THE United States and the European Union, after nearly two years of preparation, started talks yesterday aimed at securing a free-trade agreement to squeeze new economic growth out of the world's largest trade and investment relationship.

"We go into these negotiations with the goal of achieving the broadest possible, most comprehensive agreement that we can," US Trade Representative Mike Froman said.

But in the months since President Barack Obama and European leaders announced a decision to pursue a landmark trade deal, revelations about US government surveillance of phone and Internet records have cast a shadow over the start of talks.

Charges that Washington was spying on the 28-nation EU soured the atmosphere further, with France suggesting the opening round be delayed for two weeks before softening its stance so talks could proceed.

The US and the EU are already each other's top trade and investment partners, with two-way trade that totaled over US$646 billion last year.

The proposed Transatlantic Trade and Investment Partnership pact would be the world's biggest free-trade deal, covering about 50 percent of global economic output, 30 percent of global trade and 20 percent of global foreign direct investment.

The Centre for Economic Policy Research in London has estimated an ambitious agreement that eliminates tariffs and reduces regulatory barriers, once fully implemented, could boost US and EU economic growth by over US$100 billion a year.

This week's talks, led by Assistant US Trade Representative Dan Mullaney and his EU counterpart, Ignacio Garcia Bercero, are expected to be mainly organizational, with negotiators split up into 15 different groups to deal with issues ranging from agricultural market access to electronic commerce to investment and competition policy.

One big EU interest is getting exemptions from US "Buy American" requirements on public works projects, while the US wants the EU to reduce barriers to genetically modified crops that have frustrated US farmers for years.

Former EU Trade Commissioner Leon Brittan called for a US-EU free trade agreement in 1995, but it took the rise of China, the death of world trade talks and the havoc of the global financial crisis to make the time finally right.

Even then, the two sides have tiptoed up to the talks. A high-level working group examined the issue for over a year before releasing its recommendation in February for negotiations on a comprehensive trade and investment agreement.

US officials said they wanted to be certain of reaching a deal, and reaching it quickly, before launching talks with the EU.