EU Seeks to Advance U.S. Trade Deal as China’s Role Grows

The U.S. and the European Union may make progress this week on a trade report aimed at encouraging talks to remove trans-Atlantic commercial barriers, the latest step toward expanding the world’s largest economic relationship.

EU Trade Commissioner Karel De Gucht is scheduled to meet with U.S. officials including outgoing Trade Representative Ron Kirk in Washington today in a bid to set the stage for the preparation of negotiations on a free-trade deal. Work on the report may conclude this week, EU spokesman Olivier Bailly told reporters in Brussels yesterday, saying he didn’t know when it may be made public.

An accord between the trading partners would provide a boost to the 27-nation EU as it recovers from a sovereign-debt crisis and serve as a counterweight to China’s role in global trade. Investment and trade between the U.S. and bloc was valued at $4.5 trillion in 2011, according to Bloomberg Government.

“The EU’s economic relationship with the U.S. is its most important, unrivaled in scope and intensity,” the Brussels- based European Commission said in a report released yesterday. “A far-reaching agreement between the two biggest economies in the world would indeed give a strong boost to economic growth and send a strong signal of leadership to other countries.”

European leaders will have a chance to add momentum to the trade talks at a summit in Brussels later this week. The prospect of a deal is gaining support as the U.S. and the EU seek to realign themselves to balance China’s growing economic prominence, an EU diplomat told reporters in Brussels yesterday.

Chinese Disruption

“China has emerged and could potentially disrupt the global economic system,” Tyson Barker, director of transatlantic relations for the Bertelsmann Foundation in Washington, said by telephone. “The U.S. and Europe have an opportunity to reset the economic system on terms that favors their economic outlook.”

Once the report is completed, it will pave the way for work on formal trade talks. The EU may aim to agree by June on a mandate to start negotiations, the diplomat said. Any deal among trade negotiators would then need political backing and ratification by both sides -- a process that can take more than a year.

The U.S. wants the EU leaders to show that the bloc has the determination to complete a trade deal in a reasonable time period, according to a senior U.S. official with knowledge of the discussions.

Progress on a trade agreement between the U.S. and EU has been hampered for years by disputes over issues including agricultural aid, regulatory standards and health protections. A transatlantic trade deal is “within our reach,” Vice President Joe Biden said in Munich on Feb. 2.

Political Will

“If we go down that road, we should try to do it on one tank of gas and avoid protracted rounds of negotiations,” he said. “The question now is whether the political will exists to resolve those longstanding differences.”

The EU on Feb. 4 announced changes in rules concerning the trade of live pigs and lactic acid used to clean bovine carcasses in an effort to win U.S. support for an agreement. The changes take effect Feb. 25.

Two-way trade in goods between the U.S. and the EU was worth $637 billion in 2011 and $594 billion through November 2012, the latest period for which data are available. Washington-based groups including the U.S. Chamber of Commerce and the Business Roundtable -- whose members include the heads of Citigroup Inc. of New York, Exxon Mobil Corp. of Irving, Texas, and Wal-Mart Stores Inc. of Bentonville, Arkansas -- have pushed for an accord.

The officials working on the report released an interim review in June that set a goal of eliminating “all duties on bilateral trade.”

An agreement to remove tariffs on U.S. and EU goods would cut $6.4 billion a year in costs for American exporters, according to a Bloomberg Government study in November. Chemical manufacturers such as Dow Chemical Co. of Midland, Michigan, would pay about $1 billion less a year in duties, it said.

To contact the reporters on this story: Brian Wingfield in Washington at bwingfield3@bloomberg.net; Rebecca Christie in Brussels at rchristie4@bloomberg.net

To contact the editors responsible for this story: James Hertling at jhertling@bloomberg.net; Jon Morgan at jmorgan97@bloomberg.net

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