Impasse Persists on Procurement, Services in Trade Talks

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By Rossella Brevetti

July 15 — U.S. and EU officials working on a trans-Atlantic trade deal continue to differ on sensitive tariffs, government procurement, geographical indications and services.

Hard challenges remain in the Transatlantic Trade and Investment Partnership (TTIP) talks, but completing the pact this year remains the goal, U.S. chief negotiator Dan Mullaney and Europe's chief negotiator Ignacio Garcia Bercero said July 15 ending a week of negotiations in Brussels.

The deal could go into the freezer indefinitely—because of political transitions in the U.S. and key European countries—if it isn't completed during the current administration. The trade pact is aimed at eliminating tariffs, cutting regulatory red tape and easing investment flows.

“Important differences remain and much more work, basically in every area of the talks is needed until we can say we have a deal,” Garcia Bercero said at a press conference in Brussels at the conclusion of the 14th round.

The U.S. in TTIP has made the most ambitious procurement offer in any trade agreement, Mullaney said. Garcia Bercero said the U.S.'s procurement offer would bring “very limited improvements on market access,” adding that the EU is still far from achieving its goal of substantial improvements in market access at all levels of government, Garcia Bercero said.

Talks on tariffs are at an advanced stage with agreement on eliminating tariffs on 97 percent of tariff lines, Garcia Bercero said (84 ITD, 5/2/16). However, complete tariff elimination remains the U.S. goal, Mullaney said, adding that it is “urgent” for talks to start on the remaining 3 percent of tariff lines.

Geographical Indications

Securing protection for geographical indications is a EU priority in TTIP, although the sides still remain far apart, Garcia Bercero said. A geographical indication is a name or sign used on certain products corresponding to a specific geographical location or origin, such as champagne.

The U.S. trademark system already provides robust protection for geographical indications, according to Mullaney. European producers take advantage of that protection to increase exports to the U.S. of cheese and sparkling wine—where the EU has a trade surplus with the U.S., he said. Discussions on the issue are continuing, he added.

Progress on services negotiations has been “painfully slow,” Mullaney said, adding that those talks will continue in Brussels the week of July 18. “Our view of the urgent need for rapid progress on services and investment market access is well-known, and we will hope for that progress next week.”

The EU and U.S. both submitted several new proposals during the round. The EU published nine of the proposals on July 14 and an additional proposal on regulatory cooperation in the engineering sector on July 15 (136 ITD, 7/15/16). The U.S. put forward proposals on trade defense, financial services, textiles, state-owned enterprises, good regulatory practices and legal and institutional provisions, Mullaney said.

The window of opportunity to complete TTIP this year should be seized, Mullaney said. “After this year, with one political transition after another over the next few years, it could be quite a while before we pick up negotiations again.”

Financial Services

During the round, the EU made its first offer on financial services market access even though the U.S. has stuck to its position that financial services regulatory cooperation should remain outside the TTIP framework. “Our ambition about anchoring [financial regulatory] cooperation in TTIP remains exactly as it was,” Garcia Bercero said (136 International Trade Daily, 7/15/16).

Negotiators will continue discussions of investment protection proposals currently on the table, Mullaney said. The EU has proposed replacing the investor-state dispute settlement system favored by the U.S. with an investment court that would hear appeals.

The U.S. looks forward to full discussions on electronic commerce obligations, Mullaney said, noting that these discussions were side-lined while the two side were negotiating the Privacy Shield for protecting trans-Atlantic data flows (133 ITD, 7/12/16). He also reiterated the U.S. position seeking binding labor and environmental obligations in the deal.

The TTIP will contain up to 30 chapters governing market access, regulatory cooperation and institutional rules, according to Garcia Bercero.

Both negotiators agreed that technical work on the agreement remains. “As negotiators, we're not at the end of the road by any stretch,” Mullaney said, echoing the substance of remarks by his counterpart.

To contact the reporter on this story: Rossella Brevetti in Washington at rbrevetti@bna.com

To contact the editor responsible for this story: Jerome Ashton at jashton@bna.com

For More Information

The EU engineering sector proposal is available at http://src.bna.com/gQo.

Dan Mullaney's statement is available at http://src.bna.com/gQm.

Garcia Bercero's statement is available at http://src.bna.com/gQn.

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