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Jones Act seen as major issue in Transatlantic Trade talks.

A U.S. law designed to boost the American ship building and transport industry could come under a new threat when negotiators from the United States and European Union get down to discussing details of a proposed Transatlantic Trade and Investment Partnership.

At issue is the Jones Act,--formerly known as U.S. Merchant Marine Act of 1920--that requires that shipments from one U.S. port to another be carried on ships built in the United States, owned by U.S. companies and operated by U.S. sailors. Representatives of the European shipping industry are calling on EU negotiators to press for at least a relaxation of Jones Act requirements as part of the TTIP agreement.

Shipping on U.S.-flag vessels is among the world's least economic ways to transport goods on water and U.S. shipping lines and sailors who want to keep it that way for have been successful for decades in fighting off attempts to reform or jettison protectionist Jones Act requirements.

The EU shipping industry has argued in its lobbying efforts that because the EU and the United States have similar labor, environmental and state aid laws, the objections by U.S. trade unions to have maritime shipping covered by TTIP when it comes to liberalizing services are not justified. It also argues that U.S. security interests would not be threatened by the relaxation of the Jones Act.

"We understand that the debate on the Jones Act is a historical and complex one," said Sea Europe, a trade association representing European ship builders and equipment providers. "Nevertheless our goal is to achieve certain compromises and to open up certain market segments which are important for Europe."

The second round of TTIP talks that was scheduled for the week of Oct. 7 was cancelled due to the partial shutdown of the U.S. government.

If TTIP reaches its intended conclusion, it could boost U.S. exports of commodities such as wheat and soybeans to the EU, which itself is looking to increase sales of its high-quality food products to the United States. The United States already is the EU's biggest export market for farm goods, worth some $20.3 billion in 2012, yet stumbling blocks are expected on some farming issues.

EU Trade Commissioner Karel De Gucht called the cancellation of the second round of negotiations "unfortunate" but stressed the "clear commitment of both the EU and the United States to the TTIP process."

"The U.S. side has promised to provide us with further information as soon as is feasible on when and how further occasions for engagement--including negotiation rounds--can be scheduled," he said.

"Our main ambition--beyond simply reducing tariffs across the board--is to make the EU and the U.S. regulatory systems more compatible and to help shape global rules in trade.... But be it on food safety, financial services such as the regulation of derivatives or standards for electric cars, the aim is to strive for a mutual recognition on the basis of the current standards, not to water down any regulation," De Gucht said.
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Publication:The Food & Fiber Letter
Date:Oct 14, 2013
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