Top Senate trade officials warned on Tuesday that any free-trade agreement between the United States and Europe would be held to strict demands that American companies see clear benefits — particularly in areas such as agriculture that have been a source of frequent dispute.
“There is no doubt that a U.S.-[European Union] FTA is an enticing opportunity” that would enhance what is already the world’s largest trading relationship and bring half of world economic output under a more liberal system, Senate Finance Committee Chairman Max Baucus (D-Mont.) and ranking member Orrin Hatch (R-Utah) said in a letter to U.S. Trade Representative Ron Kirk. But the issues that would have to be resolved in any talks “are long-standing and difficult,” the senators said, and would require Europe to open farm, service and other markets that it has been slow to deregulate.
The Obama administration is nearing a decision on whether to open formal negotiations with the European Union over a transatlantic free-trade agreement. Europe has been pushing the idea in the hope of boosting its tepid rate of economic growth. But U.S. officials have been concerned that Europe’s complex politics — of the 27 EU nations, some are avowed free-trade supporters while some veer towards protectionist industrial policy — would make for protracted and perhaps futile negotiations.
The letter from the two senators is a reminder of just how difficult an agreement would be. Goods already flow freely between the United States and the E.U. Much of the value of a free-trade pact would come through reducing regulatory red tape so that — for example — the two sides would adopt common policies on food safety, pharmaceutical testing, patents and other complex regulatory issues.
To demonstrate the sort of advantages mentioned by Baucus and Hatch, however, would mean Europe backing off of its restrictions on genetically modified food, cattle hormones and other regulations.
“Broad bipartisan Congressional support for expanding trade with the EU depends, in large part, on lowering trade barriers for American agricultural products,” the two senators said in the letter. Lowering those barriers would be politically difficult in the E.U., particularly in a nation such as France that has pressed hard to protect its farmers and whose current government has expressed doubts about the benefits of globalization.
Procedurally, a U.S.-E.U. free-trade agreement would also face a difficult path. Presidential “fast-track” authority over trade agreements expired in 2007. Rather than the direct, up-or-down vote provided under the fast-track rules, any new free-trade agreement would be subject to amendment by Congress.
Baucus and Hatch said they were prepared to push for “prompt consideration and renewal” of presidential trade-promotion authority. But passage of a new fast-track law would probably become a referendum on pending trade agreements themselves — giving Congress more leverage over the substance of those agreements in the meantime.