The U.S. and EU already have the world's largest bilateral economic relationship, and account for about a third of the world's total trade flows, according to the European Commission. U.S. trade in goods with the EU totaled about $636.9 billion last year, according to the U.S. Census Bureau. While the transatlantic partners have worked for decades to establish closer ties, they have often been stymied by issues including agricultural policy and establishing a common set of standards for products such as machinery and appliances.

The partners took the “next step” toward beginning trade negotiations with the release of their interim report, President Barack Obama said at a June 19 news conference. A final report is due by the end of the year, and EU Trade Commissioner Karel De Gucht has proposed starting negotiations soon thereafter, with the goal of wrapping up talks by mid-2014.

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

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

Potential Goals

Potential goals include eliminating all duties on bilateral trade, providing more transparency in services, establishing a forum for resolving health and sanitation issues, and improving businesses access to government purchases.

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

“There is increased momentum behind the idea of launching ambitious transatlantic trade talks,” Peter Rashish, vice president for Europe and Eurasia at the U.S. Chamber of Commerce in Washington, said in an e-mail. “There may need to be work on certain agricultural and regulatory issues before the talks can get underway, but I'm confident that the two sides will bridge those divides.”

Election-year politics probably will prevent the U.S. from taking significant steps on a trade agreement with the EU in the coming months, Gary Clyde Hufbauer, a senior fellow at the Peterson Institute for International Economics in Washington, said in a phone interview.

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

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

The transatlantic partners are seeking to establish a trade pact in 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 book for the next 30 to 40 years, they really need to get together on what the rule book is,” he said.

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