Chances for a broad trade deal between the United States and the European Union are fading following recent revelations about U.S. electronic surveillance programs, oversight of genetically modified food and other issues, according to officials and analysts in the United States and Europe who are following the discussions.
European officials are set to meet in Brussels on Friday to debate a formal mandate for their negotiating team, and analysts who have reviewed the draft text say it points toward a more limited agreement rather than the expansive economic opening that officials said could unleash tens of billions of dollars in additional trade.
There is still, those observers and officials say, immense potential for an agreement that could in the long run boost commerce between the world’s top economic partners, lower the costs of doing business by aligning regulatory standards, and make a number of other changes to ease the flow of goods, services and capital across the Atlantic.
But hopes for an agreement that would dramatically change the trading landscape — and boost the near-term growth and job prospects for Europe and the United States — have run up against the realities of Europe’s 27-nation political maze, including privacy concerns and French demands for protections of its film and media industries.
News that the U.S. National Security Agency has an extensive data-collection effort underway, with the cooperation of major U.S. telecommunications and Internet companies, has intensified existing European concerns about where data is stored and how it is managed — an area where U.S. companies hoped to negotiate away existing restrictions. The appearance of an unapproved, genetically modified wheat strain in Oregon has amplified Europe’s resolve to keep its own systems for overseeing what it views as risky new products. U.S. ambitions for a trade pact include moving Europe’s regulatory culture from one that emphasizes caution to one more guided by scientific assessments of risk.
A recent European Parliament resolution endorsed the trade pact in theory. But it noted concerns about data privacy, protection for local film and other media content, and consumer health and environmental issues. The parliament can block any trade pact.
On health and agriculture in particular, “perceptions . . . tend to diverge between the US and the EU,” the parliamentary resolution stated. “The agreement must not undermine the fundamental values of either side.”
To the degree that such fundamental issues are not on the table, “we are heading towards a technical agreement,” said Philip Torbol, a lawyer in the Brussels office of the K&L Gates law firm who has been following the trade negotiations. “When you say states will continue to be able to protect health interests, environmental interests, cultural diversity, you know the mandate is pretty limited,” he said, noting that the draft negotiating outline under consideration seems to leave many powers in the hands of the 27 nations rather than committing them to the outcome of negotiations.
A spokesman for the Office of the U.S. Trade Representative said that if Europe produces a narrow negotiating mandate, “the U.S. will be pressed to pull back on issues of interest to Europe.”
“We understand there are sensitivities on both sides on a number of issues. That’s why it is important to sit down and explore what is possible if we are to produce a good agreement,” the spokesperson said. “We do not think carve-outs and exclusions before we even begin negotiations are helpful or appropriate.”
The Transatlantic Trade and Investment Partnership is a centerpiece of the Obama adminstration's accelerating push on trade and international economic relations to boost U.S. growth and jobs. Major European powers such as Germany have advocated a trade agreement to improve the European Union’s dismal growth prospects, but American officials have been wary about whether Europe’s loose confederation of states is prepared for an adequately broad negotiation. The interests of the major nations — Germany, France and the United Kingdom — are not always aligned, and smaller nations will need their interests addressed as well.
The United States and the European Union account for slightly less than half of the world’s economic activity, and beyond boosting transatlantic commerce, the hope behind the talks is to produce an agreement that could influence the global trading environment. Tariffs are already low on average, capital is invested freely, and goods and services move with ease. But business officials see immense advantage in, for example, streamlining auto-safety standards or research protocols in the drug, biotech and other technology-based industries so that products certified on one side of the ocean can be more easily brought to market on the other.
Extensive preliminary discussions led both sides to agree to proceed. The aim is for formal talks to be launched next week, when the Group of Eight industrialized powers meet in Northern Ireland. British Prime Minister David Cameron, the current chairman of the G-8, has made the trade discussion a priority, and U.S. officials have said they hope an agreement could conclude as early as next year — a fast pace given the complexity of relations.
But the risk now is of a negotiation that suffers death, or at least a degree of lifelessness, from a thousand cuts.
The NSA disclosure in particular, “does not do too much to enhance trust,” said Sophia in ’t Veld , a Dutch member of the European Parliament.