EU, US return to trade talks under spy scandal cloud

The EU and United States began a second round of talks Monday on the world's largest free-trade accord despite damaging revelations of US spying on its allies.

Chief negotiators, the EU's Ignacio Garcia Bercero and Dan Mullaney for the United States, stepped before the cameras for an official handshake but made no statement as they began a weeklong round of negotiations on the Transatlantic Trade and Investment Partnership.

This second round was to have been held in October, but due to the US government shutdown had to be postponed just as the spy scandal worsened.

Since then a steady flow of surveillance revelations by US intelligence leaker Edward Snowden has angered European nations, prompting demands in some EU quarters that the TTIP talks be halted altogether.

Personal data protection is a hugely sensitive issue in Europe given its history of brutal dictatorship of the left and right, and there have been longstanding concerns that giant US tech companies see it as more of a commercial commodity than a sacrosanct human right.

An EU official close to the trade talks conceded "there may be issues of trust", but stressed that Europe would not compromise its personal data protection standards even as it must discuss the wider issue of information transfer.

"The transfer of data... is a key component of a modern economy," the official said, but as far as personal data is involved, it can "only be done so in compliance with (EU) legislation on data privacy".

US Secretary of State John Kerry last week urged European leaders not to allow the snooping row to disrupt the TTIP discussions which would create "one of the most powerful economic forces on the planet".

A third round of talks is scheduled for December 16-20 in Washington as both sides aim for a final accord by late 2014 which would cover some 40 percent of global economic output and 50 percent of trade.

The EU estimates a deal would bring annual benefits of 119 billion euros ($160 billion) for the bloc's 28 member states and 500 million people, and only slightly less for the United States.

As important, however, is that it sets the standards for global trade as years of liberalisation talks in the World Trade Organisation look destined to run into the sands.

Brussels and Washington have each engaged in a series of bilateral free trade deals with other countries given the WTO impasse, and last month Canada and the EU reached a deal hailed as helping pave the way to the TTIP.

This week's talks cover services, investment, energy and raw materials but the key objective is how to harmonise regulatory regimes so as to reduce barriers to trade.

The auto sector is a prime example where standards in such areas as safety and performance could be matched up, the EU official said, noting that regulatory differences can add 20 percent to the cost of a car, much more than current tariffs do.

The aim is not a 'one-size fits all' system, said the official who asked not to be named, but rather to get each side to recognise the other's regulations where possible.

That would mean for example that an EU company could comply with EU rules knowing that US authorities would accept them as valid for their home market too.

The chief EU and US negotiators are due to give a press briefing on the talks next Friday. (AFP)