U.S., EU Link on Trade, Split on Climate

At a Washington summit, the two sides agree to a trans-Atlantic economic partnership but differ on how to cooperate in the fight against climate change

The EU and US signed a new deal on a trans-Atlantic economic partnership at their summit in Washington on Monday (30 April) but remained unable to agree steps for tackling climate change, despite an increase in positive rhetoric on the issue.

The economic deal is aimed at increasing trade and investment by harmonising business standards between the two blocs - with trade in goods and services across the Atlantic accounting for more than $2 billion every day.

As part of the agreement, a transatlantic economic council is to be set up - to be chaired by EU industry commissioner Guenter Verheugen and US National Economic Council director Al Hubbard - to overcome regulatory barriers in 40 areas, including intellectual property and financial services.

"It is recognition that the closer that the United States and the EU become, the better off our people become," US president George W. Bush said, referring to the deal. German chancellor Angela Merkel, currently chairing the EU, called it a "significant step forward."

Mrs Merkel has made improved economic ties between the two sides a priority of the German EU presidency and has previously said she would like to see a trans-Atlantic free trade area by 2015.

At the summit, both sides also inked an "open skies" agreement relaxing limitations on air services between the EU and US - set to take effect at the end of March next year.

Under the deal, EU airlines will be able to fly anywhere in the US and vice versa, even though EU airlines will not be able to operate domestic US routes.

"With this agreement, the honeymoon in Paris, the business trip to Dublin and family reunion in Naples will be cheaper, easier, and within the reach of more Americans than ever before," said US transportation secretary Mary Peters.

Agreed only after years of tough negotiations, the EU made it clear at yesterday's meeting that the current model is not good enough and that Europe is already looking ahead to a more expansive deal in future.

"The objective of the [next] negotiations will therefore be additional traffic rights and fewer restrictions on European ownership and control of US carriers," said German transport minister Wolfgang Tiefensee.

CLIMATE CHANGE SPLITWhile there was no significant movement on how to jointly tackle the effects of climate change - the other big issue on the summit agenda - both Mrs Merkel and European Commission president Jose Manuel Barroso claimed better underlying agreement on the issue.

Looking back to a year ago, Mrs Merkel said "I feel that we would have had a lot more difficulty actually bringing about language that describes this problem adequately than we have now." She later added that both sides still have "different approaches" on how to deal with the issue, however.

Mr Barroso said "We agree there is a threat, there is a very serious and global threat. We agree that there is a need to reduce emissions. We agree that we should work together."

But both sides remain split along familiar lines on how quickly developing nations should react, with the EU arguing richer nations need to take the lead before asking poorer states to move and the US refusing to budge until emerging economies like China and India come on board.

US WON'T BUDGE WITHOUT CHINA"In order to make progress on greenhouse gases, we've got to make sure that the developing nations, which are significant emitters, are a part of the process," said the US president.

"[We] could shut down our economy and emit no greenhouse gases, and all it would take is for China in about 18 months to produce as much as we had been producing to make up the difference about what we reduced our greenhouse gases to."

The continued differences means the German chancellor still has a long way to go if she is to clinch a meaningful deal on climate change at the G8 meeting of industrialised nations which she will be hosting next month.

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