Europe looks to global trade to spur new growth

The European Union looked to spur growth through revamped trade with the Americas and the Far East, with a warning that it has to act now in view of the rise of emerging economies.

A cut of 10 per cent in non-tariff barriers could boost growth by €24.4 billion

But a row with Russia over its threat to block pig imports from ex-Soviet Latvia seemed likely to feature in talks at a ministerial meeting in Brussels.

The European Union wants to stimulate trans-Atlantic trade ahead of a G8 summit in Chicago in May, and the talks among foreign and trade ministers were fundamentally about how to achieve this.

“This is not just political talk,” Pia Olsen Dyhr, Danish Minister for Trade and Investment, said before chairing the meeting.

A former World Trade Organisation specialist, she said that a changing environment which could be dominated by China meant that the EU had to act now, not least because “by 2050, I don’t see any of the big G7 economies as stands keeping their place in the future”.

Estimates by employers’ federation Business Europe, to be presented to G8 business leaders at a so-called “shadow” summit next week, suggest that between 200,000 and 520,000 new jobs could be created in the EU if a new baseline were agreed with the US.

Between 110,000 and 400,000 more jobs could be created in America, if certain trade barriers can be eliminated, they say.

The employers estimate that a cut of 10 per cent in non-tariff barriers could boost growth by €24.4 billion in the EU, and €8.2 billion in the United States.

As the EU slips into a long-expected “double-dip” recession following two years of austerity owing to the eurozone debt crisis, it is looking to a further opening up of trade as a route to new growth.

Work is being done on several Free Trade Agreements intended to boost business sectors which have shown they can benefit from such arrangements but negotiations with countries such as India can take years.

The ministers are close to signing final contracts with Colombia and Peru, although not on this occasion since difficulties over equities trading are being ironed out before a visit by members of the Colombian government to Brussels next week, sources said.

There are also problems over access to banking markets and financial services in negotiations for an agreement with Singapore which will be discussed by a wider meeting of European and Asian counterparts in Cambodia at the end of March.

Denmark, which chairs the process, said that the EU would probably open FTA talks with Japan before the end of June.

Japan, the world’s third-biggest economy after the United States and China, was responsible for 11 per cent of global production and six per cent of trade last year.

According to papers put before the ministers, negotiations here will concentrate on the subject of government procurement and on the sectors of agriculture and food, and autos.

The talks will also aim for so-called “green growth”, or growth which takes account of environmental factors, when covering air, rail and maritime transportation.

A shadow was cast over yesterday’s meeting as EU experts flew to Russia in a last-minute bid to defuse a new trade battle with Moscow. Russia has said it intends to block imports of live pigs from the EU.

A Latvian government official said that “two thirds” of the Baltic state’s export revenue was at risk because of the Russian decision, set to take effect on March 20.

The row emerged after Moscow’s veterinary surveillance agency in January suspended imports of live animals and genetic material from Germany, the Netherlands, Belgium and France over fears about the newly-discovered Schmallenberg virus, which causes birth defects in sheep, goat and cattle.