US spying casts shadow over talks

The reason why both sides are keen to limit damage is that they have both invested heavily in a successful transatlantic free trade area. The economic relationship between the EU and the US represents almost 50 percent of global GDP with trade worth some $2.7 billion passing across the Atlantic every day. A successful outcome to the negotiations would result in the largest bilateral trade deal ever concluded. President Obama and EU leaders are desperate for growth and it is estimated that a successful agreement would lead to a minimum annual 0.5 percent increase in growth for both troubled economies. Another reason is that, in the face of emerging new powers the EU and US are concerned about preserve the liberal international order that has been the cornerstone of the world economy since 1945. It is recognized that a successful deal will also have ramifications for other countries, such as the BRICS members, Brazil, Russia, India, China, and South Africa.

The two sides have established negotiating groups covering the following issues: investment, government procurement, cross-border services, textiles, rules of origin, energy and raw materials, legal issues, sanitary and phytosanitary measures, market access, industrial goods, e-commerce and telecommunications, intellectual property rights, labour, small-and medium-sized enterprises, agricultural market access, dispute settlement, the environment, financial services, competition, customs/trade facilitation, and state-owned enterprises.

The aim of the working groups is to identify areas of convergence and in areas of divergence begin to explore possibilities to bridge the gaps. The main areas of divergence are well-known: market access, regulatory compatibility and trade rules, and apart from agriculture, both sides have different takes on food safety, consumer protections and environmental standards that are deeply rooted in their respective cultures. There are also differences on financial regulation.

This week's talks in Brussels will focus on regulatory issues, services, energy, natural resources and investment. The teams negotiating on public procurement held talks shortly before the shutdown of the US government. A third round of talks is scheduled for mid- December in Washington DC.

One further shadow hanging over the talks is whether or not Congress grants the US President trade promotion authority, which would speed up the ratification process. The Republican controlled lower House is very anti-Obama and would not like him to have any easy victories. But the Republicans are also more committed to free trade than the Democrats so there is a good chance the President will get the authority.

Thus, the talks will continue, but the shadow of the NSA's activities does not create a conducive atmosphere for the negotiations. As one EU official remarked it made little sense to hold these meetings when the US side probably knew everything in the EU briefing books.

The author is director of the EU-Asia Centre in Brussels and a senior advisor to the European Policy Centre.

(China Daily 11/13/2013 page9)