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Cars, cosmetics, drugs on U.S.-EU free-trade talks short list

New cars sit in the lot at the Boston Autoport, which handles automobile import, processing and distribution for approximately 50,000 cars per year, in Boston, Massachusetts July 1, 2008. REUTERS/Brian Snyder

WASHINGTON (Reuters) - Cars, cosmetics, information technology and medicines are among the industries earmarked for potential gains in trade talks between the European Union and the United States, negotiators said on Friday.

The world's largest free-trade deal would seek to bridge regional differences in rules governing everything from seatbelts to factory site inspections and stop manufacturers having to double up on compliance.

Negotiators have not yet started on the fine print of the proposed deal, which would encompass nearly half the world's economic output, but have begun a short list of sectors which seem particularly ripe for common ground in terms of regulation.

So far this includes autos, pharmaceuticals, cosmetics, medical devices, textiles, chemicals and information and communications technology, negotiators said.

"These are sectors (where) both sides have indicated an interest in moving forward in terms of specific sectoral commitments," Ignacio Garcia Bercero, the EU's chief negotiator, told reporters as the third round of talks wound up in Washington.

Economists estimate an ambitious trade accord could boost economic output in both the EU and the United States by more than $100 billion a year, with the bulk of gains from cutting costs imposed by bureaucracy and regulation.

But there are many thorny issues to resolve, including agriculture, food standards, consumer protection, data privacy and environmental concerns.

Negotiators, who hope to finalize the Transatlantic Trade and Investment Partnership (TTIP) by the end of 2014, have stressed the deal is not about deregulation, but are keen to ease the burden on exporters, who must often comply with two sets of rules on different sides of the Atlantic.

"In certain areas it may well be that the two sides have the same level of protection, but different regulatory ways of achieving that," said U.S. chief negotiator Dan Mullaney.

"In other areas the focus may be more on whether you can ... arrive at a point where a product can be tested just once and not twice before it comes into the market," he said.

Automakers told the negotiators that their industry - the largest manufacturing and exporting sector in their respective regions - had a big stake in the outcome of the talks.

"To realize the economic promise of TTIP, meaningful U.S.-EU auto regulatory convergence must be a priority," the U.S. Alliance of Automobile Manufacturers, the European Automobile Manufacturers Association and the American Automotive Policy Council said in a presentation this week. They were among more than 350 stakeholders giving input to the talks.

Two-way trade in passenger vehicles and parts is worth billions and experts estimate non-tariff barriers to trade, such as differing regulations on how to conduct safety tests, equate to a tariff of 26 percent.

For its part, the pharmaceutical industry has asked the EU and United States to recognize site inspections of factories and improve processes for sharing the results of clinical trials.

Industry group Pharmaceutical Research and Manufacturers of America (PhRMA) is also pushing for tough intellectual property safeguards to prevent the proliferation of cheap generic drugs.

The talks this week spanned issues from services and market access to intellectual property and government procurement.

One area where the two sides are still far apart is including financial regulation within the purview of the TTIP - something the EU is pushing for but U.S. officials oppose. The EU is also keen to include U.S. gas exports in the agreement to help ease pressure on European energy prices.

Mullaney said the talks could offer opportunities for increased energy trade, "but of course ultimately whether trade actually takes place will depend on customers and pricing, private sector actors."

(Reporting by Krista Hughes, additional reporting by Elvina Nawaguna; editing by G Crosse)