Europe Grumbles as Trade Talks With U.S. Falter

WSJ: European officials say the U.S. is taking a hard line in negotiations, damping hopes for an ambitious deal.

BRUSSELS—The European public is already suspicious of closed-door talks with the U.S. on a far-reaching trade deal between the two regions. Some European officials complain the U.S. government isn't helping: It has forbidden European negotiators to share U.S. documents with Europe's national governments.

The move is one of several that have stoked discontent in Europe over the talks, officials say, fueling concern about a deal that Europe is hoping can provide a jolt to its wobbly economy.

Just months into the discussions, the two sides are running into roadblocks that are slowing negotiations. Ahead of a fourth round of talks scheduled next week in Brussels, officials here are now coming to grips with problems that threaten the ambition of the agreement, which aims to eliminate tariffs and scale back regulations that limit trade between the two, now worth about $1 trillion.

Getting rid of tariffs was supposed to be the easy part of the talks. But negotiators recently exchanged offers to cut tariffs, and the U.S. offer was much less generous than Europe's, according to European Union negotiators. As a result, the two sides won't even discuss tariffs at next week's talks after Europe's disappointment with the U.S. offer, they say. European negotiators are now waiting for the U.S. to come back with a new offer.

"The U.S. will have to match our level of ambition, but there is time for that," said Bruno Maçães, Portugal's secretary of state for European affairs, who has been briefed on the negotiations.

Officials from the EU member states don't know the details of the U.S. tariff offer—which is hundreds of pages long—since they aren't allowed to view the documents.

"Every effort is being made to work with the U.S. so that there is greater internal, institutional access to their documents," an EU official said. "The Americans are beginning to understand that this would have a real impact on the negotiations."

EU member governments and the European Parliament must approve the deal before it can become law. The Office of the U.S. Trade Representative didn't respond to requests to comment.

One compromise being considered by both sides would be to set up a secure room at the European Commission, the EU's executive arm, where member state officials could read the U.S. documents. But that idea has sparked complaints from some national officials, who are used to having easy access to documents when the EU negotiates trade deals.

These hurdles have tempered expectations in Europe, preparing officials here for long and hard-fought negotiations that will likely last years. The next round of talks will be even harder, delving into the complexities of getting rid of regulatory barriers that limit trade.

Regulators are now examining whether U.S. and EU auto-safety rules achieve the same level of safety. That would allow "mutual recognition" between the U.S. and Europe: A car made in Europe would be deemed safe to drive in the U.S., and vice versa, saving the auto industry billions of dollars.

Other disagreements loom that could pare the agreement's ambition. The EU wants the deal to include the financial-services sector, hoping to address U.S. rules that Europe says discriminate against European banks. But the U.S. still opposes including the sector in the talks, a senior EU negotiator said.

It remains unclear how the U.S. will deliver one of Europe's main goals: opening up U.S. government purchasing to competition from European firms. The problem is that many of these "Buy America" restrictions are enshrined in state law. Since the states aren't yet participating in the talks, it's questionable whether U.S. negotiators will be able to persuade the states to abandon those laws.

"We made very clear that it's not possible to conclude the negotiations without very substantial commitments on the state level," said the senior EU negotiator.

Getting the states on board with the deal will require political maneuvering by the Obama administration. The administration is already facing an uphill battle getting Congress to agree to its trade agenda. Democratic leaders have said they aren't willing to give the administration "fast-track" authority for the deal, which would prevent Congress from offering amendments after U.S. and EU negotiators have agreed on a text.

"Clearly it would take some political capital on the Hill to get the kind of support you need for fast track," said Robert Hormats, a former undersecretary at the U.S. State Department who helped launch the talks. "The question is how much political capital is the administration willing to spend and how much does it have if it wanted to use it. Both are challenges."

Write to Matthew Dalton