A New York Times article yesterday points out some of the potential difficulties already evident in early talks on a trade agreement between the United States and the European Union. The possible trade pact, called the Trans-Atlantic Trade and Investment Partnership, is touted as a critically important step to getting the sluggish economies on both sides of the Atlantic moving. Tariffs between the two parties are not likely to be a major issue, as both the United States and the EU have substantially lowered duties on most goods and services. The big bone of contention instead will be non-tariffs barriers, such as some sticky regulatory issues reflecting different approaches to risk as well as attempts to carve out “sensitive products” from the agreement. Particularly in the agricultural area, the EU’s use of the “precautionary principle” in assessing the risk of genetically modified food products and of certain chemicals and processes is likely to conflict with the U.S. approach, which uses science-based risk assessment and looks at the safety of the product rather than how it was produced. In a prologue to the talks, the European Parliament’s inclusion of the precautionary approach in its list of negotiating objectives has already raised the ire of U.S. farmers. Another big obstacle to the talks is France’s continued efforts to carve out a “cultural diversity” exception so audiovisual products and services would not be included in the agreement. France, Germany and several other countries supported a European Commission parliamentary amendment to allow films and other audiovisuals to be exempted. Although an outright exemption would be the French choice, others have come up with so-called “red lines” that would effectively restrict what some French film directors and actors have called “a cultural invasion of Europe.” One would require EU broadcasters to provide the major share of time to domestic works. Another would retain the current film and audiovisual industry subsidies. The last red line would give the EU the right to revise laws to adapt to the digital environment. Germany has since bowed out of its support, leaving France as the main country that would limit the amount of foreign films that would be allowed in the EU and continue to heavily subsidize the film and other AV industries. France has said it would veto the agreement if films and AV materials are included. If that country has its way in asserting such a “cultural” exception, that would close out an important U.S. sector that is not likely to accept such a carve-out. It doesn’t seem plausible that the U.S. would accept such an exemption, even if some other sectors might see this as an opportunity for them to get their own “sensitive product” exemptions in return.