Assessment could trigger move toward U.S. and EU Free Trade Deal
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WASHINGTON, June 20, 2012 -U.S. and European Union officials are reportedly near a decision on whether to pursue a free trade agreement. An assessment of a possible FTA from trade officials on both sides of the Atlantic is expected later this month.
A state Department official said the subject is expected to be raised by U.S. and EU officials at the Rio+20 meeting this week.
While some dissension remains among European leaders over remedies to the euro crisis, those same leaders have endorsed calls by German Chancellor Angela Merkel, Former French President Nicolas Sarkozy and British Prime Minister David Cameron to open transatlantic markets.
President Obama also endorsed the bid and at last fall's U.S.-EU Summit, leaders created a bilateral High Level Working Group on Jobs and Growth to consider the full range of measures that could be taken to deepen and expand the transatlantic economic relationship.
A Transatlantic Task Force on Trade recently estimated about $5 trillion in trade and investment goes back and forth between the two markets, which comprise more than 50% of the world's gross domestic product. U.S.-EU Trade is mostly in balance.
Trade figures show the value of U.S. goods sold to Europe in 2011 ($286 billion) was about three times that sold to China, while the value of European goods sold to the United States ($368 billion) was about twice that sold the Chinese. Also, direct investment by U.S. interests in the EU reached $1.9 trillion in 2010. Conversely, the EU totaled $1.5 trillion in direct investment in the United States. A Brussels-based think tank devoted to EU reform recently said that U.S.-EU trade supports some 15 million jobs.
Current tariffs are relatively low, ranging between 5% and 7%. But a U.S. Chamber of Commerce study says reducing those tariffs to zero would generate an additional $120 billion in trade over five years and generate gains in GDP of nearly $180 billion.
An U.S.-EU FTA also could eliminate a number of questionable phyto-sanitary restrictions on trade, which could produce additional, if small, increases in both nation's GDPs, according to a study commissioned by the EU.
Barriers to the agreement, however, loom large. EU restrictions on genetically modified foods remain a significant sticking point, as do recurring complaints over other agricultural products.
Still, areas in dispute represent no more than 2% of the total trade in goods and services, and the Working Group established at last year's summit has been meeting regularly over the past eight months to try and resolve these points.
The Working Group is scheduled to report their preliminary findings this month. They are expected to push pursuit of an FTA, but a final report is not due until the end of the year, pushing a final decision until then. Still, EU Trade Commissioner Karel De Gucht says negotiations could begin immediately after, with an FTA hammered out by mid-2014.
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