Despite being in a dispute over illegal subsidies paid to their respective major airline manufacturers that threaten the imposition of billions of Dollars on goods on each other’s exports, the USA and the European Union have given the green light to fresh bilateral trade talks aimed at facilitating trade between them.
The talks will be the first major discussion between the two sides since the election of Donald Trump hammered home the final nail in the coffin of the controversial Transatlantic Trade and Investment Partnership (TTIP) which was started under the Obama administration.
The decision, taken by EU member states at ministerial level, authorises the European Commission to conduct formal talks with US officials, but the decision was not unanimous, with France opposing the decision and Belgium abstaining.
Negotiations will proceed in two areas: elimination of tariffs on industrial goods (on a reciprocal basis) and reduction of so-called regulatory barriers to trade. An emphasis of the second strand will be “conformity assessment” where regulators in the respective markets can ensure that imported goods meet applicable standards (e.g. safety standards) prior to them being approved for sale. If this can be done domestically, it will be beneficial generally and to small businesses in particular. Currently, businesses must demonstrate that goods meet the requirements in the importing area by satisfying inspectors in the importing region rather than a domestic inspector. This is more time consuming, bureaucratic and costly and represents a “non- trade” barrier.
Even as the talks commence, there is a dispute over whether they should extend to agricultural produce because of differences in applied standards between the two with European standards being more rigorous.
Should the talks eventually bear fruit, the EC believes that elimination of tariffs will boost EU exports to the USA by 7% with the US gaining slightly more in its exports to the EU.