riassunto in italiano

24 November 2003

U.S. Official Urges Stronger Economic Partnership with EU, November 24, 2003

(Dialogue, mutual recognition and WTO engagement a key to success, Aldonas says)

The United States and the European Union (EU) must resolve current trade conflicts and move forward to create a "more ambitious, more comprehensive, and ultimately more prosperous" transatlantic economic partnership, a U.S. trade official says.

Speaking November 24 in Brussels, Under Secretary of Commerce Grant Aldonas said that a new dynamic in trade relations is the "surest" way of guaranteeing the prosperity on both sides of the Atlantic.

He said that the potential gains for both partners would "completely overshadow the impact of entire free trade agreements recently negotiated by the EU and U.S. with smaller allies."

Stronger economic ties also would minimize potential trade conflicts, which Aldonas said cost jobs, increase prices and raise production costs.

So "if we agree that we must build on our past successes ... then we must cooperate to eliminate the remaining barriers to transatlantic trade and investment," he said.

While tackling non-tariff barriers would require political commitment to negotiate "arcane and opaque" regulations, Aldonas said, eliminating remaining subsidies and tariffs would yield "real" outcomes and a new trade and investment dynamic.

To reach this "ambitious" but "attainable" goal, Aldonas said, the United States and EU can start by moving "systematically" according to three principles: maximized dialogue, mutual recognition and multilateral engagement.

Although intensifying both business and public sector dialogue cannot "miraculously" resolve existing problems or spur trade, he said, it can underpin cooperation, consensus and concrete action.

"At the very minimum, intensifying public sector dialogue will help identify disputes before they become crises," Aldonas said.

As to mutual recognition, he said that with an increasing percentage of exports covered by standards and regulations, "any trade enhancement strategy must place regulations and standards at its core."

Aldonas said that both sides must examine areas where different regulatory regimes hamper exporters and where regulators cannot find common ground.

He noted that so far the United States and EU have signed three mutual recognition agreements (MRAs), which reduced the time it takes new products to reach the market and lowered costs to consumers, while continuing to ensure the safety of users.

Under an MRA each side agrees to allow the other to perform conformity assessment to their standards, and issue the required documentation.

But in deepening their economic relationship, both partners must remain outward-looking and committed to a multilateral World Trade Organization [WTO] approach to trade, Aldonas said.

"While there has been much talk about the U.S. and EU shifting their focus to bilateral trade agreements after [the] Cancun [WTO ministerial conference], the fact remains that no number of bilateral trade agreements will bring the same benefit as a truly global, WTO approach," he said.

Following are Aldonas' remarks as prepared for delivery:
(begin text)

United States Mission to the European Union

Remarks by Commerce Under Secretary for International Trade Grant Aldonas before the German Marshall Fund's Transatlantic Center,
Brussels, November 24, 2003

I. Introduction

Mr. Drozdiak, honored guests, friends and colleagues.
Thank you for inviting me here this morning to address such a distinguished audience at the German Marshall Fund. While a breakfast address may be unconventional -- and I thank all of you for joining me here so early -- I find this to be a very inspiring way to start my day. I am inspired not only by the level of dialogue and analysis over breakfast this morning, but by the German Marshall Fund itself. It is in many ways what all transatlantic fora aspire to be. I know that my colleagues here and in Washington agree with me when I say that your continued work is critical, your insights are welcome, and your contribution to our transatlantic dialogue is as important as ever.

II. The Success of the Transatlantic Relationship

Your continued contribution is important for the challenges we face as well as for the successes we continue to achieve. Reading about the international economy in today's newspapers, challenges may seem to outnumber successes. The failure of the Cancun Ministerial, the Foreign Sales Corporation and steel safeguards disputes, and the GMO [genetically modified organisms] moratorium are just a few of the issues that continue to cause headaches in my office. I am sure that many of you keep a bottle of aspirin in your desk drawer as well.

Yet it is important to maintain a sense of perspective. If we step back, we see that our achievements tower over our shortcomings. And we must sometimes remind ourselves of these successes to ignite the optimism to undertake new, bolder initiatives.

The transatlantic economic relationship is indeed a tremendous, historic success. Our trade relationship thrives in a liberalized environment, propelled by average weighted tariffs of less than two percent. Transatlantic trade accounts for 20 percent of global GDP [gross domestic product], with Europeans and Americans consuming everything from Bayer aspirin to BMWs, Dell Computers and digital cameras. The EU [European Union] sends nearly a quarter of its total exports to the U.S., while it absorbs one third of total U.S. exports.(1) In financial terms, this economic dynamic is no less impressive. Of the $5.2 trillion in foreign assets owned by U.S. companies, more than half are in Europe. U.S. investments in Germany alone are greater than total U.S. assets in all of South America. Similarly, nearly three-quarters of all foreign direct investment to the U.S. comes from EU investors. To illustrate: There is more European investment in the state of Texas than there is total U.S. investment in all of Japan. The impact on the labor market is clear. More than 13 million Europeans and Americans receive their paychecks from local affiliates of EU and U.S. parent companies.(2) Looking back at what we have achieved should help us move forward. We should be inspired by our achievements and we should challenge ourselves to continue to strengthen our economic relationship. When German Chancellor Willy Brandt announced the creation of the German Marshall Fund twenty-five years after the Marshall Plan, he urged that "the memory of the past become our mission of the future," and that Americans and Europeans "accept [this] new challenge and perceive [this] new opportunity." In the same spirit, I believe that we should let the memory of our past economic successes become the mission of our economic future. I believe that now is the time to move forward to create a more ambitious, more comprehensive, and ultimately more prosperous transatlantic economic dynamic.

III. Why Move Forward?

We should act to create a new transatlantic economic dynamic not just for political ends, but because it is the surest way of guaranteeing the prosperity of our citizens. More importantly, it is what our citizens expect of us.

Many of us can confirm anecdotally what the Pew Foundation found in its recent Global Attitudes survey.(3) Foremost in the minds of large majorities of Americans and Europeans is the diminishing access to jobs (80 percent in Germany, 77 percent in France and 53 percent in Italy). According to the survey, more than one third of those polled were preoccupied with worsening working conditions and an increasing gap between rich and poor. Americans and Europeans are worried about the same economic facts and they look to the same places for solutions, namely to free markets, international trade and other dynamic elements of globalization. Seven in ten Americans, Germans and Italians as well as strong majorities in the rest of Europe agree that people are better off in free markets. In all of the countries surveyed, the majority of people see growing international trade and business ties as good for their countries and their families. This is especially true in Western Europe. Over 80 percent in France, Germany and Great Britain agree that free markets and international trade are good for the economy. The assumptions and expectations of the people surveyed in the Pew study are dead on the mark. Even within our very successful transatlantic economic partnership, further liberalizing our markets and trade will benefit workers and their families. British Chancellor Gordon Brown and Secretary John Snow have recently proposed an independent study to quantify the benefits of a more liberalized EU-U.S. economic partnership. This study will surely be valuable. Existing studies estimate that in a world of free trade, U.S. exports to the EU would increase by about $48 billion annually. EU exports to American consumers would expand by about $44 billion. Transatlantic flows of foreign direct investment --- already at very high levels -- would grow by an additional 19 percent.(4) These gains are not only impressive; they completely overshadow the impact of entire free trade agreements recently negotiated by the EU and U.S. with smaller allies.

Greater liberalization also increases competitiveness. European and American companies small and large thrive in a competitive environment that sparks innovation, triggers more efficient production methods, and unleashes workers' productivity. Greater competition from without also serves to strengthen markets within, invigorating the single European market as well as the U.S. domestic economy.

While further liberalizing our transatlantic markets can create jobs, lower prices and increase wealth, we must also strengthen our economic ties to minimize potential conflict. Conflict over trade -- whether caused by contingent protection, unfair subsidies or non-tariff barriers -- costs jobs, increases prices, and raises production costs. The dispute over genetically modified organisms has cost U.S. producers $4 billion, the bananas dispute $191 million, and the BSE [bovine spongiform encephalopathy or mad cow disease] -related SRM [specified risk material] ban $4 billion, to name just a few examples.(5)

These figures not just changing numbers on an economist's spreadsheet. Increased exports and FDI [foreign direct investment] flows mean more and higher jobs, better wages and greater prosperity for Americans and Europeans alike.

IV. Envisioning a New Transatlantic Dynamic

If we agree that we must build on our past successes, that our citizens rightly expect greater prosperity through further liberalization, then we must cooperate to eliminate the remaining barriers to transatlantic trade and investment. These barriers include subsidies, tariffs and non-tariff barriers. Eliminating the latter will require negotiating arcane and opaque regulations and all require political commitment. But eliminating remaining barriers would yield real outcomes and a new trade and investment dynamic --- a marketplace in which an American manufacturer can sell his goods as easily in Munich as in Minneapolis. An environment where a European producer is no more daunted by entering the market in Raleigh than in Rome or Riga. The choice of where to do business would be determined by the kind of market and consumer the producer is looking for, and not by regulatory burdens or legal fees. When goods come to market, it will be an open and fair market for the consumer. This means that for all of our consumers in every corner of our markets, there would be a choice of what to buy, based on price, quality and preference, regardless of where those goods are made.

V. Three M's: Maximized Dialogue, Mutual Recognition, Multilateral Engagement

This vision is ambitious, but I am confident that it is attainable. We can begin by cooperating and moving systematically according to three principles. I call these principles the "three M's." First, we must Maximize dialogue. I see the relationship between Americans and Europeans as a friendship. And like any two friends, we can discuss many things, but most importantly we must speak with one another frequently, openly, and honestly.

Maximizing dialogue cannot in and of itself miraculously resolve existing problems or spur on trade. But cooperation, consensus and concrete action cannot simply materialize out of thin air. And many fora for dialogue already exist. Since its inception in 1995, the Transatlantic Business Dialogue (TABD) has been key to fostering the exchange of ideas. It is a model for what can be accomplished through dialogue. By focusing on lowering transaction costs for businesses and minimizing friction between U.S. and EU governments, TABD has worked to maintain and increase competitiveness on both sides of the Atlantic. For example, U.S. and EU CEOs [chief executive officers] participating in the forum complained that unnecessary divergence of U.S. and EU regulatory regimes was hampering transatlantic economic growth. The forum then committed itself to finding solutions in areas ranging from dietary supplements, to environmental emissions, to accounting standards. The Transatlantic Business Dialogue will soon kick off a new two-year term under a new chairmanship. I eagerly anticipate their contribution to our dialogue and I look forward to an ambitious agenda.

In the public sector, we can work within existing institutions, whether bilateral and multilateral, formal or informal. But we must more quickly steer our relationship towards more productive and mutually beneficial ends. At the very minimum, intensifying public sector dialogue will help identify disputes before they become crises. On a more ambitious level, more constructive, structured dialogue will lead to cooperation toward greater economic liberalization. Two examples of such dialogue are already underway in financial markets and airlines. Both dialogues are at early stages, but both hold enormous economic potential. Ideally, maximizing EU-U.S. dialogue could facilitate greater coordination of our policies at or near inception. This kind of policy coordination would be welcome and necessary in competition and monetary policy. Ultimately, Europeans and Americans share a common culture. This common culture underpins our public and private institutions and colors our decision-making. It is a common thread running through our societies that leads us to often pursue the same goals. Our dialogue ensures that we attain these goals in a mutually beneficial way.

The second principle by which we must enhance of economic partnership is Mutual Recognition. The idea of mutual recognition as a means to facilitate trade and avoid duplicative regulations began in the European single market. In the single market, mutual recognition mandates that a product must be allowed in the import market if that product was lawfully manufactured or marketed in the exporting Member State. Companies can bring their goods to market sooner, at a lower cost, and with the confidence that they will not face discrimination at the hands of a foreign regulator.

The idea of mutual recognition has begun to be applied in EU-U.S. relations as well. With an increasing percentage of exports covered by standards and regulations at either a state, national or international level, regulators are no longer peripheral to international trade. Accordingly, any trade enhancement strategy must place regulations and standards at its core. In our trade relationship, we must examine areas where divergent regulatory regimes hamper exporters and where regulators can find common ground. This can be in billion dollar services markets or on the very technical level of medical devices, pressure equipment or information technology. Agreements between the U.S. and the EU are already in place in three areas -- telecommunications equipment, electromagnetic compatibility and recreational craft -- and we must push forward with additional cooperation.

To bring about such mutual recognition of regulations, political pressure must come from all sources that wish to help companies prosper and at the same time ensure consumer health and safety. The regulators themselves must also realize that competitive companies will gravitate to those markets where regulators recognize that we live in a global marketplace. Regulations developed in isolation ultimately hurt the competitiveness of domestic industry and hurt consumers through higher prices.

Our third principle to guide us toward a new transatlantic dynamic is Multilateral engagement. The United States and the European Union have been and continue to be committed to a multilateral approach to trade within the WTO [World Trade Organization]. While there has been much talk about the U.S. and EU shifting their focus to bilateral trade agreements after Cancun, the fact remains that no number of bilateral agreements will bring the same benefit as a truly global, WTO approach. And within the WTO, members look to the EU and U.S. to work together to set an example and exercise sensitive leadership.

VI. Conclusion

There are many reasons why a new transatlantic economic dynamic could fail. There are many more reasons why it should succeed. A new transatlantic economic dynamic based on maximized dialogue, mutual recognition, and multilateral engagement can and must be successful, for the prosperity of our citizens, but also for the health of the overall transatlantic relationship. The Marshall Plan and the German Marshall Fund demonstrate the important role commercial ties and economic policy coordination play as the bedrock upon which other policies are built. An enhanced transatlantic economic relationship -- a new transatlantic dynamic -- will serve as an anchor of stability for EU-U.S. ties as a whole.

Footnotes:

(1) Vandenbussche, Hylke, Ian Wooton and Anthony J. Venables. "Enhancing Economic Cooperation between EU and the Americas" London: Center for Economic Policy Research, 2003.
(2) Quinlan, Joseph. "Drifting Apart or Growing Together? The Primacy of the Transatlantic Economy" Washington, D.C.: Center for Transatlantic Relations, 2003.
(3) The Pew Global Attitudes Project, 44-Nation Major Survey 2002. 2003.
(4) Hufbauer, Gary Clyde and Frederic Neumann, "US-EU Trade and Investment: An American Perspective" Paper presented at a conference titled "Transatlantic Perspectives on the US and European Economies: Convergence, Conflict, and Cooperation" Kennedy School of Government April, 2002." www.iie.com/publications/papers/hufbauer0502.htm 5Hufbauer., table 3.

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