The European Commission on Tuesday agreed on a draft mandate for negotiators who are expected this summer to engage with U.S. officials on forming a transatlantic trade and investment agreement.
The draft mandate now goes to the Council for the Member States to approve it before negotiations can start.
Last month President Obama and European Union leaders announced plans to notify their respective legislatures and other bodies about their intent to begin talks on a free trade agreement this year.
Talks are expected to focus on reducing tariffs (which are already relatively low at an average of 4 to 5 percent); further opening their service sectors, including transportation; cross-border investment; procurement of public contracts; harmonizing regulatory standards; and eliminating red tape. Integrating regulatory regimes in the two markets is expected to produce significant reductions in bureaucratic costs for companies that operate in both regions. The United States and European Union have similar standards for health, safety and the environment, which gives officials hope that they can find ways to achieve those common goals through product requirements that would apply on both sides of the Atlantic.
Eighty percent of the benefits of a U.S.-EU trade deal are expected to come from reducing regulatory burdens, and liberalizing trade in services and public procurement, EU officials say.
A U.S.-EU free trade agreement would have a big impact on the global economy because the two regions make up 47 percent of global economic activity, one third of global trade flows and represent the largest trading partnership in the world. Almost $2.6 billion in goods and services is traded between the United States and the 27 EU member nations on a daily basis.
A report released the same day by the European Commission states that a transatlantic free trade agreement would add more than a half percent to the Gross Domestic Product of each side
- as much as $155 billion to the EU economy and $123 billion for the U.S. economy. It projected EU exports to the United States would increase 28 percent. Overall, a bilateral trade deal, together with increased trade with other partners, would annually increase EU and U.S. exports by 6 percent and 8 percent, respectively. That would mean an additional $286 billion sales in goods and services for EU-based companies, and $312 billion in exports for U.S. producers per year.
If the United States and Europen Union "can work together to better promote establishment and recognition in standards, reduce regulatory divergence, and otherwise reduce the impact on rules and regulations on the cost of business, it is likely that parts of such a framework (for example recognized product or safety standards) will be adopted elsewhere, reducing trade costs for third markets," the report said. "To the extent the EU and U.S. together drive global standards, this has potential to promote economic gains across the globe." - Eric Kulisch