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U.S., EU Wrap Up First Round of Trade Talks

Both sides note progress and issues to be addressed.

WASHINGTON — The chief trade negotiators from the U.S. and European Union said Friday they had made progress in initial discussions covering a wide range of areas, including textiles, and outlined areas of “divergence and convergence,” as the two sides wrapped up the first round of negotiations here on a trans-Atlantic trade accord.

This story first appeared in the July 15, 2013 issue of WWD.  Subscribe Today.

The U.S. and EU hope to significantly boost trade with the free-trade agreement that has major implications for U.S. imports and exports of apparel, textiles, footwear and accessories.

“All engagement this week has been very positive and… substantive,” chief U.S. negotiator Dan Mullaney said at a press conference Friday.

Mullaney said several areas were covered by negotiators this week. In addition to textiles and the rule of origin, topics that were discussed included investment, intellectual property rights, market access for industrial goods, regulatory coherence and cooperation and technical barriers.

Some of the thorny trade issues facing negotiators include France’s concerns over audiovisual controls, agricultural subsidies on both sides of the Atlantic, “Buy America” rules in the U.S. pertaining to government procurement and Europe’s opposition to the use of genetically modified foods. Another outstanding issue directly impacts the fashion industry: In April, the EU tripled the tariff on U.S.-made women’s and girls’ cotton denim jeans to 38 percent, as part of a World Trade Organization case the trading bloc won against the U.S. in 2005, and industry groups are pressing for a resolution.

“Because this has been our first direct, substantive engagement in these negotiations, the goal of the first round was to walk through, cover all of the areas that may be addressed in this negotiation, share initial thoughts about how to approach each issue, discuss our priorities, discuss our objectives and set up solid work streams [that lead] to increased substantive engagement in the second round,” Mullaney said.

 

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The officials said the second round of negotiations on the accord, dubbed the Transatlantic Trade and Investment Partnership, will be held in Brussels in October.

“Both of us see this agreement as having the potential to deliver something transformative to our economies, in terms of market access, in terms of regulatory compatibility and in terms of rule making,” said EU chief negotiator Ignacio Garcia-Bercero. “We have identified certain areas of convergence.…And in areas of divergence, we have begun to explore how such divergences can be reconciled. In short, we have paved the way for a substantive second round of negotiation in Brussels.”

Asked how close or far apart the two sides were on a textile rule of origin and whether a yarn-forward rule that requires the accords’ signatory countries to use fabric and yarns produced within the trade area to receive duty-free benefits was being considered, Garcia-Bercero said product-specific rules of origin were not discussed in the first round. But he noted that on “protocols we have found there are quite a few areas where we have convergence on what the U.S. provides for and what the European Union provides for.”

Although none of the EU member countries are top apparel suppliers to the U.S., there are well-established relationships. Apparel imports to the U.S. from Italy were $1.1 billion in 2012, while imports from France were $151 million, followed by the U.K., with $98 million. Textile imports to the U.S. from the EU are also important. For example, Italy is the third-largest supplier of wool imports to the U.S., followed by the U.K. as the fifth-largest supplier and Germany, which is ranked 10th.

Retailers and brands are also interested in seeing the two sides streamline regulations, remove burdensome technical barriers and eliminate redundancies in areas from Customs procedures and product safety testing and certification to environmental and privacy policies.

“It is very important that there is a clear understanding of what we aim to do and what we do not aim to do on the regulatory field,” said Garcia-Bercero. “We are working on the basic concept that both [the] U.S. and European Union should be able maintain a level of protection that they consider to be appropriate, but there are many things that can be done…that would avoid unnecessary duplication and unnecessary regulatory barriers. That is what we are trying to explore.”