Sore Feelings as U.S. and Europe Begin Trade Talks

European officials have called the potential free trade agreement with the United States a “once-in-a-generation prize,” with the prospect of adding hundreds of billions of dollars in yearly growth and thousands of jobs to the still-lagging European and American economies.

But big deals come with big stakes, and analysts expect months of intense negotiations as officials rush to complete a comprehensive agreement — under the title of the Transatlantic Trade and Investment Partnership — before a deadline of the end of 2014.

Companies and countries have started maneuvering in an effort to broker special carve-outs, exclusions or inclusions. Sensitive issues like agricultural policy, airline rights, data privacy and intellectual property are likely to face serious headwinds.

Michael Froman, the United States trade representative, urged those taking part in the talks here to “think outside of the box as necessary to make progress.” He added both sides were entering the talks “with eyes wide open” but with the knowledge that “there is strong political will at the highest levels on both sides of the Atlantic determined to stay focused and get this done on one tank of gas.”

Despite the push on both sides of the Atlantic, reports that the United States’ National Security Agency has been secretly tracking European diplomatic offices in Washington overshadowed the start of the talks.

In recent weeks, several European leaders expressed outrage over the reports, which were based on information supplied by the former government contractor Edward J. Snowden, who remains in legal limbo in a Moscow airport. France, in a show of deep discontent, called for postponement of the trade talks. Chancellor Angela Merkel of Germany criticized American espionage agencies for “cold war” tactics.

Last week, the European Parliament voted to start an investigation into the matter. Parallel negotiations on security and surveillance concerns started Monday as well, covering “data protection and privacy rights of E.U. citizens,” European officials said in a statement.

Even so, the interlinked economies — still suffering from low growth rates and high unemployment in the wake of the recession — desperately need a shot in the arm.

The International Monetary Fund predicts that the euro zone will contract again this year, with the broader European Union scarcely growing. The outlook is better in the United States, but not much; the fund expects modest growth of about 1.9 percent.

“We are convinced that this trade agreement will result in more jobs and more growth — and that will help to get us out of the economic crisis,” Karel de Gucht, the European trade commissioner, said at a news conference on Monday. “That would be good news for Europe, but also a very good message for the whole world economy.”

One major study by the London-based Center for Economic Policy Research found that a comprehensive trade and investment deal could increase the European economy by about 119 billion euros, or $150 billion a year, and the American economy by an annual $122 billion.

Households are expected to benefit, too. An average family of four in the European Union might see an additional 545 euros in disposable income, the study found. An American family might benefit by about $841.

“This is a once-in-a-generation prize, and we are determined to seize it,” David Cameron, the British prime minister, said last month at a meeting with President Obama and other leaders at the Group of 8 summit meeting in Northern Ireland.

The similarity of the American and European work forces, corporate structures and legal systems — and the depth and breadth of the existing ties between the two economies — have eased the way for an ambitious deal on tariffs, regulations and other issues.

But entrenched interests have started lobbying in earnest behind the scenes. For instance, France has pushed to retain its subsidies for its domestic film industry. And farm and food safety standards are expected to be a major sticking point in the negotiations. Genetically modified crops, which Europe largely abhors and which the United States produces billions of dollars’ worth a year, are just one issue.

On Monday, public interest groups also raised concerns that the negotiations would weaken consumer protection standards, and that corporate interests were too strong.

“We are highly skeptical that an agreement focused on regulatory harmonization’ will serve consumer interests, workers’ rights, the environment, and other areas of public interest,” said a large coalition of American and European consumer groups in a statement. “It could lead to lower standards and regulatory ceilings instead of floors,” the statement said. The coalition called for negotiating texts to be released to the public.

But officials have put in months of legwork on the negotiations, and they were optimistic as the deal talks formally began.

“We will work hard to get a result,” said Mr. De Gucht, the European trade commissioner. “We will of course meet a lot of problems and stumbling stones, but if we reach an agreement, it would be a historic one.”

Article source: http://www.nytimes.com/2013/07/09/business/global/sore-feelings-as-us-and-europe-begin-trade-talks.html?partner=rss&emc=rss