Trans-Atlantic Trade Talks Seen Entering Harder Phase

Talks between the U.S. and European Union will be more difficult in the coming months as both sides sort out regulatory differences for a deal they are seeking to complete this year, the EU’s top trade negotiator said.

“If we want to finish on the now-proverbial single tank of gas, our message to our negotiators now is that we need to step up a gear,” EU Trade Commissioner Karel De Gucht said during a speech today in Washington.

De Gucht and U.S. Trade Ambassador Michael Froman wrapped up two days of meetings in Washington to assess progress on the trans-Atlantic Trade and Investment Partnership negotiations, which began in July. A U.S.-EU accord would unite the world’s largest economic blocs, creating a free trade area that has about $33 trillion in annual economic output.

“We both see opportunities to make substantial progress in the coming months, as well as some challenges,” Froman said in a statement after their meeting. He said both sides had discussed ways to eliminate tariffs.

Leaders on both sides of the Atlantic and companies including FedEx Corp. (FDX), Ford Motor Co. (F), Fiat SpA (F) and AP Moeller-Maersk A/S (MAERSKB) say the deal will help boost economic growth. Labor unions and consumer groups have said it could weaken existing regulatory standards.

Food, Environment

In a news conference before his speech, De Gucht said EU standards on food, data protection and the environment are “not up for negotiation.” The U.S. will have to accept the EU’s ban on imports of hormone-treated beef, De Gucht said.

“We are not going to import hormone beef into Europe,” De Gucht told reporters.

The EU trade commissioner in his speech said the parties identified issues on which they can agree, including a desire to ease trade for small and medium-sized companies, to uphold labor protections and to protect the environment.

They have also marked topics that need more work, such as establishing greater market access, setting rules to relax cross-border paperwork and reducing regulatory barriers, which De Gucht said would be the most difficult part of future talks.

“The marked-out areas are still larger than the common ground,” he said. “But we now have a clear picture of the whole field.”

Negotiators initially set the end of 2014 to reach an agreement. In recent months they have said that while they want to move quickly, it’s more important to get the agreement right.

Finance, Farms

The two sides are seeking to bridge differences on issues including financial regulation, agriculture subsidies and country-of-origin labeling.

De Gucht said he and Froman still think the talks remain on track. The next round takes place in Brussels the week of March 10.

Some members of Congress, particularly Democrats, have opposed giving President Barack Obama’s administration the “fast-track” authority it seeks to help smooth passage of trade deals. Lawmakers have cited rising income inequality and the need to have more say in trade accords as reasons for their opposition, as the U.S. negotiates the EU accord and a separate agreement with 11 Pacific-region nations.

“Trade policy done right can be an important tool in our efforts to address” income inequality, Froman said during in a separate speech today in Washington. He said the U.S. trade office is in the process of expanding and diversifying its advisory panels on trade issues.

To contact the reporter on this story: Brian Wingfield in Washington at bwingfield3@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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