Earlier today, the Office of the U.S. Trade Representative sent a notice to Congress that the Obama administration would begin negotiating a trade partnership agreement with the European Union. In the letter to House Speaker John Boehner, Acting USTR Demetrios Marantis noted that official talks would begin no earlier than 90 days from the transmittal of the letter.
The agreement would be the largest trade pact to date. The two trade power houses together represent 30 percent of global trade. As the letter stated:
Last year the United States exported $458 billion in goods and services to the EU, estimated to support more than 2.2 million U.S. jobs. The stock of U.S. and EU investment in each other’s economy totaled nearly $3.7 trillion in 2011, and EU affiliates in the United States employed an estimated 3 million Americans in 2010.
While tariffs already are very low or have been eliminated on most goods, there are still some so-called sensitive products where talks about reducing tariffs could get sticky. However, the biggest hurdle in reaching an agreement will be non-tariff barriers to trade, particularly those relating to differing regulatory approaches to health and safety, and standards.
It’s expected that the negotiations would be fairly lengthy — taking several years. On the regulatory front, the two parties have to figure out whether to take an approach that involves mutual recognition or one that seeks to “harmonize” the regulations. CEI has cautioned against regulatory harmonization, particularly since the EU has adopted the precautionary principle as the basis for much of its risk assessment.