LUXEMBOURG – The European Union worked around French objections on Friday to agree on a free trade negotiating mandate for sweeping talks with the United States that President Barack Obama wants to officially open next week.
Under Friday’s deal, trade ministers at a meeting in Luxembourg agreed to France’s demand to keep its movie and television industry out of the hotly anticipated trans-Atlantic talks. But, they said they could possibly come back to debate it at a later time, meaning the deeply divisive issue could resurface.
The outcome should allow Obama and his EU counterparts to announce the start of negotiations for a deal expected to provide a big boost to growth and jobs by eliminating tariffs and other barriers that have long plagued economic relations.
A free trade pact would create a market with common standards and regulations across countries that together account for nearly half the global economy.
France’s longstanding objections, which turned a simple ministerial meeting into a 12-hour negotiating marathon, showed the challenges ahead. Within the EU alone, there is a rift with some nations big on protecting struggling sectors with subsidies and more pro-free-trade member states.
Beyond the audiovisual sector, major problems are expected to emerge over agriculture and transport.
Friday night though, Finland’s European Affairs Minister Alexander Stubb tweet optimistically about the prospect of trans-Atlantic negotiations: “Play ball!” he wrote.
All other EU nations have vowed to protect the culture industry as well, but the large majority nevertheless wanted it to be part of the talks. They fear that removing it would set off tit-for-tat claims on both sides.
France’s Trade Minister Nicole Bricq said though that the Americans already had staked out an issue which was off limits.
“Frankly, I met the Americans in Washington and it is clear that they too want exclusions — on the financial services,” she said.
Even though EU negotiator Karel De Gucht could try bring back the audiovisual sector into the talks, France would always have a veto to keep it out if it wanted.
An EU-commissioned study shows that a trade pact could boost the 27-country bloc’s economic output by 119 billion euro ($159 billion) a year and the U.S. economy’s by 95 billion euros ($127 billion). Another estimate showed eliminating tariffs alone would add $180 billion to U.S. and EU gross domestic product in five years’ time while boosting exports on both sides by about 17 per cent. That could add about 0.5 per cent annually to the EU’s GDP and 1 per cent to the U.S.
For Europe in particular, that extra growth would be crucial to help pay high public debt and bring down unemployment, which is at record highs.
“An EU-U.S. agreement could potentially represent 400,000 jobs in the EU, so that’s a prize really worth working for,” said Irish Enterprise Minister Richard Bruton, who chaired Friday’s EU meeting.
“It is an opportunity both for the United States and the EU. It’s time is now,” Bruton said.
Tariffs between the EU and the U.S. are already relatively low, averaging 5 per cent to 7 per cent. But the pact would have huge benefits because of the sheer size of the market — bilateral trade is worth $1 trillion annually, the largest commercial relationship in the world.
The prospects sounded so good that all seemed aligned for a launch of the talks during Obama’s European visit. Both the U.S. and Britain said they wanted to announce the opening of negotiations by the G-8 summit on June 17-18, with talks expected to start around the beginning of July.
But France and Hollywood have long had a fraught relationship. Paris has for years sought to protect its cultural industries with lavish subsidies and quotas as competition grew from other countries — particularly the U.S., whose exporters are helped by having a massive domestic market and the use of English, the world’s pre-eminent language.
And since the EU is a patchwork of often tiny countries with their own languages and cultures, such protection has become a fully acceptable practice in the bloc.
Because of this, France insisted the EU is so unlikely to give up such protection that there is no point in even including it in the negotiations.
EU Trade Commissioner De Gucht, who will negotiate on behalf of the 27 countries based on a unanimous mandate, said the mandate includes guarantees that protection for the cultural industry would be maintained.
Stubb said that with such guarantees “there’s absolutely nothing that threatens the French or the European film industry and I shall certainly continue to watch all of my beloved French movies even after this free trade negotiation has been finalized.”
As the G-8 summit drew closer, however, some of the most divisive issues in trade relations appeared as intractable as ever. Besides the issue of culture, deep differences remained over agriculture, food safety, climate change legislation, financial deregulation and intellectual property enforcement.
The best-case timetable for completing the pact is the end of 2014. However, for many experts, that is overly optimistic and the consensus is it will take a few years.
Associated Press writer Marjorie Olster contributed from Washington
Follow Raf Casert on Twitter at https://twitter.com/rcasert