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EU: United States Free Trade Agreement

Volume 741: debated on Wednesday 19 December 2012


Asked By

To ask Her Majesty’s Government what steps they, and the European Union, will take to make progress on proposals for a European Union-United States free trade agreement.

My Lords, the European Union-United States high-level working group on jobs and growth, which is tasked with examining the options for enhancing the transatlantic economic relationship, is expected to release its report in the coming weeks. The UK Government look forward to receiving the conclusions of this report and to working with other EU member states and the European Commission to take forward this important agenda and achieve—if at all possible—an EU-US free trade agreement.

My Lords, following the failure of the Doha round of global trade negotiations, does the Minister agree that the focus will increasingly be on regional arrangements and where better than the EU-US following the EU summit with the US last year, which accounts for half of the total GNP of the world and one third of world trade? Will he give an assurance that the conclusions of this working group will be speedily worked upon? What steps does he see following that?

I agree with the noble Lord that this is an extremely important negotiation. It is indeed the case that in the wake of the stalling of the Doha round, regional arrangements of this kind is the inevitable way forward in practice for free trade. The EU has a heavy agenda; a couple of weeks ago, it agreed a mandate for negotiating with Japan—obviously another major economy. The EU-US deal will be the most important one for the reasons that the noble Lord has indicated—the importance of the two blocks in world trade—and I assure him that the British Government will pursue every avenue that we can to encourage, support and cajole others into working to get this deal done.

Is my noble friend aware of the United States’s concerns about its influence with both the United Kingdom and the European Union should the United Kingdom seek to distance itself from the current arrangements it has as a serious partner in the EU? Will he consider, in the light of the US-UK free trade agreement what the implications might be if we proceed to distance ourselves from within the European Union?

My noble friend asks a very important question which embraces the wider issue of the British relationship with the European Union. I think it is appropriate for me to stress that as far as trade and the single market are concerned, Britain’s role in the EU is extremely important, both to it and to the EU. Our chances of a good trade agreement that is of interest to the US are much greater in the context of a European Union negotiation.

My Lords, I speak as an ardent free-trader. I hate to sound cynical, but is the noble Lord aware that, if by free trade you actually mean free trade—namely, free trade in all goods and services, which on the one hand must certainly include agriculture and on the other hand must certainly include financial services—there is not the slightest chance that the Americans will agree to anything resembling free trade as understood by most people, including Adam Smith, who believed in it?

The noble Lord has pointed out a number of the issues which will indeed be points of difficulty in the negotiations. Agriculture will clearly be a significant demand on the part of the United States. On the part of the European Union, and indeed so far as the UK is concerned, freer access to the services market in the US is an important demand. The complexity at that end lies in part in the fact that some of the regulations are at state level not at federal level in the US, and this just points to the general theme that this is going to be a difficult, long and painstaking process. It would be naive of any of us to believe that it will take merely a few months to get a deal done.

My Lords, given the recently concluded treaty between the European Union and the region of central America and the ongoing negotiations with the Mercosur countries—Uruguay, Paraguay, Argentina and Brazil—is there any scope for going one step further and, once the bilateral agreement with the United States is completed, having an EU-NAFTA treaty?

My noble friend asks an important question about the wider ramifications of a US deal. Indeed, NAFTA is the first consideration here. The EU already has an agreement with Mexico—I think I am right in saying that it was signed in 2000. It is a deal which covers only tariffs and not non-tariff barriers, and Commissioner De Gucht has publicly mused on the value of updating that agreement in time. The EU is in the midst of negotiations with Canada and is hoping to conclude them within the first few weeks of the coming year. As far as Mercosur is concerned, I think that there is a lot further to go. At the moment, the negotiations are rather stalled, but a recognition of their importance is the fact that we will keep going, not least because of the importance of the Brazilian economy.

My Lords, is the Minister aware that, under the Irish presidency, Dublin hopes to host a meeting for the promotion of the European Union- United States free trade area agreement? However, does he believe, as I do, that, while there may be resort to plurilateral, bilateral and indeed regional meetings, we still require, for the most efficient purposes, multilateral agreements along the lines that Doha proposed?

I completely agree with the noble Lord. The ideal position is a completed Doha round, but I am afraid the reality is that that has stalled. However, we do not conclude that there is therefore nothing that we should do, and we will be encouraging the Commission to work to complete a trade facilitation agreement in the context of the WTO that we hope can be improved at the next ministerial meeting of the WTO in about a year’s time.