The chief U.S. trade negotiator for the Transatlantic Trade and Investment Partnership talks said Friday the U.S. will not settle for a watered down trade pact with the European Union and is still optimistic a comprehensive trade agreement can be finalized this year.
“The United States has no interest in a ‘T-TIP Light’,” said Dan Mullaney, assistant U.S. Trade Representative and chief negotiator for the U.S. “That would not fulfill the economic promise of the ambitious agreement we are seeking and it would not pass muster with our stakeholders or our Congress.”
U.S. and EU negotiators wrapped up the 13th round of talks in New York on Friday. They have been negotiating for more than three years to forge a deal that would eliminate tariffs on imports, streamline regulations, remove burdensome technical barriers and eliminate redundancies in areas such as Customs procedures, product safety testing and certification and labeling requirements.
Ignacio Garcia Bercero, the EU’s chief negotiator, concurred with Mullaney, noting that “T-TIP light” would not be “workable either for the U.S. or for the European Union.”
He said President Obama’s visit to Europe last week gave the talks a “strong political boost.”
Mullaney said the two sides have exchanged offers in “almost all negotiating areas” and are now focused on resolving areas of disagreement.
“We believe there remains sufficient time to complete an ambitious, comprehensive and high-standard T-TIP agreement this year, if we continue our intensive engagement and we mobilize the necessary political will, effort and determination on both sides,” Mullaney said.
T-TIP holds potential for brands and retailers in many areas, including tariff elimination, regulatory streamlining and the removal of trade barriers. Negotiators agreed in earlier rounds to immediately eliminate duties on 97 percent of trade in goods across the Atlantic. The other 3 percent of trade will be subject to longer tariff phaseouts on sensitive products that are currently under negotiation.
“During the round, we also continued to make progress on tariff elimination, a key U.S. goal,” Mullaney said. “We had agreed earlier to eliminate tariffs on 97 percent of tariff lines, and at this round, we worked to increase the number of those tariff lines that would be zeroed out upon entry into force of the agreement. In the months ahead, we will discuss the elimination of the remaining tariffs and we will seek to accelerate the pace of reduction for tariff lines we have already agreed to phase out.”
Garcia Bercero also noted the two sides made progress on tariffs.
“During the round, we had good talks on improving the existing offers by, for instance, shortening the transition periods for some of the products,” he said. “Here consumers and companies would feel an immediate impact, as the prices of imported and exported products could fall. Indeed, European Union firms pay over 3.5 billion euros a year in customs tariffs when exporting to the United States.”
He noted that the remaining 3 percent tariff lines for sensitive products was not discussed during this round.
The U.S. textile industry has raised concerns about T-TIP. Among the two biggest issues for the industry are that the EU favors a more liberal rule of origin, a fabric-forward rule, as opposed to the stricter yarn-forward rule that the U.S. supports. In addition, the EU is pressing for access to U.S. military contracts through the government procurement process that now only allows the Department of Defense to purchase 100 percent U.S.-made products from the fiber forward under the Berry Amendment.
The U.S. market is the biggest export destination for EU textiles and apparel, with shipments worth a combined $5.6 billion in 2014, while the 28-member EU trade bloc imported U.S. textile products worth $1.1 billion and apparel valued at $580 million.
Mullaney noted that negotiators made “solid progress” in the areas of regulatory cohesion and continued to make progress in developing provisions for specific product sectors, including cosmetics, autos, pharmaceuticals and medical devices.
“We are aiming to have text on the table for most, if not all, of the sectors by the time of the next round,” Mullaney said.
Achievements highlighted by Garcia Bercero were in the areas of regulatory cooperation and good practice, small and medium size enterprises, and customs and trade facilitation.
“From the European Union point of view, we are ready to work hard to try to conclude these negotiations in 2016, but of course, only if the substance of the deal is right,” he said.
He said the next round will be held in July.
“The objective for this round would then be to continue to work on consolidation in all areas, so that we only have a very limited number of open issues…that will ultimately need to be resolved at political level,” he added.