The EU and US have decided to launch negotiations for a comprehensive trade and investment agreement. The aim is to go beyond the classic trade agreement by aligning rules and technical standards which are seen as the most important barrier to free trade. These non tariff barriers are believed to add an equivalent tariff cost of approximately 10%, whereas classic tariffs are at around 4%.
The declared goal of the negotiations is to get customs tariffs removed.
Both parties will now start internal procedures leading to a launch of negotiations. The European Commission aims to prepare a draft for consideration by the Council for the second half of March 2013. The US administration plans to send notification to Congress triggering a 90 day layover period.
The prize of a free trade agreement between the EU and US is significant. There is likely to be some real challenges along the way and we will keep you abreast of developments. If successful, the agreement will increase the importance of origin rules and may open up further opportunities with Mexico and Canada (under NAFTA).