No. 91/08
November 13, 2008

EU AMBASSADOR OUTLINES PROSPECTS FOR EU-US RELATIONS UNDER NEW ADMINISTRATION

In a speech given at the Bertelsmann Foundation today, Ambassador John Bruton, Head of the Delegation of the European Commission to the United States, gave his personal reflections on prospects for EU-US relations under the Obama administration and a prescription for how common problems should be addressed. 

Speaking of the enormous domestic and external challenges facing President-elect Obama, Ambassador Bruton said "now is the time for the European Union and the United States to join together to make the case to the rest of the world" to turn the series of separate and seemingly insoluble problems into a chain of interlinked opportunities. 

The European Union has changed, noted Ambassador Bruton. "It has enlarged dramatically. It is taking on new roles in areas like foreign policy, defense and counterterrorism and equipping itself to be a steadily more effective partner of the United States in the defense of our common values and interests."

Ambassador Bruton gave his remarks at the Bertelsmann Foundation in conjunction with their release of a briefing book for the incoming administration, which offers a blueprint for foreign policy cooperation between Europe and the United States. 

Regarding the current financial crisis on which G-20 leaders meet this weekend in Washington, Ambassador Bruton warned that given how interdependent we have become, a protectionist pursuit of economic independence by anyone would produce major dislocations. Instead he called for a global solution to a global problem. 

"The world will expect the United States to take a leading role in ensuring that a global re-evaluation of financial assets takes place. President Obama is right to focus on this as his number one issue. Only when true values of financial assets are established can normal banking activity resume. This should be done quickly and in a way that preserves an open trading system. If we do not get the fundamentals of international finance right, it will be very hard to get international politics right. Likewise, if the global financial and economic recovery does not rest on a globally agreed and sustainable environmental model, it will not command investor confidence, and it will not endure. In other words, financial negotiations and climate negotiations cannot be separated."

On trade and investment, Ambassador Bruton said the world will be looking to the United States for a lead in trade and investment. "This will not be an easy task for the new President either. The most recent Pew survey suggests that 53 percent of Americans think trade is good for them (as against 78 percent in 2002). In contrast 82 percent of French people, 90 percent of Indians and 87 percent of Chinese are of that opinion." 

Ambassador Bruton added that a relaunch of the "Doha Round is made more, rather than less, possible by the financial crisis. With so many other calls on public funds, the political viability of trade-distorting farm programs has been reduced. Indeed Doha may provide an excuse to do things that Governments want to do anyway, for other reasons. For example with a Doha deal, the expensive US Farm Bill could be more easily reversed, and scarce resources released for more urgent domestic issues."

Ambassador Bruton warned against the introduction of artificial restrictions on outward investment by US companies through changes in the US tax code. "This would not be a one-way street. The US needs inward investment to sustain its banking system, revive its economy and maintain its currency. The EU believes the United States would also benefit from inward investment in its airline industry. Any distortion introduced into the US tax system to penalize outward investment could be replicated elsewhere, with results that would not be pleasant for anyone."

Regarding trade security, Ambassador Bruton added: "The European Union fully shares US concerns about port security and the risk of WMD coming into ports in containers. But we want a system of protection that will work. The requirement that all containers leaving European ports for the United States, which US law mandates for 2012, is excessively costly for traders and is also discriminatory in two ways. First the US is not proposing to scan all containers leaving the US, and secondly all the costs are to be borne by the European exporter. This is a protectionist measure which will harm transatlantic trade at the time when our flagging economies need more, not less, trade. A targeted, risk-based system on which we are already agreed would be much better from both a trade and a security point of view."

On climate change, Ambassador Bruton said the United States Congress would have difficulty ratifying an agreement that does not place tight limits on CO2 emissions in China or India, even though the average Chinese consumes one-eighth as much energy per head as the average American.

"But this must not be an excuse for delaying climate change legislation here in the United States. Look how quickly bank rescues and stimulus packages can be agreed. Why should legislation on climate change not be passed into law before the Copenhagen conference at the end of 2009? I believe that developing countries will not be willing to agree to restrictions in Copenhagen on their economic growth in the name of climate change, if the United States Congress is still debating what the United States will do."

Among the external challenges the new US President will face when he takes office January 20, Ambassador Bruton highlighted the Middle East Peace Process saying that the continuing building and expansion of Israeli settlements on the West Bank breached the Fourth Geneva Convention. It undermined the geographic basis for a two-state solution, which is the best way to give Israel durable security. "A two-state solution is impossible if most of the territory of one of the would-be states is taken up by citizens of the other. The European Union wants to work with the United States to accord this project the urgency it needs," he said.

Regarding the imminent problem of nuclear enrichment by Iran, he stated:

"This poses a grave threat to the international nuclear non-proliferation system. The European Union has already joined with the United States in putting maximum pressure on Iran to abandon its present course, while recognizing that ways also have to be found of meeting Iran’s legitimate security concerns and integrating it into the global economy."

To read the full text of Ambassador Bruton's speech, please visit:
http://www.eurunion.org/BertelsmannFoundJBSpeech-11-13-08.doc .

Further Contact Information:
Press and Public Diplomacy
Delegation of the European Commission
2300 M Street, NW
Washington, DC 20037
Tel: 202-862-9552