Spy Scandal Impacts EU-US Free Trade Talks

Created: 2013-07-04 13:01 EST

Category: World > Europe
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The European Commission said on Tuesday that the negotiations on an EU-US Free Trade Agreement will begin next week as scheduled, regardless of the negative impact brought by the prism scandal.

The European Union and the United States have been preparing for the negotiations to launch a comprehensive free trade agreement.

The pact would not only exempt tariffs but also remove non-tariff barriers in market access, technical standards and intellectual property.

It is estimated that if the agreement is reached, the EU will see its GDP rise by 0.5 percent and its annual income rise by 86-billion euro.

However, the disclosure of the U.S. prism program, a surveillance program involving European countries such as France and Germany, has riled the EU members.

France has already announced that it requires the first round of Free Trade Agreement negotiations to be suspended due to the prism scandal.

U.S. program director, Xenia Dormandy, from the Royal Institute of International Affairs Chatham House in the United Kingdom, says the negative impact of the scandal will be short-term.

[Xenia Dormandy, U.S. Program Director]:
"America would be starting on the back foot, will find much harder to perform that position without Europe really pushing back very, very harder then. So it will make some differences in the margins. But more broadly about the bilateral relationship between the U.S. and Europe, It's unlikely to have long-time consequences."

Aiming at creating the world's largest free trade zone, the agreement involves a trading value as high as one-trillion U.S. dollars, which is a huge economic boost both for the EU and the U.S.

[Xenia Dormandy, U.S. Program Director]:
"The benefit of TIIP to the Europeans is in the part of 0.5 percent rising in GDP. That is a huge number particularly given a slowly Europe is coming out of recession. That's a very, very important benefit."

Although the importance of the free trade agreement is obvious, the European countries are on alert from the U.S. action.

The European Council has announced that it will launch a probe into the scandal.

Analysts say, in case public anger over the U.S. action continues, the EU members involved in the prism program will be taking a much tougher stance in the free trade talks.