US should consider trade pact with EU-manufacturers

The EU-Canadian push for closer trade ties comes as resistance in the U.S. Congress to trade deals has the Obama administration mulling just when to ask lawmakers to vote on a much-smaller free trade pact with Panama.

The White House also is still trying to figure out how to win approval of two other trade deals with Colombia and South Korea that face strong opposition from Democrats and that President Barack Obama himself criticized last year.

Meanwhile, the EU is close to concluding its own trade deal with South Korea. Canada struck a pact with Colombia in 2008.

"This has always been our concern: other countries are going to negotiate deals that will either dilute our market access or will put us at a significant disadvantage" while the U.S. government mulls what to do next, Vargo said at a briefing called to talk about manufacturers' trade priorities for 2009.

A free trade pact between the United States and EU would give the two sides a chance to tackle regulatory and other "non-tariff barriers" that are the main impediment to trade, since tariffs between the two trading partners are relatively low, Vargo said.

NAM president, John Engler, has floated the idea of hammering out a deal to create a transatlantic free trade zone between the EU and the three NAFTA members.

However, it would be a mistake for the Obama administration to join negotiations between the EU and Canada because the groundwork has not been laid in Congress or among key stakeholders, Vargo said. The administration has given little indication of what new trade deals it might pursue.

In a speech last week, U.S. Trade Representative Ron Kirk said any new trade talks would focus on opening up the biggest markets to more U.S. exports. And a spokeswoman for Kirk said Washington hopes Canada and the EU succeed in their talks.

"Trade liberalization and the reduction of trade barriers are positive developments, particularly in challenging economic times, and we wish the EU and Canada well as they begin this negotiation," USTR spokeswoman Nefeterius McPherson said. (Reporting by Doug Palmer; editing by Todd Eastham)