The following is excerpted from today’s article by the Journal of Commerce.
That’s the daunting challenge European and U.S. trade officials will confront when they gather in Brussels in early October to start the nitty-gritty negotiations for the grandly titled Transatlantic Trade and Investment Partnership.
The one positive for the negotiators is they will be free from the hype and drama surrounding their first session in Washington in early July that focused on setting the framework for the year-long negotiations…
On paper, creating a single market between the U.S. and EU shouldn’t pose an insurmountable obstacle. The U.S. and EU are the world’s biggest commercial partners, with two-way trade in goods and services totaling more than $1 trillion in 2012 and total bilateral investment worth almost $4 trillion.
Trans-Atlantic tariffs are already low — averaging less than 3 percent — so the negotiations will focus on eliminating non-tariff barriers ranging from differing customs and regulatory requirements, inspection procedures and licensing agreements to export subsidies and quotas.
Removing non-tariff barriers would provide an immediate boost to trans-Atlantic trade because lower costs would make existing exports more competitive and open the door to new products. European chemicals producers, for example, face a U.S. tariff of just 1.2 percent, but that’s bolstered by a non-tariff barrier equivalent to a 19.1 percent duty, according to the London-based Centre for Economic Policy Research. U.S. automakers face EU non-tariff barriers equivalent to an extra 25.5 percent duty on top of an 8 percent import tariff.
The problem is that non-tariff barriers are much more complex than conventional tariffs and thus much more difficult to dismantle…
This article is available in its entirety at: http://www.joc.com/regulation-policy/trade-agreements/international-trade-agreements/us-eu-challenge-build-trade-zone-end-2014_20130802.html (subscription may be required)