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Saturday, October 25, 2014         

NEW YORK TIMES


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U.S.-European trade talks inch ahead amid flurry of corporate wish lists

By Danny Hakim and Eric Lipton

New York Times

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Yum Brands, the owner of KFC, wants cheaper chicken wings, rumps and other assorted poultry parts.

Ocean Spray wants an easing of pesticide regulations.

DuPont wants greater protection of trade secrets.

Negotiations have barely begun for a potentially sweeping trade pact between the United States and Europe. But the lobbying is already well under way by corporations on both sides of the Atlantic. And the sometimes parochial nature of their demands is sure to further complicate the trade talks — which no one expects to proceed quickly or smoothly, given the geopolitics involved.

Companies from an array of industries have made their wish lists known, according to a review of their public filings, as well as documents obtained via the Freedom of Information Act in the U.S.

The comments from European companies include one from the Italian carmaker Ferrari urging the U.S. government to drop customs duties on cars and parts, while DHL, the German shipping company, wants airlines to be able to bid on public-sector shipping contracts, regardless of their nationality.

The records provide windows onto how companies hope to shape the talks, and how barriers on both sides of the Atlantic have hindered business — or protected the public, depending on the perspective. But the filings also show how high the hurdles might be to reaching a deal by the negotiators' self-imposed deadline at the end of next year, at least one of any substance. The next negotiating session is set for early October in Brussels.

"Generally everybody is very excited by the promise of these talks," said Robert Mack, a Brussels-based executive who is the head of the public affairs practice at Burson-Marsteller, the public relations and lobbying giant. "In a context of economic recession or slow growth, these talks represent a good way to create some drivers of growth."

Then again, he added, "when you get down into the issues, everything gets a little more complicated."

The deal, if an agreement is reached, would apply to nearly a billion people who live in the combined markets and make it easier for products to be traded between Europe and the U.S., as they would presumably have to pass only one regulatory test instead of two.

The negotiations could also become de facto global standards, given the size of the combined trans-Atlantic market. The U.S. and the European Union are already the world's two largest trading partners, with $2.6 billion in goods and services exchanged daily, according to a European estimate.

"It will be one of the greatest boons to economic development on both sides of the Atlantic," said Stuart E. Eizenstat, a former senior trade official at the Commerce Department, who now works as a partner at the law firm Covington & Burling, which has U.S. and European corporate clients that are closely following the trade negotiations. "What is clear is that it will touch everyone in one way or another - their jobs, their health, their safety."

That said, an overriding fear in Europe is that the talks are a far lower priority for the U.S., especially for an Obama administration that is already enmeshed in Asian trade talks.

"Both American and European companies think this is still a negotiation that is considerably more important for the European political interests," said Jacob Lund Nielsen, a partner and co-founder of cabinet DN, one of the largest lobbying firms in Brussels, the seat of EU power.

When corporate delegations trudge up to Capitol Hill in Washington, Nielsen said, it is "very hard to engage lawmakers on this issue, which makes it more difficult to have controversial or substantial talks."

L. Daniel Mullaney, the chief U.S. negotiator, was more upbeat.

"I see a lot of enthusiasm on our side for this agreement," he said. "President Obama himself made it part of his State of the Union address announcing that he is interested in this, and he was there in Northern Ireland at the end of our consultation period" to make a joint announcement with top European officials.

A few general trends emerge from the hundreds of comments sent to regulators on both sides during the last year. Many companies are seeking greater harmonization in regulations coming out of Washington and Brussels, as well as lower tariffs on both sides of the Atlantic.

Europe's continuing privacy debate is also encompassed in the negotiations, with issues like the security of cloud computing coming to the fore. Those concerns have been made even thornier by Edward J. Snowden's leaks about spying in Europe by the National Security Agency.

The chemicals giant DuPont cited another issue, one that is a concern to many U.S. companies: bringing to Europe the kind of protection of trade secrets that is enshrined in U.S. law.

"At the present time, there is no EU unfair competition legislation providing for protection against trade secret theft, nor is there an EU law to prevent infringing products from entering the market," Barry M. Granger, a DuPont vice president, wrote in a Washington filing. "The poor quality, or even absence, of trade secret protection in some EU member states is problematic for DuPont," he wrote, adding that the company does not sell certain technologies in Europe as a result.

The concerns of individual companies can seem very narrow.

Yum Brands, the Kentucky-based operator of Pizza Hut, KFC and Taco Bell, owns 2,200 restaurants in Europe. The company has presented the U.S. trade representative's office with a list of 20 different regulations of poultry, beef and cheese, as well as restaurant equipment, that Yum says set off problematic European tariffs.

"Eliminating these tariffs would allow Yum to annually import several million dollars of products from U.S. producers for its restaurants in EU," Ann Grappin, Yum's senior manager of global trade policy, wrote in a letter to the U.S. trade representative this year. Raw frozen chicken, including "backs with necks attached, rumps and wing tips," have a tariff of 18.7 euros per 100 kilograms, or $25 per 220 pounds, the filing said. Rumps are defined in European regulations as the tail of the chicken.

One of the most contentious proposals from some corporations is the adoption of a dispute appeals system known as "investor-state resolution" that would allow businesses to file legal challenges if they believed their rights were being violated — as when a new European regulation might be adopted governing food safety or how private consumer data is used by Internet-based companies.

The idea is being pushed by the European Union itself, and by U.S. companies like Chevron, which said in its filing that the company's "ability to do business globally" depended on "strong mechanisms for resolving disputes."

Others are skeptical.

"This leverage, if granted, will be used by companies to prevent legislation they don't want," said Joe McNamee, executive director of European Digital Rights. "Why on earth would they not use this? The EU has nothing to gain out of such agreement."

Some companies see the talks as an opportunity to pick and choose the most favorable regulations among the varying rules on either side of the Atlantic - whether in food, pharmaceuticals or farming. They also provide corporations a greater role in the writing of new trans-Atlantic regulations, a notion that makes consumer groups queasy.

Lori Wallach, a director of Public Citizen, an advocacy group that is closely monitoring the talks, said that she was not surprised the companies are turning to the trade negotiations to move their agendas, but that there should be no doubt about what they are trying to deliver.

"What they consider trade irritants, we consider the most important consumer, health, environmental, privacy, financial stability safeguards on either side of the Atlantic," she said. "This is an effort to achieve through trade what that they could not achieve through democratic processes domestically."

The fruit-growing cooperative Ocean Spray, expressed concern in its filing about the difficulty of complying with European regulations on pesticide residue. In Europe, the company explains, maximum pesticide residue levels for cranberries "are set at levels significantly more restrictive than U.S. levels."

Companies including Yum also echoed U.S. frustrations over European rules barring the use of chemicals to reduce microbes on poultry, an issue that has already led to a trans-Atlantic trade dispute.

What is clear is that a broad U.S.-European agreement, if it comes to pass, could have ramifications worldwide.

"There is a global competition for regulatory prevalence," said Thomas Tindemans, the chief executive of Hill & Knowlton Strategies in Brussels. "The Europeans and the Americans have been racing against each other to adopt legislation or regulations for their market, which as a result forces or inspires third countries — Japan, China, Russia, Brazil and others" to adapt to those rules.

"If there were to be an EU-U.S. agreement," he added, "it would, de facto, set global standards."






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