By Daniel Bases
NEW YORK, April 12 European Commission President
Jose Manuel Barroso said on Friday that he seeks to negotiate a
"living agreement" to help deepen economic and trade ties with
the United States.
"If we manage to come to a comprehensive agreement, the
overall gains could add up to a 0.5 percent increase in GDP for
both sides," Barroso told investors and diplomats at an event
co-sponsored by the European American Chamber of Commerce New
York and Bloomberg LLP.
A "living agreement" means trying to work toward the
prevention of regulatory barriers, Barroso said.
The United States had a deficit in goods trade with the
European Union of $115.7 billion in 2012. So far in 2013 the
deficit is running ahead of last year's pace, according to U.S.
government data. In the first two months of this year the
27-nation EU sent $17.4 billion more in goods than it has
received from the United States.
Barroso noted that tariffs between the United States and the
EU are low, with an average trans-Atlantic tariff of 5.2 percent
for the EU and 3.5 percent for the United States.
"Because of massive flows, even the slightest reduction has
a considerable impact," he said.
"We will not be able to eliminate all regulatory divergences
in one round," he said.
The euro area economy is expected to contract by 0.2 percent
in 2013 before rebounding with a 1 percent growth rate in 2014,
according to the latest estimate from the International Monetary
Fund. In contrast, the U.S. economy is expected to grow 2
percent this year and 3 percent in 2014.
"We had to build a lifeboat in the middle of the storm and
while not entirely finished yet, it is sufficiently strong to
face the headwinds," Barroso said of Europe's fiscal and
Barroso said that fiscal stimulus alone will not pull the
European Union's economy, as a whole, out of its decline.
"Trade is the cheapest way to promote growth," he said.
Barroso reiterated that he expects conditions for trade
talks to be in place within the next few weeks. He said in
February that they may start by the end of June.
Barroso told reporters after his speech that Europe could
not be complacent despite less severe crisis rhetoric and
progress in slowing the fiscal bleeding and alleviating the debt
"For instance, these latest developments regarding Cyprus
should be a warning to Europe that we need to go faster and
deeper in the banking union. This is the lesson to draw. We have
not yet completed all the arsenal, the tool kit we need to face
crisis," he said.
Earlier on Friday, euro zone finance ministers backed a
10-billion-euro bailout for Cyprus while the European Commission
said it would try to help the island's economy grow again with
better use of EU structural funds.
The EU is providing 9 billion euros while the IMF is
contributing 1 billion.
To cover its financing needs over three years, Cyprus will
have to come up with 13 billion euros of its own, with the bulk
coming from the closure of its Laiki bank and the restructuring
of the Bank of Cyprus.
Slovenia, the first state to break away from the former
Yugoslavia in the 1990s, is struggling to avoid following Cyprus
into a bailout. The question is whether it has enough cash to
roll over a large tranche of debt maturing in June to stay
The European Commission, the executive arm of the EU, on
Wednesday published the results of an in-depth review of 13 EU
countries identified last year as showing signs of macroeconomic
imbalance in areas such as debt management, banking sector
reform and labor markets. It said Slovenia needs to repair its
banking sector and should consider an eventual privatization of
Barroso would not be drawn on what odds he gives for
Slovenia avoiding a bailout.
"I never make this kind of prediction. What I think is that
Slovenia has to face in a decisive manner all those challenges
that were now identified in our macroeconomic imbalances
(report)," he told Reuters.