European Commission ambassador to the US John Bruton has ruled out the creation of an EU-US free trade zone and downplayed expectations of success in the world trade talks.
However, he said there was new momentum in attempts by the EU and US to abolish regulatory barriers between the two biggest global economic powers.
"A transatlantic free trade agreement is not a runner," former taoiseach Mr Bruton said after a briefing at the Institute of European Affairs in Brussels.
German Chancellor Angela Merkel is promoting the idea of a transatlantic free trade zone during Berlin's six-month EU presidency as a way to boost investment flows.
Mr Bruton noted that there was already a substantial amount of free trade between the EU and US. However, this did not extend to the agricultural sector.
He said that both sides had been looking at ways to reduce the myriad of regulatory barriers which increase transatlantic costs. For example, common rules would ensure that exported products did not have to be tested twice in each region. Common standards for consumer protection and accounting were another possibility.
"The difference now is we have political will being expressed by Angela Merkel and President Bush on the issue," said Mr Bruton, who also dampened expectations for a breakthrough in the Doha round of world trade talks.
He said that the politics of a Democratic-controlled Congress in the US would make it very difficult to achieve a successful Doha round. Even if the Congress extended Mr Bush's negotiating mandate to conclude the talks, the Democrats could try to introduce new elements to any draft deal, such as a focus on labour standards. Because these have not been included in the talks since the start of the process, negotiators could be forced back to "first base" in the Doha round.
Mr Bruton made his comments just a day after the EU criticised a US plan to cut farm subsidies by $18 billion over five years as not going far enough.
The success of the Doha round relies on the US and EU being able to meet tough demands from developing states to cut subsidies and tariffs on agricultural products. So far, both sides have failed to offer the cuts developing states say are required for them to be able to offer access to their manufacturing and services sectors.
