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Obama expected to call for U.S.-EU trade talks in speech

President Barack Obama speaks from the briefing room of the White House in Washington February 5, 2013. REUTERS/Kevin Lamarque
President Barack Obama speaks from the briefing room of the White House in Washington February 5, 2013. REUTERS/Kevin Lamarque

By Doug Palmer

WASHINGTON (Reuters) - President Barack Obama is expected to call for comprehensive trade and investment talks with the 27 nations of the European Union in his annual State of the Union speech on Tuesday, following more than a year of exploratory discussions.

"There's a buzz in Europe and the expectation is that the president will signal his political support for the beginning of the talks," said Andras Simonyi, managing director of the Center for Transatlantic Relations at Johns Hopkins University's School of Advanced International Studies.

A successful agreement that phases out remaining tariffs, harmonizes product standards and reduces regulatory barriers to trade would "have huge implications, way beyond just economics.

I like to call it the 'new NATO'," Simonyi said, referring to the North Atlantic Treaty Organization, a military alliance that has bound the United States and Europe since 1949.

The United States and the European Union already have the largest trade and investment relationship in the world.

However, faced with rising competition from China and slow economic growth at home, Obama together with European Commission President Jose Manuel Barroso and European Council President Herman Von Rompuy, created a working group in November 2011 to look at ways the transatlantic partners could build on that relationship to create more jobs.

The group released a preliminary report in mid-2012 calling for the negotiation of a comprehensive trade and investment agreement. Its final report, which was due out at the end of December, still has not been released.

Leaders of the 27 EU member states issued a joint statement on Friday endorsing the proposed pact.

That has raised expectations that Obama would call for the launch of talks in his speech and the working group would release its report shortly after that. Neither the White House nor the U.S. Trade Representative's office would comment on those possibilities.

A European official, speaking on condition that he not be identified, said they were "hopeful" that Obama would make a push for the talks.

Gary Hufbauer, a senior fellow a the Institute for International Economics, said he expected U.S. allies to be listening closely for references to the proposed U.S.-EU talks and other trade initiatives, like the ongoing Trans-Pacific Partnership talks between the United States and 10 countries in the Asia-Pacific region.

"If he doesn't mention these things at all, that's a very big downer," Hufbauer said.

Europeans not only want Obama to endorse the talks, but also to spend some time selling Congress on the idea that a U.S.-EU agreement is central to his vision of stimulating economic growth and creating new jobs, Hufbauer said.

U.S. manufacturers would like Obama to make "a very strong statement on trade in the State of the Union, including talking about launching the transatlantic partnership discussions with the European Union," said Linda Dempsey, vice president for international economic affairs at the National Association of Manufacturers.

Annual U.S. export numbers released last week for 2012 were "fairly anemic," Dempsey said. "What we'd like to see is a much more robust expansive trade policy," that includes the White House working with Congress to get legislative trade authority to negotiate a number of new agreements.

(Additional reporting by Arshad Mohammed and Jeff Mason. Editing by Christopher Wilson)

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