Wednesday

2nd Dec 2020

EU-US free trade talks restart in Brussels

  • EU headquarters: common rules, not tariffs, are the main prize (Photo: ec.europa.eu)

For over a century in the developed world, the concept of free trade was based on the principle of no tariffs.

But in 2013 the economic map has changed. Although many countries still impose tariffs or duties on products entering their markets from foreign countries, it is "behind the border barriers" which are the real drag on trade flows.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

EU and US officials will hold the second round of talks on the so-called Transatlantic Trade and Investment Partnership (TTIP) - set to last all week - starting Monday (11 November).

Around 50 US officials are expected to be in Brussels from a range of economic sectors. The meetings are expected to cover services, investment, energy and raw materials, as well as regulatory issues.

The talks will, largely speaking, not be about tariffs. In fact, duty barriers between the EU and the US are already low - under 3 percent in most cases. The European Commission estimates that a small scale EU-US deal eliminating the remaining tariff barriers would limit the economic benefits to under €25 billion.

"Regulatory coherence" between the two blocs is seen as the real prize at the end of the TTIP talks.

The EU executive estimates that a comprehensive trade deal going beyond tariff barriers and harmonising standards across a variety of sectors could be worth €275 billion per year to the two sides, of which roundly €100 billion per year would be for the EU - equivalent to an additional 0.5 percent of EU GDP.

Officials also say that this would create up to 2 million new jobs.

But while the potential rewards would be large, the challenge of reaching agreement is much tougher and is likely to take far longer, potentially pushing the timetable for agreeing a deal into 2015.

"It's going to be difficult to get the US to engage in regulatory talks … but we are optimistic that we can at least get the US to agree on a few principles," says a commission official, who is hoping to put financial services on the negotiating table.

However, recent experiences in transatlantic financial regulation are not promising.

The EU and US could only reach agreement on how to regulate the multi-trillion dollar derivatives market at the 11th hour following a tense showdown between regulators.

The US Commodity Futures Trading Commission (CFTC) agreed to a joint approach with the EU in July, just hours before CFTC rules were due to come into force that would have forced US financial services to comply solely with US swaps rules.

The Americans are unwilling to put financial services on the table, fearing that any deal could undermine the so-called Dodd-Frank bill on financial regulation, adopted in 2010 in response to the 2008 financial crisis.

Kay Swinburne, a prominent Conservative MEP on the European Parliament's economic affairs committee, told a recent hearing: "We've been told to stop talking about it [financial regulation] because it's not going to happen".

In contrast, when it comes to regulation of the chemical industry, it is the EU that fears its own existing rules could be weakened.

The so-called Reach legislative package, which re-wrote the EU's rules on chemicals in 2007 and which requires companies to provide information on the contents of over 30,000 substances, was flatly opposed by the US, which prefers a lighter-touch approach.

The EU plans to use the Reach rules to reduce the number of potentially dangerous chemicals in circulation in household goods, while the US system in many cases would keep them on the market, so long as they are not used in ways that would harm people.

However, the recently-concluded trade talks between the EU and Canada, though not extending into financial services, did see agreement in areas such as public procurement contracts.

Under the final deal agreed in October, EU companies will be able to bid for contracts at all levels of the Canadian government.

The commission is approaching the TTIP talks with a sense of urgency, and trade commissioner Karel de Gucht is anxious to seal an agreement as soon as possible - preferably before the end of the current legislative term.

But if the deal is to go much beyond conventional tariffs, more time and patience will almost certainly be needed.

Opinion

EU-US trade - the value of shared values

The EU and the US will soon be launching negotiations for a Transatlantic Trade and lnvestment Partnership, one of the most ambitious bilateral initiatives in the world to create jobs and growth through trade and investment.

EU law needed to protect free press, NGOs say

More than 60 NGOs and media, including EUobserver, have signed a call for an EU-wide law to stop the rich and powerful from silencing critics with malicious litigation.

Frontex takes transparency activists to EU court

The EU border agency Frontex's annual budget for 2020 is €460m. Now they are launching court proceedings against two pro-transparency campaigners for not paying them €24,000 in legal fees after losing a case last year.

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic climate debate on 17 November!
  2. UNESDAMaking healthier diets the easy choice
  3. Nordic Council of MinistersUN Secretary General to meet with Nordic Council on COVID-19
  4. UNESDAWell-designed Deposit Return Schemes can help reach Single-Use Plastics Directive targets
  5. Nordic Council of MinistersNordic Council meets Belarusian opposition leader Svetlana Tichanovskaja
  6. Nordic Council of MinistersNordic Region to invest DKK 250 million in green digitalised business sector

Latest News

  1. EU law needed to protect free press, NGOs say
  2. Socialists demand resignation of EU border-agency chief
  3. Orbán ally admits he was at Brussels lockdown 'sex party'
  4. Legal battle over oil giant Shell's emissions begins
  5. Chance for Christian Democrats to draw line against extremism
  6. Frontex takes transparency activists to EU court
  7. EU's opportunity to curb online politics ads
  8. China and Russia encircling divided Western allies

Join EUobserver

Support quality EU news

Join us