Trade Deal Between U.S.-Europe May Pick Up Steam

FRANKFURT — A free-trade agreement between the United States and Europe, elusive for more than a decade but with a potentially huge economic effect, is gaining momentum and may finally be attainable, business and political leaders say.

Arduous negotiations still lie ahead, but if technical hurdles can be overcome, supporters of a pact argue, it could rival the North American Free Trade Agreement in scale and be a cheap way to encourage growth between the European Union and the United States, which are already each other’s biggest overseas trading partners.

“There is now, for the first time in years, a serious drive towards an E.U.-U.S. free-trade agreement,” Karel De Gucht, the European trade commissioner, said in Dublin earlier this month.

Within days, if not hours, of President Barack Obama’s re-election, numerous European leaders, including Angela Merkel, the German chancellor, and David Cameron, the British prime minister, were urging Mr. Obama to push for a free-trade agreement. The Europeans hope that eliminating frictions in U.S.-E.U. trade would provide some badly needed economic growth.

Corporations and business groups on both sides of the Atlantic are also pushing hard for a pact. Tariffs on goods traded between the United States and the European Union are already low, averaging less than 3 percent. But companies that do substantial amounts of trans-Atlantic business say that even a relatively small increase in the volume of trade could deliver major economic benefits.

“The reason we care about this is because these base line numbers are so huge,” said Karan Bhatia, a former deputy U.S. trade representative who is now vice president for global government affairs at General Electric in Washington. “This could be the biggest, most valuable free-trade agreement by far, even if it produces only a marginal increase in trade.”

Noting that a free-trade agreement would not cost taxpayers any money, Mr. Bhatia said, “This is the great, untapped stimulus.”

While China has dominated the political debate in the United States, U.S. trade with Europe is much larger, totaling $485 billion in goods in the first nine months of this year, compared with $390 billion in trade with China.

Perhaps more important for U.S. companies, Europe buys much more from the United States than China does. U.S. exports of goods to Europe through September totaled $200 billion, according to U.S. government data , while China imported $79 billion worth of U.S. goods.

“The economic music is between America and Europe,” said Fred Irwin, president of the American Chamber of Commerce in Germany. The organization has been among groups lobbying energetically for a comprehensive agreement to replace the potpourri of existing tariffs and regulations and also to roll back national rules in Europe that may impede trade.

The chamber estimates that an agreement that eliminated tariffs and other barriers between the United States and Europe could add 1.5 percentage points to growth on both sides of the Atlantic. While that may be optimistic, economists agree that trade increases when barriers fall.

Supporters of an agreement hope that Mr. Obama will visit Europe early in 2013 and that he agree while there on a framework for negotiations that could lead to a detailed agreement within several years. They argue that a pact would offer Mr. Obama an opportunity to improve his relations with the business community while reaching out to European political leaders who feel he has taken them for granted.

“The Europeans believe that Obama does not care about Europe,” said Mr. Irwin, who has met with E.U. government leaders on the trade issue.

Asked about the U.S. position, Andrea Mead, a spokeswoman for Ron Kirk, the U.S. trade representative, said in an e-mail that the working group “continues to work to assess how best to increase U.S.-E.U. trade and investment to produce additional economic growth and jobs, and improve our international competitiveness.”

There does not seem to be any broad-based political opposition to an E.U.-U.S. trade agreement, as there was to Nafta. But some industry groups have expressed concern about how a free-trade accord would affect them.

Last week, a coalition of food and agricultural groups led by the National Pork Producers Council in the United States wrote to Mr. Kirk, expressing concern that a free-trade agreement might leave them out.

Article source: http://www.nytimes.com/2012/11/26/business/global/trade-deal-between-us-europe-may-pick-up-steam.html?partner=rss&emc=rss