After buoyant debut, U.S.-E.U. trade talks face a growing list of issues


President Obama (L) and British Prime Minister David Cameron shake hands after holding a joint news conference in the East Room at the White House May 13, 2013, in Washington, D.C. (Alex Wong/Getty Images)

Supporters of a U.S.-European free-trade deal have begun damping expectations about its immediate benefits amid a series of emerging disputes that could complicate the creation of the world’s largest trade zone.

President Obama and British Prime Minister David Cameron met Monday and affirmed that the Transatlantic Trade and Investment Partnership remains a top economic priority on both sides of the ocean — critical in Europe’s quest for economic recovery.

But in recent weeks, fresh disagreements have surfaced over issues such as the regulation of financial services and the openness of U.S. state governments to foreign businesses and contractors. Those add to a healthy list of legacy disputes involving agriculture, European prohibitions on genetically modified food and French insistence it be allowed to maintain quotas on non-French media.

None are necessarily deal breakers. But they could make it harder for officials to reach their goal of finishing an agreement by next year and diminish the potential for a treaty to quickly boost jobs and growth. Although the push for such a partnership grew out of concern about high unemployment in the developed world, business groups, public officials and others involved in the negotiations say the short-term effects may be muted.

“There was an initial flurry of excitement that this was finally launched,” said Tim Bennett, director general of the Transatlantic Business Council, a group of chief executives who confer with the U.S. government and European Commission on trade and economic issues. But “let’s not oversell the benefits. The benefits will take several years to manifest . . . . This is not the silver bullet that is going to solve all the employment problems in the E.U. or the U.S.”

“If the negotiation gets started, we know it will be a long one filled with obstacles,” French Trade Minister Nicole Bricq said during a trip to Washington last month in which she detailed possible problems the French foresee in the talks.

Cameron on Monday said the talks could launch formally at a meeting of top world leaders in Northern Ireland next month and that he hoped they would start without preconditions imposed by either side.

“To realize the huge benefits this deal could bring would take ambition and political will. That means everything on the table,” Cameron said. “The next five weeks are crucial.”

It is over that time that the office of the U.S. Trade Representative will finish conferring with Congress about the scope of the negotiations. A similar process is underway in the European Union as the 27 member nations discuss a negotiating “mandate” for European commission officials.

In the course of those discussions, the demands are multiplying.

Some European officials want to use the negotiations to push back on new U.S. financial regulations that could force European banks to restructure their operations if they want to do business in the United States. The effect of the Volcker Rule on European companies has been a sore point for more than a year. Some U.S. officials are hesitant to include matters that are still under debate in the United States and unsettled in U.S. laws and regulations.

Some European countries also are insisting that U.S. states be included in a proposed expansion of the market for government contracts and services. The hope is to liberalize the rules so that, for example, engineers, architects, accountants and other professionals can more easily move between countries and compete for government work, and businesses can vie for government contracts.

The United States cannot force states to open their markets to foreign firms or change their regulation of professional services. Thirty-seven states signed an existing international government procurement treaty, allowing foreign firms to bid for business; it’s unclear whether those states or the other 13 would agree to the potentially broader terms of a U.S.-E.U. deal.

But Bricq said Europe will insist that the states be included.

Any agreement “must gather the states,” Bricq said. “This opening up of public markets is essential.”

Bricq also said France was insisting that its rules on French-language media be excluded from the talks in advance — a difficult position for U.S. officials to accept. The movie industry, in its public comments on the TTIP, did not object to the rules. But U.S. officials say countries should not be allowed to wall off whole industries in advance.

Bennett and other supporters of the proposed agreement say they see immense potential in it to eventually boost world trade and influence other nations. If a trading bloc that already accounts for 40 percent of world economic output becomes even more integrated, so the argument goes, other nations may feel compelled to conform to its rules and standards.

But with such close trade ties and low tariffs already in place, the true value of the agreement may only accrue years down the road, as regulators in Europe and the United States work together to smooth out conflicting rules for doing business, safety standards converge and businesses take advantage of a more efficient operating environment.

That idea, of a seamless business environment governing much of the developed world, has been debated conceptually for many years, with only spotty progress.

If it does not take root this time, Bennett said, the worry is that it may never happen.

“We don’t think there will be another opportunity like this,” he said.

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