FT: Sticking points remain in trade talks, say officials

TTIP Update

US and European officials vowed to give negotiations on a transatlantic trade agreement a jolt to allay fears that they could lose momentum without a push to resolve sticking points between Washington and Brussels.

“Our message to the negotiators now is that we need to step up a gear,” said Karel De Gucht, EU trade commissioner, after a meeting with Michael Froman, US trade representative, in Washington. “The marked-out areas are still larger than the common ground. But we now have a clear picture of the whole field,” Mr De Gucht added, as he warned that the “next phase” would be “harder going”.

The EU and the US are aiming to lower tariffs and harmonise regulations across a range of industries, in a bid to stoke trade and enliven sluggish economies on both sides of the Atlantic.

Negotiators have held three formal sessions – with another on the agenda next month in Brussels – and have cited progress since the launch eight months ago. But the scope and complexity of the proposed deal – combined with political anxiety about the agreement in both the US and Europe – have meant that the negotiations remain fraught with obstacles.

“We both see opportunities to make substantial progress in the coming months, as well as some challenges. But our resolve and the political will to reach an ambitious, comprehensive agreement remain strong,” Mr Froman said.

One of the questions surrounding the talks is whether US President Barack Obama has the backing of his own Democratic party for his trade agenda. Legislation known as Trade Promotion Authority – which would speed the passage of agreements through Congress – is on hold.

“Mike Froman realises very well that if we are in the endgame it will be practically impossible to close the deal if there is no TPA at that moment in time. That’s very clear,” Mr De Gucht said. “How they get there, how they convince their caucus, that is up to them,” he added.

US officials have always expressed confidence that they would ultimately gain the support of Congress for their trade deals, just as EU officials are confident that the deal will be approved by the European Parliament, where there is also scepticism.

Mr Froman delivered a speech on Tuesday at the Center for American Progress, a liberal think-tank, in which he set out the most extensive argument yet for how the trade agreements would benefit middle-class Americans and fit with Mr Obama’s economic policies.

“Trade, done right, is part of the solution, not part of the problem. Through enforcement actions we are able to stand up for our rights and fight for our people. Through negotiations we are able to create new opportunities,” Mr Froman said. “We face a choice: work to raise the standards or stay on the sidelines as other countries write the rules,” he added.

Mr De Gucht detailed the three main areas of the talks with the US, and said “we have work to do on all of them”.

On opening access to each other’s markets, the EU and the US exchanged their first offers to slash tariffs on goods just last week and Mr De Gucht suggested that his side had been more generous. “We have tried to put something on the table that is ambitious. That was a deliberate choice,” the EU trade commissioner noted. “To our mind this is not matched at this moment in time by what has been put on the table by the US,” he added.

In the category of “rules”, Mr De Gucht called for a “high standard” on the role of state-owned enterprise, which will be crucial in terms of managing competition from companies and investors in emerging markets such as China. And he urged “no restrictions” on trade in raw materials and energy, at a time when the US is slowly opening up its curbs on gas exports and is considering lifting curbs on crude oil exports that date back to the 1970s.

Mr De Gucht said the final area of harmonising regulations was the most difficult yet the most important, and cited “very serious concerns” in Europe that the trade deal with the US could lead to watered-down regulations.

Mr De Gucht said it was possible to “adapt our rules and reach common standards while still maintaining the highest levels of regulatory protection”. But the EU trade commissioner also said it would require hard work. And Mr De Gucht shut down any hopes from US ranchers and farmers that the talks could lead to a relaxation of rules related to hormone treated beef or genetically modified crops.

“There will be no hormone beef on the European market. There are no negotiations on that,” he said, adding that US producers should simply set up separate production lines of hormone-free beef to export to the EU. “It is not as if you can only grow a cow with hormones,” Mr De Gucht added.