EU and US free-trade talks launched

[Zanza]

http://www.bbc.co.uk/news/business-21439945

The European Union and the US will begin formal talks on a free-trade agreement, paving the way for the biggest trade deal in history.

European Commission President Jose Manuel Barroso made the announcement following President Barack Obama's State of the Union address.

A deal would bring down trading barriers between the two biggest economies in the world.

EU-US trade is worth around 455bn euros (£393bn; $613bn) a year.

"A future deal between the world's two most important economic powers will be a game-changer, giving a strong boost to our economies on both sides of the Atlantic," said Mr Barroso, speaking in Brussels.

The EU estimates that a "comprehensive and ambitious agreement" will boost annual GDP growth by 0.5%.

Mr Obama announced US support for talks as part of his annual address to the US Congress on Tuesday, saying a free-trade deal would "boost American exports, support American jobs and level the playing field in the growing markets of Asia".

It is not clear how long the talks will take, but similar trade deals have involved years of negotiations, and the BBC's Gavin Hewitt in Brussels says the most optimistic timeframe given by European officials is two years.

A US-EU working group was established in 2011 to discuss the prospect of a free-trade agreement.

Low tariffs
EU Trade Commissioner Karel De Gucht told the BBC that free trade between the US and the EU had been under discussion for several years, and said he hoped talks would begin in the summer.

But he admitted that the negotiations would be "difficult" and "complex", but he warned: "As the two biggest economies in the world, failure is not an option."

The EU says the deal will focus on bringing down remaining tariffs and other barriers to trade, and standardise technical regulations and certifications.

Currently the US and EU impose relatively low tariffs on goods traded between them, but analysts say other barriers are often in place to prevent European companies competing in the US and vice versa.

One example is found in the car industry, where the EU and the US employ equally strict - but differing - safety standards, meaning that European car makers must meet both before they can sell cars in the US market, putting them at a disadvantage.

Mr De Gucht estimates that such barriers are equivalent to a traditional imports tariff of 10-20%.

Rise of China

The agriculture industry is likely to be a focus of negotiations
Agriculture is also likely to be a significant bone of contention. The European farming industry is already heavily subsidised through the Common Agricultural Policy, and the European agriculture minister has already expressed reservations about the impact a free-trade deal might have.

The US government is also likely to come under pressure from domestic businesses who have in the past called for protectionist measures to prevent the market from being swamped by cheaper Chinese imports.

The EU has already said that certain "sensitive" sectors will require more negotiation but said no sectors would be excluded from the deal completely.

The chief European economist at Barclays, Philippe Gudin, suggested that the emergence of China as an economic power along with other emerging markets has encouraged the US and Europe to unify in order to remain economic leaders.

Mr De Gucht denied that they were seeking to combat Chinese growth, saying: "We are the leading economies and it's important that we remain the leaders, but in a way that allows others to develop."

Steve Davies from the Institute of Economic Affairs, a think tank, said he believed the economic crisis in Europe was a far more important factor.

"It's happening now because there has been seriously depressed growth in the EU, and this will be good news for economic growth," he said.

"On the American side, the critical factor is that Obama is now in his second term, so he doesn't have the protectionist pressures from US businesses to worry about."

Excellent. I hope the talks will be successful.

[Grey Fox]

They can never be.

Farm subsidies are too important.

[Admiral Yi]

They can never be.

Farm subsidies are too important.

Yup.  Besides ag I think EU tarrifs are negligible.

[dps]

Currently the US and EU impose relatively low tariffs on goods traded between them, but analysts say other barriers are often in place to prevent European companies competing in the US and vice versa.

One example is found in the car industry, where the EU and the US employ equally strict - but differing - safety standards, meaning that European car makers must meet both before they can sell cars in the US market, putting them at a disadvantage.

Uhm, why would that put European car makers at a disadvantage?  US automakers hae to meet the European standards to sell cars in Europe.

[Zanza]

Tariffs are low, but other barriers to trade exist. Mainly different regulations on both sides of the Atlantic which require companies to make two different products.

[Zanza]

Uhm, why would that put European car makers at a disadvantage?  US automakers hae to meet the European standards to sell cars in Europe.

I didn't understand that part either. However, GM and Ford mainly sell European-designed and made cars here as far as I can tell, whereas the European car manufacturers try to sell one model globally, also due to lower total volumes.

[MadImmortalMan]

These guys have rules about how bendy bananas can be. It won't be easy to finalize anything. But it sure would be cool if they do get it hammered out.

[Zanza]

No we have rules what bananas may be called "class A" bananas.

To be fair, the USDA doesn't seem to have a regulation on bananas, but they do have regulations on apples, apricots, avocados, cherries, cranberries, dewberries and blackberries, grapes, grapefruits, kiwis, lemons, limes, mangos, nectarines, oranges, peaches, pears, pineapples, plums and prunes, raspberries, strawberries, and tangerines.
http://www.ams.usda.gov/AMSv1.0/freshmarketfruitstandards

I am sure adding one more regulation on bananas to that list won't break the US agriculture market.

[Ed Anger]

Yay! Horsemeat for everybody.

[Neil]

Feta is feta no matter where it comes from.  Trying to project dishonest Euro regulations into the US is doomed to failure.

[Barrister]

Feta is feta no matter where it comes from.  Trying to project dishonest Euro regulations into the US is doomed to failure.

And sparkling wine = champagne.

[crazy canuck]

Its a pity.  I had hoped the Canadian trade agreement could have been concluded before the Americans jumped in.  Now they will suck all the oxygen out of the room for the next 10 years and nothing will get done.

[crazy canuck]

Feta is feta no matter where it comes from.  Trying to project dishonest Euro regulations into the US is doomed to failure.

And sparkling wine = champagne.

Why must you show off the degree to which living in Edmonton has diminished your brain function?

[Barrister]

Why do you hate BC champagne producers CC?

[Zanza]

I suspect that feta cheese, sparkling wine and bananas are a minor portion of the total trade between the USA and Europe. I suspect having common regulations for stuff like aircraft, cars, electronics, chemicals, machinery etc. would have a much more profound impact than arguing about food items.