The European Commission has published its
annual report on barriers to trade and investment in the United States.
The report focuses on some key trade barriers and measures that prevent
European Union exporters from tapping into the full potential of the US
market. It notes some continuing concerns and highlights a number of
new barriers introduced in 2008.
and the US are each other's main trading partners and
enjoy the largest bilateral trade relationship in the world. In 2007
their combined economies accounted for nearly 60 percent of global GDP,
approximately 33% of world trade in goods and 44% of world trade in
The total flow of Foreign Direct Investment (FDI) between the
EU and the US was approximately €147 billion. The EU FDI stock held in
the US amounts to about €926b. Total FDI stocks held in each others
countries is approximately €1.89 trillion.
The onset of the financial crisis in 2008 has
resulted in a rapid deterioration of the real economy all over the
world, which has had a major impact on trade volumes. In this changing
environment the US and the EU are the main engines of global growth and
must remain committed to free and nondiscriminatory trade. For this
reason, the unfolding economic recession makes the transatlantic
relationship even more pertinent. The size and importance of the
bilateral trade relationship makes the EU and the US the key players on
the global scene.
In 2007 the EU and the US launched a new effort,
the Transatlantic Economic Council (TEC), to integrate their economies
more fully by identifying key areas where greater convergence between
economies and systems could reap rewards on both sides of the Atlantic.
The TEC has had three meetings so far, addressing issues like
investment, financial markets' issues, mutual recognition of accounting
standards and secure trade, as well as a number of more technical
However, there are trade barriers and differences that hinder
trade and investment. The annual report on US trade barriers from the
European Commission highlights some of the impediments that the EU
encounters when doing business with the US.
The barriers described range from the small and relatively
easily addressed to larger, more complicated problems, including
challenging regulatory questions and some issues that have been or are
being litigated at the World Trade Organization.
In accordance with the report, only a small proportion of EU-US
trade is affected by trade disputes, but raising and addressing these
issues helps to boost confidence in the transatlantic marketplace and
allows exporters to reap the full benefits available. The report
highlights positive outcomes in the long-running dispute over
hormone-treated beef and in the EU-US first-stage Air Transport
Agreement, which creates new opportunities for EU air carriers to
operate in the US.
Concerns about US law
The report reiterates concerns about US legislation governing
ports and freight, in particular with respect to the potential costs of
the scanning requirement and its impact on EU supply chains.
The report states that the GATS Basic Telecommunications
Agreement, in force since February 1998, has a widely positive impact
on communication services. Nonetheless, EU and foreign-owned firms are
still faced with substantial barriers to access the US market. These
include, for example, restrictions to investment, lengthy proceedings,
conditionality of market access and reciprocity-based procedures. There
are also limits to foreign indirect investment, although this is
subject to a public-interest waiver.
Much of the focus of US-EU discussions in the field of
financial regulation over the past three years has been to find
pragmatic and mutually satisfactory solutions to ensure that provisions
of US law do not have unintended consequences for activities of
EU-established entities and vice versa.
In general, recognition of equivalence of home-country
standards for capital and banking markets would significantly reduce
the regulatory burden of firms and financial institutions that are
active on both sides of the Atlantic.
Financial-services negotiations in the framework of the GATS
are also important. In this context, the EU is said to be working to
improve access for European financial institutions to US markets in a
number of key sectors.
Ari Syrquin is the head of the International Department at GSCB Law Firm.