Financial Times (11.10.07).

Ambitious bid to end disputes.

By Eoin Callan in Washington

Diplomats from the US and European Union are laying the groundwork for an unprecedented round of bilateral bargaining in which all the main transatlantic trade disputes would be put on the table and negotiated in one go.

The talks between the world's two largest trading blocs would link the resolution of billions of dollars-worth of simmering trade disputes and aim to "clear the decks" with one allencompassing deal, officials said.

The negotiations would tie the fate of a range of US and European industries, including computer manufacturers and producers of genetically modified foods, to a back-and-forth round of bartering that would produce "winners and losers on both sides", a senior European official said.

The plans appear to have originated in Brussels and coalesced around the Transatlantic Economic Council, which met for the first time yesterday in Washington and brought together senior policymakers from the Bush administration and European Commission.

Officials concede the drive for a single round of bilateral trade negotiations is ambitious, fraught with drawbacks and could quickly falter.

They are also concerned that some industry groups and influential companies will try to scupper the effort because they fear their bargaining position will be weakened.

But a European trade official said the transatlantic economic relationship was sufficiently mature that there was potential to "build consensus around bilateral issues".

Officials said the goal was to capitalise on the spirit of co-operation fostered at yesterday's council meeting, which was first proposed in April by Angela Merkel, the German chancellor, at an EU-US summit.

A European trade official said there were a handful of trade disputes that acted as a "persistent irritant in what is otherwise a fairly smooth transatlantic economic relationship".

Peter Mandelson, the European trade commissioner, said: "Personal relations are good and there is a desire to deal with these irritants through negotiation rather than litigation." He said there was merit in an approach that linked separate trade disputes and "put them on a ledger, marking down each one, three wins for you, three wins for us".

He said it was easier to achieve a negotiated solution when "you can get a win on both sides" rather than trying to broker a compromise when trade law clearly favoured one side.

Officials said they saw a chance in the new year to press Boeing and Airbus to sit down to negotiate a dispute over airline subsidies that is being heard by the World Trade Organisation.

The areas of trade friction include politically controversial differences over hormone-treated meat, genetically modified goods and internet gambling.