At the middle of June, the EU Council gave the green light to the European Commission to initiate formal bilateral trade negotiations with the United States of America. Endorsing the idea of bilateral talks, Member States set out the objectives the Commission should follow in the negotiations on behalf of the EU. Thus, negotiations between the European Union and the US were launched at the beginning of July. According to the European Commissioner for Trade, Karel De Gucht, a final agreement could be made at the end of 2014.
The aim is to increase trade and investment between the EU and the US by unleashing the untapped potential of a truly transatlantic market place. The agreement is expected to create jobs and growth by delivering better access to the US market, achieving greater regulatory compatibility between the EU and the US, and paving the way for setting global standards. If such an ambitious agreement were achieved, it is expected that every year an average European household would gain an extra EUR 545 and our economy would be boosted by 0.5% to up to 1% of GDP, or EUR 119 Billion annually, and that of the US by EUR 95 Billion, once fully implemented.
In more concrete terms, the goal will be to eliminate duties and other restrictions for trade in goods. Freeing up commercial services, providing the highest possible protection, certainty and level playing field for European investors in the US, and increasing access to American public procurement markets are also objectives. Removing unnecessary regulatory constraints on trade is a key issue for the EU, as are obtaining stronger protection of European Geographical Indications, facilitating customs formalities and addressing competition rules.
“The benefits for the EU and the US would not be at the expense of the rest of the world. On the contrary, liberalising trade between the EU and the US is expected to have a positive impact on global trade and income, potentially increasing GDP in the rest of the world by almost EUR 100 Billion. Some of the reductions achieved in the cost of doing trade will also benefit other partners because the EU and the US will be able to work together towards better trade rules and less regulatory divergence between them in the future”, the European Commission states.
The negotiating directives set out in very broad terms the topics and the objectives to be achieved in the negotiations. There are essentially three main elements in the mandate: market access, regulatory convergence and trade rules addressing shared global challenges.
An economic study published by the Commission shows that EU exports to the US would go up by 28%, equivalent to an additional EUR 187 Billion worth of exports of EU goods and services. EU and US trade with the rest of the world would also increase by over EUR 33 Billion. Overall, the extra bilateral trade between the two blocs, together with their increased trade with other partners, would represent a rise of 6% in total EU exports and of 8% in US exports. This would mean an additional EUR 220 Billion and EUR 240 Billion worth of sales of goods and services for EU and US based producers, respectively.
“Each one of us has a major stake in the success of the other. We don’t have to grow only economically, we also have to implement structural reforms”, said the American President Barack Obama in June during a visit to Berlin.
Both sides should open their services sectors at least as much as they have done in other trade agreements to date. At the same time, both sides will seek to open their ser-vices markets in new sectors, such as in the transport sector. The EU also wants to make sure that European professional qualifications can be recognised on the other side of Atlantic and that EU companies and their subsidiaries will be able to operate in the US under the same conditions as American domestic companies.
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