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EU leaders agree to push for U.S. trade deal

By Robin Emmott and Andreas Rinke

BRUSSELS (Reuters) - European leaders agreed on Friday to push for a free-trade pact with the United States, putting the onus on the White House to decide whether to try for a deal that would encompass half the world's economic output.

Major exporters Germany and Britain won support from the rest of the European Union at a summit in Brussels to reach a deal with Washington that many leaders hope will help Europe pull out of its banking and debt crises.

In their final statement, leaders said the European Union gave "its support for a comprehensive trade agreement" with the United States.

"We need to move forward," European Commission President Jose Manuel Barroso said at the end of the summit, referring to the United States. "The Commission will push ahead to realize the full potential of an integrated transatlantic trade agreement," said Barroso, who heads the EU executive responsible for negotiating the European Union's trade agreements.

The EU leaders' statement raises expectations that U.S. President Barack Obama may endorse the initiative next Tuesday in his annual State of the Union speech, which presidents traditionally use to lay out their priorities for the year.

A U.S. trade official in Washington said EU leaders' unity was "helpful in building confidence that the EU has the political will to do what is necessary for an agreement."

Europe's main business lobby, Business Europe, urged Obama to embrace the momentum in a letter released on Friday on behalf of 41 business federations, calling on him to give "a strong signal" and "political support" for the talks.

With economic growth elusive on both sides of the Atlantic, Obama and EU leaders tasked their trade chiefs in 2011 to look at whether it was feasible to agree a deal to further integrate the two blocs that already have low tariffs.

A U.S.-EU draft proposal drawn up by EU Trade Commissioner Karel De Gucht and U.S. Trade Representative Ron Kirk is essentially ready. De Gucht, who went to Washington this week, has given strong signals that there is enough common ground to go ahead with negotiations.

Talks could start in months, and while De Gucht was warned of difficult negotiations, both sides appear to want to agree on an accord quickly, possibly by the end of 2014.

"WITHIN REACH"

Following the collapse of global trade talks in 2008, both the United States and Europe have sought to tie up as many free-trade agreements as possible, and Brussels alone is negotiating with more than 80 countries.

Efforts to agree a U.S.-EU pact could spur the rest of the world to revive global talks for fear of being sidelined in the emerging shape of global commerce, Indonesia's candidate to head the World Trade Organisation told Reuters.

But U.S. officials, wary of getting bogged down in endless talks, have said they need a strong political commitment from the 27-nation European Union that Brussels is serious about opening up its markets before they can go ahead with talks.

German Chancellor Angela Merkel, with support from free-trade advocate Britain, has been eager for a deal for months.

"I wish for nothing more than a free-trade agreement with the United States," Merkel said on January 29 in Berlin.

Diplomats say the time is right for a deal that was first talked about three decades ago but was considered too difficult because of worries from protectionists on both sides of the Atlantic, especially in the farming sector.

The European Union dropped its ban on some U.S. meat imports this week in a gesture aimed at starting talks, but countries such as France, and U.S. states such as Georgia, are reluctant to fully open up to foreign competition.

Still, a deal could increase Europe's economic output by 65 billion euros ($88 billion) a year, according to the European Commission, benefiting industries from chemicals to automakers.

The United States too is dissatisfied with its meager economic growth since the global financial crisis of 2008/2009 and sees removing barriers to trade with the European Union as a way to unleash billions of dollars in transatlantic business.

In a speech on Saturday in Munich, Vice President Joe Biden said the economic benefits of a comprehensive trade agreement would be "almost boundless" if the two sides could muster the political will to resolve longstanding differences in regulations that have blocked farm and other exports.

Biden said: "This is within our reach."

(Additional reporting by Doug Palmer in Washington; Editing by Jon Hemming and Roger Atwood)

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