EU-US free trade agreement mooted in Berlin

EU Observer | 20.09.2006

EU-US free trade agreement mooted in Berlin

By Honor Mahony

Centre-right members of the German government are in favour of closer economic ties between the EU and the US, possibly resulting in a free trade agreement.

According to a report in Germany’s Bild newspaper, top CDU politicians - whose party is part of the ruling government coalition - are increasingly calling for a transatlantic free trade zone.

The paper says that chancellor Angela Merkel is also in favour of stronger cooperation between the two sides in trade issues.

According to Matthias Wissman, head of the Europe committee in the German parliament, a free trade zone would be "a great project for Europe and the German presidency."

Germany takes over the EU presidency at the beginning of next year for six months - being at the helm of the EU gives countries some leeway to push particular pet projects.

This is not the first time the idea of an EU-US free trade zone has been mentioned - Spain’s last prime minister the centre-right Jose Maria Aznar also called for one in 2004 but his ideas were not taken up on an EU-wide level.

Similarly, several MEPs and their counterparts from the US Congress, are members of the Transatlantic Policy Network, one of whose aims is to promote strong cooperation between the two sides on economic issues.

A transatlantic trade zone would provide a counterbalance to the emerging economic power of China - with which the EU has been having a war of words, accusing Beijing of dumping cheap goods into European markets.

But any developments in this direction would likely be seen as a nail in the coffin of the stalled world trade talks, which collapsed before the summer.

At the time of the collapse, trade officials warned that it could result in a series of bilateral agreements between countries - last week the Conservative opposition leader in the UK suggested there should be an EU-India free trade zone.

Trade representatives from 19 countries, including the US, are currently meeting in Australia to see if there is a possibility of reviving the talks, which failed mainly due to disagreements over farm subsidies in the EU and the US.

The meeting will discuss compromise plans by the Australian trade minister Mark Vaile for the EU to cut agricultural subsidies by a further five percent and for the US to chop €3.9 billion from farm aid in a bid to revive the talks - although the EU has already dismissed the proposal as not asking enough of the Americans.

"We have to focus on the domestic politics of the European Union and the United States,’’ WTO chief Pascal Lamy said, according to Bloomberg news agency.

"The question is whether countries have the courage, stamina and momentum to go this extra mile," he added.

He said there was a brief window of opportunity to make the talks work referring to the fact that the current US administration’s negotiating mandate runs out in July next year leaving only a short time for deal to get through the US Congress.

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source: EU Observer