US, EU to study bilateral trade deal

Leaders discuss eurozone crisis, foreign affairs at summit in Washington, DC.

Obama says US ‘ready’ to help eurozone tackle crisis

The United States and the European Union have agreed to explore the possibility of a bilateral trade agreement to create a zone that would account for half of the world’s economic output and one-third of global trade.

“We must intensify our efforts to realise the untapped potential of transatlantic economic co-operation to generate new opportunities for jobs and growth,” a joint statement said after US President Barack Obama met Herman Van Rompuy, the European Council president, and José Manuel Barroso, the European Commission president, in Washington, DC yesterday (28 November).

“We are committed to making the EU-US trade and investment relationship – already the largest and most integrated in the world – stronger,” the statement said.

The leaders instructed Karel De Gucht, the European commissioner for trade, and Ron Kirk, the US trade representative, to head a working group on how to deepen economic ties. The working group is to report back by the end of next year.

De Gucht and Kirk will hold talks in Washington, DC today at a meeting of the Transatlantic Economic Council.

The US and the EU had so far been reluctant to launch talks on a free-trade agreement for fear this could undermine the Doha round of global trade talks. But a meeting of the world’s trade ministers at the World Trade Organization in Geneva in December is expected to conclude that the Doha round has failed to produce agreement, and to seek alternatives.

“We stand by the Doha Development Agenda mandate and recognise the progress achieved so far, but note that in order to contribute to confidence we must pursue fresh, credible approaches in 2012 to advance the negotiations and pursue new opportunities and challenges,” the statement said. “We look forward to the upcoming ministerial meeting in Geneva, which provides an important opportunity to work on such approaches.”

Because of the level of regulatory convergence between the US and the EU and the mutual openness of their markets, a bilateral trade deal carries less potential than trade deals with other, less integrated economies. But the US Chamber of Commerce estimated in a recent report that the elimination of the remaining tariffs could generate $120 billion (€90bn) in additional trade within five years.

At their summit, the leaders also discussed a wide range of international issues, from climate change to Iran’s bid to acquire a nuclear weapon. But the talks were overshadowed by the eurozone’s sovereign-debt crisis. The final statement said that the US “welcomes the EU’s actions and determination to take all necessary steps to ensure the euro area’s financial stability and resolve the crisis,” while the EU “looks forward to US action on medium-term fiscal consolidation”. The summit came just days after a ‘super-committee’ of the US Congress failed to agree a new deficit plan.

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