May 19, 2024

U.S. and Europe to Begin Ambitious but Delicate Trade Talks

President Obama said that the first round of negotiations would begin in Washington next month between the United States and the 27-nation Europe Union. “The U.S.-E.U. relationship is the largest in the world — it makes up almost half of global G.D.P.,” Mr. Obama said, referring to gross domestic product. “This potentially groundbreaking partnership would deepen those ties.”

But France’s president, François Hollande, expressed disbelief at comments made over the weekend by the European Commission president, José Manuel Barroso. In an interview with The International Herald Tribune/New York Times, Mr. Barroso had criticized as “reactionary” France’s insistence on protecting its film and television industries as a condition of supporting the trade negotiations.

“I do not want to believe that the president of the European Commission could have made the statements about France, or even about the artists, that were made,” said Mr. Hollande, according to the Web sites of several French news organizations.

Mr. Hollande did not appear in a media tent here at the Lough Erne Resort when President Obama and Mr. Barroso — along with Herman Van Rompuy, president of the European Council, and David Cameron, the British prime minister — announced the timing of the trade talks. French reporters said Mr. Hollande was busy preparing for his meeting later with the Russian president, Vladimir V. Putin.

Aside from trade, the two-day Group of 8 meeting was likely to be dominated by the crisis in Syria. Other financial issues on the agenda were measures to clamp down on tax evasion and the legal ruses used by multinational companies to limit their tax liabilities.

Mr. Cameron, the summit host, was by far the most effusive among the leaders who spoke about their trade ambitions. “We’re talking about what could be the biggest bilateral trade deal in history, a deal that would have a greater impact than all the other trade deals on the table put together,” he said.

A European Union-United States trade pact has been a longstanding ambition of policy makers. According to the European Commission, the executive arm of the 27-nation bloc, such a deal would allow European companies to sell an additional 187 billion euros worth of goods and services a year to the United States.

The angry French response highlights the sensitivity of the negotiations, which will aim to reduce trans-Atlantic tariffs and streamline regulations to stimulate economic growth in the United States and Europe.

On Friday, after a campaign by French artists and politicians, European Union trade ministers agreed to accede to France’s demands to protect the audiovisual sector. In his interview earlier that day, Mr. Barroso had said France’s Socialist government was advocating an “anti-globalization agenda” that was “completely reactionary.”

Mr. Barroso’s comments were described as “scandalous and dangerous” in a statement Monday from the French Socialist Party.

In addressing reporters on Monday, Mr. Barroso took no questions and did not comment on the French backlash.

Speaking in Brussels, Olivier Bailly, a spokesman for European Commission, said that Mr. Barroso’s comments had referred not to the French government but to those who had “made personal attacks” against him in the run-up to the negotiations. Mr. Bailly did not identify those concerned.

In response to the French objections, some Europeans worry that the United States will seek to exclude financial services from the talks, thereby reducing their scope significantly.

Mr. Obama acknowledged those concerns. “There are going to be sensitivities on both sides,” he said. “There are going to be politics on both sides. But if we can look beyond the narrow concerns to stay focused on the big picture — the economic and strategic importance of this partnership — I’m hopeful we can achieve the kind of high-standard, comprehensive agreement that the global trading system is looking to us to develop.”

Officials said Mr. Cameron had sought to make the Group of 8 an intimate meeting, with leaders seated around a locally produced wooden table in a room with a series of paintings inspired by the local countryside.

The setting, in a remote part of Northern Ireland, posed acute logistical problems for organizers but also for those aiming to demonstrate against an event, conducted amid tight security. Several thousand people were expected to join a march on Monday, but officials said numbers were likely to be lower than initially predicted.

“If you think it was difficult for you to get here, just imagine how hard it is for protesters,” said one official not authorized to speak publicly.

This article has been revised to reflect the following correction:

Correction: June 17, 2013

Because of an editing error, an earlier version of this article stated incorrectly the timing of an interview with José Manuel Barroso. The interview was on Friday before trade ministers agreed to accede to France’s demands to protect the audiovisual sector, not after the agreement.

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Rebekah Brooks Denies Hacking Charges

In Southwark Crown Court in London, Ms. Brooks, 45, entered a plea of not guilty to five charges, including conspiracies to hack phones, to commit misconduct in public office and to pervert the course of justice. Five other former employees of News International, the British subsidiary of Mr. Murdoch’s News Corporation, as well as Ms. Brooks’s husband, Charlie, also appeared in court and entered pleas of not guilty to various charges.

The arraignment was the latest chapter in an unfolding drama that led to the closing of Mr. Murdoch’s News of the World tabloid in July 2011 after accusations that its reporters had hacked into the voice mail of a kidnapped teenager, Milly Dowler, who was later found murdered.

The scandal mushroomed into bribery investigations involving police officers and public officials. A panel of inquiry set up by Parliament urged that British press regulations be enshrined into law to prevent a recurrence of the scandal.

Ms. Brooks, with her connections to the political elite, including Prime Minister David Cameron, has been closely watched throughout the scandal. A former editor of both The News of the World and The Sun, Ms. Brooks has been accused of conspiracy to hack phones between 2000 and 2006 and conspiracy to commit misconduct in public office between 2004 and 2012. She is also accused of seeking to pervert the course of justice by conspiring with her personal assistant to spirit material away from police investigators in July 2011.

Ms. Brooks, Mr. Brooks and four other former News International employees were accused of seeking to pervert the course of justice. Separately, Clive Goodman, the former royal reporter for The News of the World, was accused of conspiracy to commit misconduct.

All of the defendants have been free on bail pending trial.

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British Group Criticizes European Transaction Tax Plan

LONDON — A European tax on financial transactions would fall disproportionately on London firms, a business lobbying group said Thursday, highlighting growing tensions between Britain and its continental allies over banking regulation.

The British government started legal action last month to try to block the European Union’s so-called Robin Hood tax on the grounds that it could ensnare banks from countries that do not adopt the law, including Britain and even the United States. At issue is a clause in the proposal under which the tax would be applied to trades by banks from European countries that sign on to the law, like Germany or France, regardless of where the transaction actually takes place.

The British Treasury says that, for example, were an American bank to trade a British government bond with the London branch of a German bank, then both the U.S. and German banks could be liable for the tax.

A report published Thursday by the London Chamber of Commerce and Industry identified the tax as a problem area of European Union policy, along with employment regulation.

In a survey of 130 London businesses of different sizes and from various sectors, 52 percent said they believed that it was not desirable for Britain to remain in the union under the current terms. But 60 percent favored staying if powers could be transferred from Brussels back to national governments. That is broadly the policy preferred by Prime Minister David Cameron, who has promised to hold a referendum on European Union membership.

The report Thursday said the union’s drive to strengthen the regulation of financial services after the crash had produced “legislative proposals that are particularly damaging for London’s financial services industry.”

The proposed transaction tax “would affect London disproportionally as it is a major hub for euro trading,” it added.

The tax has joined a growing list of financial issues dividing the Continent and the British government. Britain says the country needs a looser relationship with the bloc if it is to stay a member.

Under the proposal, a tax would be imposed of at least one-tenth of 1 percent of the value of all transactions between financial institutions. Derivatives contracts would be taxed at the rate of one-hundredth of 1 percent. The European Commission has estimated the tax could raise 30 billion euros to 35 billion euros, or $39 billion to $46 billion, a year.

Britain refused to sign on to the proposal. But 11 other European Union nations agreed to go ahead: France, Germany, Belgium, Austria, Slovenia, Portugal, Greece, Slovakia, Italy, Spain and Estonia. Transactions would be taxed if there were “an established economic link” between a financial institution and the group of 11 nations — the so-called Financial Transaction Tax-zone, or F.T.T. That would include branches of banks operating outside the zone.

Last month, the British government decided to challenge the tax in Europe’s highest court, the European Court of Justice, even though no detailed agreement was in place among those countries that wanted to implement it.

Emer Traynor, spokeswoman for the European commissioner for taxation, Algirdas Semeta, said she was “fully confident that the F.T.T. as proposed is legally robust. It is fully in line with international tax laws and broad principles already widely used.”

The tax is just one of several disputes between Britain and the European Union about financial services. Earlier this year Britain found itself isolated over moves to cap bankers’ bonuses. Britain has a separate legal challenge against the European Central Bank over its plans to prevent some euro-denominated securities from being cleared outside the 17 European Union countries that share the euro — in that way excluding Britain, which has kept its own currency.

The British government is also resisting new rules to rehabilitate troubled banks, which would mean creating national funds to pay for bank resolution costs. And a long-standing plan to harmonize the base on which corporate tax is levied in Europe is also a point of contention between Britain and Brussels.

Tension with Brussels has grown during an economic crisis seen by many continental Europeans as the product of freewheeling financial services. The result was pressure for tougher regulation and, in the case of the Robin Hood tax, measures to recoup cash from the industry. The euro zone’s debt crisis is also forcing the 17 European Union countries that use the currency to integrate more closely in areas like banking, raising issues for member states outside the monetary union.

“On the one hand it shows the dangers of disengaging from the E.U.,” said Philip Whyte, senior research fellow at the Center for European Reform, a research institute in London, who argues that Britain feels increasingly beleaguered on issues related to financial services.

“At the same time, it gives a lot of ammunition to those saying that the E.U. is a hostile force to Britain. ‘Let’s get out and develop closer links with faster-developing parts of the world economy.’ ”

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British Group Backs Renegotiating E.U. Role

LONDON — Is British business fretting about the risks of the country drifting out of the European Union? Or does it crave a looser relationship with Continental allies, one free from meddlesome regulation?

The answer to that question remained unclear Monday after a newly formed group of business leaders argued for a renegotiation of Britain’s membership terms — echoing the policy of Prime Minister David Cameron, who in January promised voters a referendum on whether the country would remain in the Union.

The new group, called Business for Britain, is intended to counter the intervention of pro-E.U. business leaders who have warned of the dangers of Britain slipping out of the 27-nation bloc and its single market of 500 million people. A statement released Monday to announce the group’s formation was signed by about 500 executives.

In the declaration, Business for Britain said Mr. Cameron was “right to seek a new deal for the E.U. and for the United Kingdom’s role in Europe.”

Mr. Cameron has pledged to hold the referendum within five years, if he remains in office after elections scheduled for 2015. But that promise has failed to halt the rise of the U.K. Independence Party, or UKIP, a small but expanding populist group that wants Britain to quit the Union and curb immigration.

So far the opposition Labour Party has resisted calls to commit itself to holding a vote on E.U. membership if it wins power in the next general election, though some analysts believe it may ultimately feel the need to do so.

Never much attracted to the idea of European unity, the British public tends to see the Union in terms of value for money. That means that the verdict of high-profile business leaders is crucial.

In general, big businesses, which depend on international trade, tend to be more pro-European than smaller companies, which are more focused on the domestic market. However, Business for Britain boasts some supporters from larger enterprises, including Karan Bilimoria, founder of Cobra Beer, an international brewing company, and Richard Burrows, chairman of British American Tobacco.

“Far from being a threat to our economic interests, a flexible, competitive Europe, with more powers devolved from Brussels, is essential for growth, jobs and access to markets,” the group said in its statement.

Like Mr. Cameron, Business for Britain has yet to identify what powers London should seek to win back from the Union, though it says it intends to answer that question later this year.

And also like Mr. Cameron, Business for Britain has not said whether it would recommend leaving the Union if negotiations on new membership terms do not lead to significant change.

In January pro-European business leaders including Sir Richard Branson, founder of Virgin Group, and Roger Carr, president of the Confederation of British Industry, a lobbying group, signed a letter that warned against risking Britain’s membership in the European Union.

A group of more skeptical business leaders countered with a letter supporting Mr. Cameron’s approach.

Pro-Europeans were dismissive of the initiative announced Monday.

“Everyone wants reform in Europe but without throwing away the advantages we get from permanent full access to Europe’s single market and maximizing British influence in it,” Peter Mandelson, a former cabinet minister and a former European commissioner, said in a statement.

“This new group of familiar names and small businesses may hinder this process and slide towards UKIP’s rather than David Cameron’s position,” Mr. Mandelson continued. “My fear is that this will not help to advance Mr. Cameron’s cause in Europe.”

Leaders on both sides of the issue argue that the Union needs to reform. Pro-Europeans have begun to rally behind two different campaign groups. One, Business for New Europe, has sought to argue the case that Britain must engage strongly with the European Union in order to bring about any significant reforms. Another organization, called British Influence, describes itself as an independent advocacy campaign that wants Britain to lead in Europe.

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As Government Stands Firm, Analysts See Risk of New Recession in Britain

LONDON — As George Osborne, the chancellor of the Exchequer, prepares this week to update Parliament on his plans for the economy, the prospect of stagflation is back to haunt Britain.

Recent disappointing economic data coupled with rising consumer prices have heightened fears among some economists that Britain is once again edging closer to a recession, leaving Mr. Osborne and his austerity plan increasingly isolated.

Calls for Mr. Osborne to take a break from his relentless efforts to balance the budget and instead find ways to get economic growth back on track intensified in advance of the annual budget, which he is to present to Parliament on Wednesday. Even within his own Conservative Party and among members of the government’s junior coalition partner, the Liberal Democrats, lawmakers have started to suggest that it time for a new approach.

“The pressure is mounting on Mr. Osborne,” said Simon Wells, an economist at HSBC. “He’s been in the job almost three years, and over this period the economy has grown by a measly 1 percent.” That compares with 4.9 percent growth in the United States during that span, 3.7 percent in Germany and 1.7 percent in France, according to Mr. Wells.

“With an election looming in 2015, he needs growth if he is to stabilize the public finances, and he needs it soon,” Mr. Wells said.

Some lawmakers and economists suggested that Mr. Osborne should use the budget update to announce a slight increase in borrowing to invest in infrastructure, education and other projects that would help revive growth. But the government is widely expected to stick with its plan of balancing the books within five years, even as a deteriorating economy makes achieving that goal more difficult.

“This month’s budget will be about sticking to the course, because there’s no alternative,” Prime Minister David Cameron said in a speech last week.

In January, Britain’s industrial production surprisingly fell to its lowest level in 20 years, reviving concerns that the country could fall back into a recession for the third time in little more than four years. A dismal economic outlook had pushed the pound to the lowest level against the dollar in nearly three years; that makes imports more expensive and threatens to increase inflation that is already above the E.U. average. Higher consumer prices in turn would further cut spending power.

Irfan Aslam, the founder of Global Components, a British supplier of bolts, textiles and other components to the local furniture industry, said the weak pound had already hurt his business by making parts he buys in the United States and Europe more expensive.

“It’s having a real detrimental effect on the business,” said Mr. Aslam, 37. “It forces us right to the edge.”

Mr. Aslam had to postpone plans to expand his warehouses and hire staff members and said he might be forced to pass price increases to his customers. “Demand is weak anyway, and we should be thinking about offering promotions to create demand, but we can’t. We’re actually thinking about increasing prices,” he said.

The government and the Bank of England had welcomed a weaker pound, arguing it would help the economy by making British exports cheaper. But the recent slump of the currency against the dollar, as well as the euro, prompted Mervyn King, governor of the Bank of England, to change his tone. In an interview with the television channel ITV on Thursday he said the pound was now “properly valued,” indicating a further decline was not desirable.

Ha-Joon Chang, an economist at the University of Cambridge, said Britain had failed to generate a trade surplus despite the relatively weak pound because the country was unable to produce enough valuable goods that could be exported. Britain’s economy shrank 0.3 percent in the final quarter of last year and is expected to grow 1 percent this year, according to the International Monetary Fund.

The opposition Labour Party has been pointing to the weak economic growth as evidence that Mr. Osborne’s austerity plan — which has included some tax increases, the elimination of tens of thousands of public sector jobs and cutting social benefits — was not working. Austerity is choking the economic recovery, opposition lawmakers have argued; they say the government needs to increase spending to fuel growth.

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Europe Union Agrees on Plan to Limit Bankers’ Bonuses

BRUSSELS — The European Union took a big step Thursday toward putting strict limits on the bonuses paid to bankers, hoping to discourage the risk-taking behavior that set off the financial crisis.

If the measure, opposed by the British government, becomes European law, the coveted bonuses that many bankers receive would be capped at no more than equal to their annual salaries, starting next year. Only if a bank’s shareholders approved could a bonus be higher — and even then it would be limited to no more than double the salary.

The move, part of a package of banking regulations known as Basel III that is aimed at reducing the danger of big bank failures, was hailed Thursday by some European lawmakers.

‘’We’ve achieved the most comprehensive banking reform in the European Union,’’ said Othmar Karas, an Austrian member of the European Parliament who helped find a compromise in a late-night negotiating session with representative from E.U. member states and the European Commission.

A majority of the Union’s 27 member nations would need to approve the rules for them to take effect.

The agreement, which would also apply to those working at overseas offices of European banks, is a potential blow to Britain. Its economy partly relies on generous remuneration packages to ensure that the City of London remains the biggest financial center in Europe and serves as an overseas base for big banks from the United States and Asia.

‘’We need to make sure that regulation put in place in Brussels is flexible enough to allow those banks to continue competing and succeeding while being located in the U.K.,’’ David Cameron, the British prime minister, said Thursday while visiting Riga, the capital of Latvia.

Mr. Cameron said Britain would ‘’look carefully’’ at the final proposal before deciding how it would address the issue with other European governments.

The agreement on the proposed banking rules reflects the global backlash against the lavish compensation in the financial sector that many politicians say rewarded risky trading and investments that triggered the financial crisis. Voters in Switzerland, which is not an E.U. member, will go to the polls this weekend for a referendum that will decide whether shareholders should have more control over executive compensation.

The limits on bonuses would also apply to bankers employed by E.U. banks but working outside the bloc, in New York, for example. The E.U. authorities are drafting separate rules that could restrict remuneration at private equity firms and hedge funds.

‘’This legislation was resisted tooth and nail by the industry,’’ said Philippe Lamberts, a Belgian member of the Parliament’s Green bloc.

While the battle has often been portrayed as pitting Britain against the Continent, Mr. Lamberts said, the reality has been that ‘’many in Paris, as well as Frankfurt and Berlin, were not too happy’’ about what was happening in Parliament, but were glad to let Britain take the heat for leading the opposition.

The law is intended to reduce the financial incentives that led bankers to take risky bets, like those made on subprime housing debt in the United States during the credit bubble. But some critics of the legislation have warned that institutions might defeat the intent of the legislation by simply raising bankers’ base pay.

Mark Boleat, the policy chairman at the City of London Corp., which is the voice of London’s financial center, said Thursday that ‘’removing flexibility from pay arrangements in this highly cyclical industry would seem counterintuitive, especially if it leads to higher fixed salaries.’’

Some bankers said the rule posed the question of why the bonus cap would not apply to other industries where staff members stand to gain large bonuses. Stephen Hester, the chief executive of Royal Bank of Scotland, told BBC radio on Thursday morning that he did not think ‘’bankers should be treated as special creatures in any way.’’

David Jolly contributed reporting from Paris.

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Shortage of Engineers a Strain on Britain’s Economy

NORTH SHIELDS, ENGLAND — Andrew Esson has plenty of workshop space to expand his small, thriving company that designs and makes hydraulic equipment here in the northeast of England. His investors have offered more financing should he need it.

Even his bank is supportive.

His problem is people — more specifically, finding enough skilled engineers. And it is a shortage of a type afflicting much of British industry that some experts worry could help tip the country into its third recession since the financial crisis.

When Mr. Esson’s advertisement for a design engineer and an experienced technician produced no suitable applicants last year, he decided to train apprentices instead. Even that proved impossible until he widened the search beyond those leaving the closest secondary schools — despite the fact that more than one in five young people are unemployed here in this pocket of the Tyneside area of around 830,000 people.

With the right pool of skilled talent, Mr. Esson thinks he could have won extra orders worth £700,000 to £800,000, or $1.1 million to $1.3 million, a year for his company, Quick Hydraulics, which had revenue of £3.1 million in 2012. Its primary business is designing and building hydraulic power units for businesses including military contractors and paper producers.

His lost opportunities illustrate one of the reasons experts say the British economy is vulnerable. Another potential drag is new economic uncertainty resulting from Prime Minister David Cameron’s plan, if he stays in office, to hold a referendum by the end of 2017 on whether the country should remain in the European Union. Regardless, a key to putting Britain’s economy back on the path to growth will be overcoming the shortage of people with mathematics and science skills.

Mr. Esson, who acquired the company in 2011 when it had a staff of 14, planned to take on his 24th employee Monday, a sales and marketing administrator recruited from his former company. But if there were a bigger pool of engineering talent, Mr. Esson said, he would be able to add even more staff and more aggressively pursue new business.

The problem is endemic in Britain. In the aftermath of the financial crash, the country’s politicians acknowledged that they had put too much faith in a bloated financial sector that plunged the country into crisis. But rebalancing the skills of the British labor force may require a shift that is as much social and cultural as it is economic.

Engineering has never been truly prestigious in Britain, where traditionally many of the best brains have opted for careers in law, medicine, the civil service or the news media. Add to that the more recent lure of London’s financial sector, which, despite recent layoffs, still offers lavish salaries and bonuses. It is little wonder that British manufacturing struggles to compete for the country’s most capable young people.

In 2010, British manufacturing output accounted for only 2.3 percent of the global total. Among big Western economies, that trails even the relatively weak total of France, which has a 2.6 percent share in global manufacturing, and is far behind Germany’s 6 percent and the United States’ 18.2 percent, according to statistics compiled by the British Parliament.

The engineering community in Britain complains about the better support the German government gives to people in the field.

“You only have to go to Germany to see how revered engineering and industry are,” said Sir John Parker, president of the Royal Academy of Engineering. Britain has started to change course, he said, but still has much catching up to do. “Many of the countries I have visited have been more proactive in industrial policy than we have.”

The Cameron government argues that it has expanded its apprenticeship program and has set up several programs to promote engineering. But last September, the business secretary, Vince Cable, acknowledged the scale of the problem, describing the dearth of engineers as “one of the biggest long-term challenges” facing the British economy.

“We are chronically short at present,” he said. “I take encouragement from the fact that this year’s applications to university show engineering has remained a popular choice. But we need to do much more.”

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U.S. Reassures an Impatient Europe on Trade

DAVOS, Switzerland — President Barack Obama is committed to reaching an agreement to smooth trade with the European Union, the United States’ top negotiator has said, but only if it is constructed in a way that would overcome objections from farm groups and that could win congressional approval.

In an interview Saturday in Davos, Ron Kirk, the U.S. trade representative, responded to European leaders who in the past week renewed their calls for a U.S.-Europe deal to dismantle tariffs and other barriers, which they badly want as a way of stimulating their ailing economies.

At the World Economic Forum, David Cameron, the British prime minister, and Angela Merkel, the German chancellor, were among a host of leaders and business people pleading for a pact that would eliminate tariffs as well as regulations that impede trade. Even without changes, the United States and Europe between them already have the world’s largest trading market.

On both sides of the Atlantic, proponents of a deal have expressed frustration about the delaying of an official report by a U.S.-European working group that would set the stage for formal talks. The delay has fed the widespread perception that Mr. Obama does not care that much about a trade pact or, for that matter, about Europe in general.

“We greatly value the trans-Atlantic relationship,” Mr. Kirk said at a hotel in Davos. “We have devoted an extraordinary amount of time” to a possible trade agreement, he said. But the administration wants to make sure objections from farmers and other constituencies are addressed first, he said. Otherwise, officials might spend years negotiating an agreement only for Congress to reject it.

“If we do this, we want there to be a bridge to somewhere and we want to get there on one tank of gas,” Mr. Kirk said. He declined to predict when formal talks might begin.

Trade had been one of the main topics of discussion at the World Economic Forum, which concluded Saturday. There were signs of progress toward a trade accord, which, if it proved durable, could provide a riposte to the eternal criticism of the elite event: that the annual Davos forum is just an expensive cocktail party where little of substance is ever accomplished.

While it is true that Davos is rarely the venue for concrete agreements, the event attracts a diverse international crowd in an informal setting. It can be a place where political and business leaders work toward consensus on difficult issues like trade. That may have been the case in the past week, some of the people involved said.

“I’m carefully optimistic we will kick off negotiations this year,” Alexander Stubb, the Finnish minister for foreign affairs and trade, said after a panel on trade issues at the forum Saturday. “It’s going in the right direction.”

Noting that trade ministers from more than 20 nations were in town, Mr. Kirk said: “It’s a great opportunity to touch base with a number of them bilaterally. This saves me a trip to nine other countries.”

“Everybody criticizes Davos until they come,” Mr. Kirk said.

Friction-free commerce between the United States and Europe could create jobs and add an estimated $50 billion a year to the U.S. economy, Mr. Kirk said. European political leaders fervently want a deal to help their anemic economies grow. There is also strong support from business groups on both sides of the Atlantic.

“Half a dozen senior leaders in Europe are ready to move forward,” Thomas J. Donohue, president of the U.S. Chamber of Commerce, said in an interview in Davos on Thursday. He said that a deal could be concluded within 18 months if both sides set their minds to it.

But others are skeptical, noting that Europe and the United States have been talking on and off about a trade deal for years. While U.S. companies like General Electric have expressed strong support for an agreement, progress has always been stymied by objections from interest groups, particularly over agricultural issues. Some Europeans, for example, object to imports of U.S. food containing genetically modified plants.

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State Dept. Official Suggests Britain Keep European Union Ties Strong

The comments, made in London by Philip Gordon, the assistant secretary of state for Europe, echo sentiments expressed by a number of European officials. But they are likely to have a bigger impact in Britain because of the closeness of its ties to Washington, a point of pride in London.

The timing of the rare public intervention is also significant, coming shortly before a long-awaited speech by Prime Minister David Cameron in which he intends to lay out plans for a redefinition of Britain’s relationship with the European Union.

Mr. Gordon’s remarks, in which he stressed the importance of Britain’s role in the bloc, add Washington’s voice to growing alarm in European capitals and in Brussels, the headquarters of the union’s bureaucratic apparatus, over the possibility that Britain will distance itself from the union.

Speaking at a news conference in Dublin on Wednesday, Enda Kenny, the prime minister of Ireland, which took over the union’s rotating presidency this month, said it would be “disastrous for a country like Britain to leave the union.” He pleaded with London to stay fully engaged with the bloc.

Mr. Cameron, whose Conservative Party faces a growing electoral challenge from a stridently anti-European Union group, the U.K. Independence Party, has said he wants Britain to stay in the union but to negotiate a looser relationship. He has indicated that he will seek the approval of British voters for such an arrangement. In Mr. Cameron’s speech, expected before the end of the month, he may specifically promise a referendum.

In London, Mr. Gordon indicated that any British withdrawal from the union would be unwelcome and said that referendums held by other nations on European Union agreements “have sometimes turned countries inward.”

“We have a growing relationship with the E.U. as an institution, which has an increasing voice in the world, and we want to see a strong British voice in that E.U.,” he told British reporters, according to a transcript released by the United States Embassy in London. “That is in the American interest. We welcome an outward-looking E.U. with Britain in it.” He added: “Britain is such a special partner of the United States — that shares our values, shares our interests, has significant resources to bring to the table. More than most others, its voice within the European Union is essential and critical for the United States.”

Britain joined the European Economic Community, the predecessor of the union, 40 years ago this month. But the ideals of European unity have never been embraced by a majority of Britons, and the country tends to see its membership in more pragmatic terms than most continental nations do. Britain has “opted out” of several of the union’s major integration initiatives, most notably the single euro currency, and the debt crisis in the euro zone has tended to sharpen public hostility to the union in Britain.

Responding by e-mail to Mr. Gordon’s comments, the British Foreign Office said that “the prime minister has been clear that he wants Britain to be at the heart of a reformed E.U. and that our approach is determined absolutely by the national interest.”

“We think there need to be changes in the E.U. to better meet the interests of all member states,” the Foreign Office statement added. “And we believe that the current debate about the changes the euro zone countries require to protect their national interests provides the opportunity for the U.K. to ask for changes too.”

The idea of Britain’s quitting the bloc, once almost inconceivable, has gained ground in recent months, to the alarm of some business leaders, who have spoken in favor of continued membership. These include Roger Carr, president of the Confederation of British Industry, the country’s most prominent business lobby.

It has also stirred deep unease in Ireland, which has developed close ties with Britain after years of mutual suspicion and is aghast at Mr. Cameron’s policy toward Europe. The two countries have developed starkly different views on the merits of European integration. While Dublin credits the union with playing a key role in Ireland’s economic and social development and in its weathering of a banking crisis in 2008, London tends to view the bloc’s bureaucracy as meddlesome and an affront to national sovereignty.

Mr. Kenny, the Irish leader, said it was highly unlikely that the European Union would agree to rewrite treaty terms to allow for what Mr. Cameron called a “new settlement,” an arrangement that would let Britain retain access to the single market but exempt it from rules it did not like.

Revising treaty terms to suit Britain, Mr. Kenny said, would only “open the floodgates” to demands from other member states and undermine the union’s foundations.

Stephen Castle reported from London, and Andrew Higgins from Dublin.

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DealBook: News Corp. Considers Dividing Itself Into Two

1:29 a.m. | Updated The News Corporation is considering dividing itself into two companies, cleaving its publishing arm from its far larger entertainment division, a person briefed on the matter told DealBook early on Tuesday.

If News Corporation follows through, it would essentially mean splitting off the newspaper business that once formed the heart of the company from the Fox movie studio and television networks that now represent the strongest and most profitable parts of Rupert Murdoch‘s media empire.

Such a split, which may take the form of a corporate spinoff, would create a publishing business that included The Wall Street Journal, The Times of London, The New York Post and the HarperCollins book-publishing business.

The Murdoch family would likely retain control of the newly split companies under such a scenario, this person said.

It isn’t yet clear whether Mr. Murdoch will ultimately proceed with the move — something he had rejected in the past — though he has softened his opposition more recently. Should the company settle on this path, it could announce its intentions to pursue a split as soon as this week, the person said.

A News Corporation spokeswoman, Julie Henderson, declined to comment.

News Corporation’s chief operating officer, Chase Carey, said publicly earlier this year that the company’s management team had considered a split. But at the time, he said, no decision had been made.

Such a move would come amid the ongoing investigations into alleged hacking by News Corporation’s British newspapers, a damaging scandal that led to the shuttering of the News of the World and undermined the company’s $12 billion bid for the portion of British Sky Broadcasting that it did not already own.

The fallout from the hacking scandal has grown over the past year to touch upon an array of figures, including British Prime Minister David Cameron and Mr. Murdoch’s son, James, who led the company’s British newspaper operations. The country’s broadcast regulator has been reviewing News Corporation’s status as a “fit and proper” owner of television stations in Britain.

But the person briefed on the matter said that a split was more closely tied to attempts to improve shareholder value. Many restive shareholders have long preferred that the company focus on its more lucrative entertainment assets, which together generated $23.5 billion in revenue in the year ended in June 2011. The publishing business, by contrast, contributed $8.8 billion in revenue.

News Corporation’s shares have risen 20 percent over the past 12 months, but some of that ballast has been supplied by an expensive buyback program. The company’s stock fell 1.4 percent on Monday, to $20.08.

The company’s deliberations were first reported by The Wall Street Journal.

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