Credit goes to EU Trade Commissioner Cecilia Malmstrom for talking up the possibility of a free trade agreement between the European Union and the United States. But is her optimism misplaced? That the 11 non-US signatories of the Trans-Pacific Partnership have agreed to forge ahead with what initially promised to be the most ambitious regional free trade to date suggests that they consider any attempt to renegotiate the deal with the US to be a waste of time. So perhaps expecting the EU and US to make progress on what could be the world’s most complex FTA to date in the current political environment is unrealistic. Besides, the US perhaps has enough in its trade inbox to cope with for now after formally beginning the legislative process to renegotiate the North American Free Trade Agreement, which is unlikely to be a smooth ride all the way.

Coincidentally, Malmstrom was recently in Mexico – the southern third of the NAFTA trio – to discuss renegotiating the existing EU/Mexico FTA. It will be interesting therefore to see how these two negotiations progress over the coming months, as well as to compare the outcomes, should any outcomes be achieved. If Malmstrom is to be believed, the EU is confident that its new deal can be concluded by the end of this year, which is likely to be well ahead of any renegotiated NAFTA text. Or perhaps that’s another piece of wishful thinking on her part.

For more information on this, and other topical international tax matters, please visit: https://www.cchgroup.com/roles/corporations/international-solutions/research/global-tax-weekly-a-closer-look

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