The Transatlantic Relationship: A Balance Sheet

Benita Ferrero-Waldner

European Commissioner for External Relations and European Neighborhood Policy

Breakfast Briefing with the American Business Forum on Europe (ABFE) and the US Council for International Business (USCIB)

New York, 20 September 2006

Chairman,
Excellencies,
Ladies and Gentlemen,

First let me thank Sven Oehme of the American Business Forum on Europe and Peter Robinson of the US Council for International Business for this invitation to talk to you, and Sidley Austin for so generously hosting this event.

And thank you to everyone for having bravely battled through the traffic to get here - while UN Ministerial Week is seen by us diplomats as a crucial contribution to the UN’s work of building a better, safer world, I know for New Yorkers it brings anything but a better world!

On a serious note, standing in this great city today, a city I had the pleasure of living in myself for several years, one can scarcely imagine the enormity of the tragedy which hit it five years ago.

It is to New York's great credit that 9/11 did not reverse the City's economic boom; far from it, it continues apace. I read recently that if New York City were an independent state it would have the second highest per capita GDP in the world!

The role New York’s business community has played in making it the city it is today is much admired throughout the world. Perhaps The Economist newspaper put it best in giving its 2004 survey of this city the headline, “a caring socialist republic run by cut-throat capitalists.”!

And that business community is also at the core of the transatlantic business links which form the bedrock of EU-US relations. I know ABFE and USCIB are doing excellent work in consolidating those ties, and I thank you for all you are doing to help bring our business communities closer together.

Ladies and Gentlemen,

This morning I’d like to present you with the “balance sheet” of what we could think of as the EU-US “joint venture.” We have an impressive array of assets, yet the current geo-political market-place presents us with a number of risks.

Let me begin by assessing the “shared equity” of our relations. This has increased in value enormously over the last eighteen months or so. We have moved from a time of tension and frustration to one of cooperation and understanding. There’s a new spirit of constructive engagement between us, and the June Summit between President Bush and the European Union was one of the most fruitful yet.

Of course the political difficulties we had were never mirrored in our economic relations, which continued to go from strength to strength. But undoubtedly, as you will know better than I, a more positive political atmosphere also has benefits for business.

Our renewed commitment to transatlantic cooperation is, I hope, here to stay. Indeed, I believe it has to stay, because the “business environment” in which we are now operating requires it.

Both of us are facing increased competition from new players in the global market, who are threatening our dominant position – in both commercial and ideological terms. As globalization continues to gather pace we face new competitors for energy supplies, raw materials, consumers and investment.

We are also both exposed to more risks than ever before, security threats including terrorism, failed states and the proliferation of weapons of mass destruction; environmental threats like climate change; pandemics; energy shortages and price hikes; and waves of uncontrolled migration as a result of poverty and conflict around the world.

These risks are too great, too multi-dimensional to be dealt with by one country alone. If we are to insure ourselves against a more uncertain and more turbulent future, we need to work together. And we need to ensure we have the effective multilateral institutions necessary to help us deal with these global risks. It is the realization of the commonality of the threats we face and the impossibility of tackling them alone which underlies the renewal of our transatlantic cooperation.

For the same reason our relationship needs more focus than ever before. There are four areas where we need to direct our collective energies: global security, economic competitiveness, energy, and the environment.

1) Global security

There is no shortage of security threats to the United States and Europe. The European Union’s response has been a concerted effort to build up its foreign, security and defense policy, in recognition of the fact that our global economic power is not matched by an equivalent political punch.

That is also an implicit response to the justifiable criticism from many in the United States that we have not, in the past, pulled our weight in dealing with crises and conflict around the world.

As a result we are now a better and more effective partner and are working with the US to defend our collective interests and build a safer world. We now have around 60,000 European peacekeepers serving across the globe. And the EU provides the backbone of the international community’s presence in Kosovo, the Democratic Republic of Congo and Aceh, to mention but a few.

Our cooperation in fighting terrorism is now well-established. We are working together on terrorist financing, radicalization, and recruitment. We are putting in place the legal and regulatory infrastructure to prevent the proliferation of weapons of mass destruction and their means of delivery, particularly to terrorists. And we have jointly pushed for the implementation of arms control, disarmament and non-proliferation treaties.

We must of course be careful to strike the right balance between heightened security and the continuation of open trade and passenger transport. The business community sees more than most the costs we pay for increased security, and we must keep these in proportion. If we allow ourselves to pay too high a cost, whether in requirements for container security, demands on airlines to provide passengers’ details, human rights and personal liberties or, in the case of the EU, discriminating against friendly countries over the visa waiver, then we allow our enemies to win. We must not lose sight of what we are striving to protect – our humanity, our dignity, and our openness to others.

Around the world the EU and US are working together to avert or resolve conflicts and crises. In Afghanistan the EU is providing 80% of the troops in NATO’s International Security Force. And the EU and US shared the costs of the presidential and parliamentary elections.

This summer we worked together to resolve the situation in Lebanon, and are both leading members of the international Quartet dedicated to pushing for peace between Israelis and Palestinians.

We have committed ourselves to working more closely to promote democracy and human rights around the world. We discuss strategies on supporting fledgling democracies in places like Ukraine and Lebanon, assisting the growth of democratic consciousness in Egypt and Georgia, and confronting dictatorships like Zimbabwe and Uzbekistan.

But to be seen as credible and trustworthy by others we need to be scrupulous in our own behaviour. That means maintaining the very highest standards in observance of the rule of law and respect for fundamental human rights. At the Summit we had a frank exchange of views with President Bush on this point in the context of the fight against terrorism. It is an issue of great concern to Europeans, as I know it is to many Americans. It’s not a subject to joke about, but in business terms I’m afraid it would have to count as a serious reputational liability for the United States.

For the future it is vital that we continue and extend the scope of our cooperation on global security. And the European Union will focus on turning itself into an even more effective player on the world stage.

2) Economic competitiveness

The second focus is economic competitiveness. The economic and trade ties between us will remain key to driving the global economy. Whilst other economies around the world may be growing at a startling pace, and gaining an ever larger share of world GDP, in absolute terms the European Union and the United States still account for almost 6O% of the world’s GDP. Where the transatlantic market place leads, the global economy follows.

But if we want to maintain this position we have to remain ahead of the game. And we have to secure our position by ensuring the global market place is run on the basis of a transparent set of common rules.

For that reason the EU continues to support a global multilateral trade deal. The current climate is clearly not right for pushing forward negotiations, but we are willing to go back to the negotiating table as soon as there’s a possibility to do so. The political and economic costs of an indefinite suspension of the Doha Development Agenda are far greater than the costs of a less-than-perfect deal.

The EU and the US must exercise global leadership in pushing for an agreement which will strengthen economic growth, improve living standards and alleviate poverty around the world.

There’s also more we can do to strengthen our bilateral economic relations. At the EU-US Summit we focused on two important initiatives, enforcing intellectual property rights worldwide and tackling barriers to transatlantic investment on both sides.

Within Europe we need to address our particular liabilities and focus on boosting our economic performance and compensating for our ageing population. We are making progress – economic growth has accelerated to its fastest growth for six years, domestic demand is picking up, and unemployment has dropped to its lowest point since 1998.

But there is more to do, and in the coming years the European Commission will focus on fighting economic nationalism, defending and widening the internal market and ensuring a clear and coherent stance on competition issues. We are determined to deliver concrete results for both business and consumers.

3) Energy supplies

The third joint area is energy. Energy will be of central importance to the long-term stability and prosperity of the global economy. We are faced with record-high oil prices and increased dependence on foreign supplies of fossil fuels. According to current trends the EU will import 70% of its energy in 2030, compared to 50% today. The US faces a similar challenge, which is why earlier this year President Bush made his famous call for an end to American oil addiction. To put things in perspective, Europeans consume 12.5 barrels of oil per person per year, exactly half of what each US citizen consumes. The Chinese consume only two barrels of oil each.

So it’s no surprise that energy has risen to the top of the political agenda and was one of the major issues at the EU-US summit. We agreed there should be strategic cooperation between us, addressing energy supply security – including diversifying supply routes, enforcing market rules and protecting infrastructure; alternative sources of energy; and energy efficiency.

The key is to increase predictability by creating the right market conditions and legal frameworks in both producer and transit countries. And to work together on technological developments that will help us diversify our energy sources.

The EU and the US have an important role to play in providing the global leadership required for practical action to take place. Success will bring new economic opportunities; cleaner air and drinking water; and a chance to halt and perhaps reverse environmental degradation.

4) Environment

Which brings me to my final topic, the environment. A surprise block-buster in cinemas this summer was Al Gore’s film An Inconvenient Truth, which so dramatically and convincingly makes the case for manmade global climate change.

This has not traditionally been an area on which the EU and the US have seen eye to eye, but we are now converging in our appreciation of the scale of the global environmental challenges we face. As the film points out, large swathes of the planet - this city included - are scheduled to disappear under the ocean if we do nothing to change our behaviour.

In my home country, Austria, we are increasingly confronted with annual floods and disappearing glaciers.

At the Summit in June we set up a high level dialogue on climate change, clean energy and sustainable development. The idea is to find ways to get cost-effective emission cuts, develop and use new technologies and renewable fuels, and focus on environmental issues like biodiversity.

Business has not always been the strongest champion of environmentalism, but I believe that too is changing as we realize the enormity of the threat we face, and the inevitable impact on commercial interests that will have. Environmental protection is increasingly being seen as a joint responsibility between government, business, and civil society.

Ladies and Gentlemen,

That completes today’s review of the balance sheet of transatlantic relations. Do our liabilities outweigh our assets? No. Should we be issuing a profit warning, or selling stock options? Certainly not.

The business environment is certainly challenging, but we have the necessary tools and most importantly the political will to rise to those challenges. If we continue our close cooperation and focus on the four areas I’ve highlighted: global security, economic competitiveness, energy and the environment, the projections for the future look bright.

I forecast dividend payments ahead!