A proposed agreement to liberalize trade between the U.S. andthe European Union would set a good example for other nations tofollow in establishing similar accords, Siemens AG Chief FinancialOfficer Joe Kaeser said.

The Munich-based company is “reasonably optimistic that the EUand the United States get something done and be the lighthouse ofglobal trade cooperation,” Kaeser said yesterday in an interview inWashington. “If not those two, who else should do it?”

The U.S. and the 27-nation EU are seeking a trade pact asnations including Greece and Spain grapple with a sovereign-debtcrisis, sapping economic growth worldwide. Officials from bothsides on June 19 released an interim report on the potential scopeof a deal, including reducing tariffs and trade barriers inservices and investment.

“If we send the wrong signals as United States and Europe toemerging countries like Brazil, which has always been somewhatshaky on global-trade agreements, that would be a devastatingmessage,” Kaeser said.

The U.S. and EU already have the world's largest bilateraleconomic relationship, and account for about a third of the world'stotal trade flows, according to the European Commission. U.S. tradein goods with the EU totaled about $636.9 billion last year,according to the U.S. Census Bureau. While the transatlanticpartners have worked for decades to establish closer ties, theyhave often been stymied by issues including agricultural policy andestablishing a common set of standards for products such asmachinery and appliances.

The partners took the “next step” toward beginning tradenegotiations with the release of their interim report, PresidentBarack Obama said at a June 19 news conference. A final report isdue by the end of the year, and EU Trade Commissioner Karel DeGucht has proposed starting negotiations soon thereafter, with thegoal of wrapping up talks by mid-2014.

The U.S. and EU are considering a “comprehensive agreement” thatmay encompass a reciprocal market opening in goods, services andinvestment, according to the interim report produced by officialsled by De Gucht and U.S. Trade Representative Ron Kirk.

Such an agreement, “if achievable, is the option that has thegreatest potential for supporting jobs and promoting growth andcompetitiveness across the Atlantic,” it said.

Potential Goals

Potential goals include eliminating all duties on bilateraltrade, providing more transparency in services, establishing aforum for resolving health and sanitation issues, and improvingbusinesses access to government purchases.

The U.S.-EU report concluded “it would not be feasible innegotiations to reconcile across-the-board differences” in theobligations regarding intellectual property rights that theyusually include in similar trade agreements.

“There is increased momentum behind the idea of launchingambitious transatlantic trade talks,” Peter Rashish, vice presidentfor Europe and Eurasia at the U.S. Chamber of Commerce inWashington, said in an e-mail. “There may need to be work oncertain agricultural and regulatory issues before the talks can getunderway, but I'm confident that the two sides will bridge thosedivides.”

Election-year politics probably will prevent the U.S. fromtaking significant steps on a trade agreement with the EU in thecoming months, Gary Clyde Hufbauer, a senior fellow at the PetersonInstitute for International Economics in Washington, said in aphone interview.

“I think the administration is very skittish — and anyadministration would be — of opening up a new vista” that politicalopponents might criticize, he said. Mid-term elections in 2014effectively set a deadline for completing an accord during the nextfour years, according to Hufbauer.

The U.S. and EU have been at odds over establishing uniformstandards, in part because decisions are set by member states inEurope and independent agencies in America, he said. The EU is alsointerested in liberalizing procurement at all levels of government,and which may create tension at the U.S. state level, Hufbauersaid.

The transatlantic partners are seeking to establish a trade pactin part to offset China's role in influencing global trade rules,according to Hufbauer.

“If the U.S. and the EU want to continue to set the rule bookfor the next 30 to 40 years, they really need to get together onwhat the rule book is,” he said.

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