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U.S. to hold pivotal trade talks with China and then EU

By Doug Palmer

WASHINGTON (Reuters) - The United States will hold high-level trade talks with China and the European Union this week, testing the Obama administration's ability to tear down barriers that impede U.S. exports and economic growth.

The United States and China will cap a rocky year of trade relations with two days of meetings beginning on Tuesday. The United States on Thursday will then shift from transpacific to transatlantic relations for talks with the EU.

The separate dialogues present distinctly different challenges, with fast-growing China receiving the bigger share of U.S. attention this year.

Heading into the annual U.S.-China Joint Commission on Commerce and Trade (JCCT) meeting, the Obama administration is under pressure from Congress to show progress on trade irritants ranging from beef to computer software.

Chinese Vice Premier Wang Qishan will head a delegation of nearly 100 officials for talks led on the U.S. side by Commerce Secretary Gary Locke and Trade Representative Ron Kirk.

A bipartisan group of U.S. members of the House of Representatives on Friday complained that promises made by China at past JCCT meetings "have failed to lead to commercially meaningful market access for U.S. companies."

They urged Locke and Kirk to press China to commit to specific targets for measuring how much it is cutting piracy of U.S. software and other intellectual property and boosting imports of American goods.

The United States is also expected to press China to loosen export restraints on rare earth minerals used in a variety of clean energy and high-tech industry technologies.

U.S. concerns about China's currency, which the United States contends is significantly undervalued, are not formally on the agenda but will be in the background of the talks.

Another major topic will be China's "indigenous innovation" policies that threaten to force U.S. companies to transfer intellectual property to China to participate in that country's vast government procurement market.

A successful meeting would provide momentum for a summit between President Barack Obama and Chinese President Hu Jintao in mid-January, said John Frisbie, president of U.S.-China Business Council.

"China says it prefers to resolve things through dialogue, not legislation or sanctions. I think this is an opportunity to show that," Frisbie said.

STALE US-EU MARRIAGE

While the U.S.-China trade relationship is often fraught with tension, relations between the United States and the 27 member nations of the EU may suffer from neglect.

"We treat this transatlantic relationship like a stale marriage," said Kathyrn Hauser, executive director of the TransAtlantic Business Dialogue, a private sector group.

"But when push comes to shove, the innovation and the job creation that affects Americans most significantly is because of our relations with the Europeans," she said.

This week's TransAtlantic Economic Council (TEC) meeting chaired by EU Trade Commissioner Karel De Gucht and White House Deputy National Security Adviser Michael Froman will explore how to cut regulatory barriers that inhibit trade.

"If companies have to comply with two regulations, but the protection they give consumers is the same, it's a dead weight loss," an EU official said, speaking on condition of anonymity.

Past efforts to make business regulations more compatible in the United States and European Union have been difficult. But both sides are embarking on new regulations in areas ranging from clean energy to the Internet to financial services that create opportunities for cooperation.

U.S. and EU officials are also expected to discuss prospects for concluding the long-running Doha round of world trade talks in 2011.

The EU is eager to reach a deal, but "there are doubts about whether there is a real willingness to look at this on the American side," the EU official said.

The United States will discuss Doha with the Chinese on Monday in a pre-JCCT meeting.

The Obama administration has pushed China, India and Brazil to offer bigger market openings in agriculture, services and manufacturing in exchange for cuts in farm subsidies and manufacturing tariffs the United States is being asked to make.

With the outlook for concluding the nine-year-old Doha round in doubt, some experts believe the United States and the European Union should negotiate a transatlantic free trade agreement to reduce both tariff and regulatory barriers.

The EU official acknowledged the growing public discussion of that, but said the idea is not part of the formal agenda for this week's TEC meeting.

(Reporting by Doug Palmer; editing by Will Dunham)

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