlantic trade agreement, which has been floated since the Reagan administration but proved elusive over the years, was brought to the forefront earlier this year when President Obama announced his intent to start negotiations.

In the past, Europeans have balked at a trans-Atlantic trade agreement, but the global financial crisis is forcing their bloc to reconsider such a deal, because it could help spur their economy. Combined, the European Union and United States generate more than $30 trillion in annual gross domestic product, or about half the world’s output, according to the Business Coalition for Transatlantic Trade.

"For many years, a trans-Atlantic trade agreement seemed almost impossible," Jose Maria Aznar, the former president of Spain, said during a trip to Washington last week to promote the trade agreement. "Not any more. An agreement is within our grasp."

Political leaders are eager to get a deal done, but they don’t have much time. The European leaders who are pushing for an agreement have elections coming up in 2014. The U.S. Congress also faces mid-term elections in 2014. Analysts warn that the trade deal could disappear if it isn’t completed before the end of that year.

"The political window is very small," said Dan Mahaffee, director of policy and board relations at the Center for the Study of the Presidency and Congress, a Washington-based group. "Right now, you have politicians who agree with many of the concepts, but you don’t know who’s going to get elected on both sides of the Atlantic. So they want to get it done while they know they have a friendly political environment."

That gives trade officials just more than a year to complete negotiations. In contrast, it took the U.S. half a decade to finalize the recent trade agreements with Colombia, South Korea and Panama.

Still, both sides seem optimistic they can get a deal done, though they won’t set an official deadline for doing so.

"I think it’s the first time in which this agreement can really become a reality," Jaime Garcia-Legaz Ponce, Spain’s secretary of state for commerce, who is helping negotiate the deal for Europe, said during a recent trip to Washington. "The reason for that is that the crisis has changed how Europeans think. Their approach to the global economy has changed.

"Europe needs to change its economy," he added. "It needs to open up, it needs to profit from the growth that is taking place almost everywhere around the globe."

That desire for growth is seen most in countries like Greece that have been devastated by the financial crisis. Maria Galanou, press officer at the Greek Embassy in Washington, said a trade deal would be beneficial for her country.

"You have to be optimistic about it," Ms. Galanou said. "It’s going to take a lot of negotiations and back and forth, but there is political will on both sides."

Mr. Ponce, whose nation is joining Germany and Britain in taking the negotiating lead on the European side, said the EU is willing to take drastic measures to push this deal through.

"We are ready to make the decisions that will be difficult — to open up our markets," Mr. Ponce said. "We will be ready to put on the table all the issues, including the difficult ones for European countries."

Tariffs between the U.S. and EU are already low, Mr. Ponce said, so that won’t require much discussion, though regulation issues could pose a problem.

Mr. Ponce fears that one solution — harmonizing regulations so that one set of rules covers both markets — would be too difficult to negotiate and could slow down the trade deal. "There’s no reason to make a case about harmonization," he said. "It cannot work."

Instead, he wants to see negotiators to be content with the status quo of "mutual recognition," in which U.S. companies — for example, Ford selling cars — are subject to European regulations for that part of their businesses that operates over there, and vice versa for Mercedes-Benz or Volkswagen in the U.S.

The biggest regulations the U.S. and EU will have to negotiate have to do with agriculture, Mr. Mahaffee said. American businesses would like access to markets for such products as ethanol, biodiesel and meat, which European health and safety rules hamper.

 source: Washington Times