The European Union will offer to lift tariffs on nearly all goods imported from the United States as part of negotiations surrounding the world's largest free trade deal, people familiar with the proposal have told Reuters.

The offer will be made on Monday, a week ahead of face-to-face talks between EU trade chief Karel De Gucht and his US counterpart Michael Froman in Washington, they said.

The European Commission, which handles trade issues for the EU's 28 member states, will let the US know how far it is willing to go to open its markets, and US officials are expected to do the same.

Officials familiar with the EU's proposal said the European Union will offer to remove 96 percent of import tariffs, retaining protection for a few sensitive products, like beef, poultry and pork.

"This is just the first step, but it sends a message that no sector will be completely shielded from liberalization," said one person involved in preparing the EU offer. The official declined to be named because of the talks' sensitive nature. Two other European officials confirmed the offer.

Tariffs between the US and the EU are already low, and both sides see greater economic benefits coming from dropping barriers to business.

But Dr Daniel Hamilton, executive director of the Center for Transatlantic Relations at Johns Hopkins University in Baltimore, Maryland, said that tariff reductions will make a difference given the size of the EU and US markets - 815 million people.

Billions at stake

"Just reducing tariffs would be worth five times the US-South Korea trade deal, and that was a big deal in the United States," he said on a recent visit to Brussels, referring to an agreement that went into effect in March 2012.

The US and the EU are seeking to seal a trade deal encompassing half the world's economic output, in hopes that it can bring economic gains of up to $100 billion a year for both sides.

Monday's exchange of market access offers will occur simultaneously so that neither side has an advantage over the other. The swap marks the first concrete step since negotiations were launched last July, though offers may change considerably during trade talks.

Officials close to the offer exchange said the EU's proposal is split up into four categories.

First, Brussels will offer to drop 96 percent of tariffs with the understanding that Washington will reciprocate.

Two transition categories will be proposed on a further 3 percent of goods, with periods of three and seven years until tariffs are dropped to allow EU industry to adapt.

These could include commercial vehicles and some agricultural products.

In the final category, sensitive products such as beef, pork and poultry would remain protected, but the US will be granted bigger quotas, the size of which will be determined at a later date.

Last year, the EU agreed to let in an extra 45,000 metric tons of beef from Canada, and the US allowance is expected to be at least twice that. France and Ireland, as large beef producers, have expressed concerns about the greater quota.

The European Commission declined to comment.

Any move to lower the cost of trade is seen as beneficial for companies, particularly automakers such as Ford, General Motors and Volkswagen, which have US and European plants.

Reuters

(China Daily 02/08/2014 page8)