Ambassador Guenter Burghardt
Head of the European Commission Delegation to
the United States

United States Council for International Business
New York, New York

4 June 2003

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Introduction:

I’d like to begin by thanking you for inviting me to speak to you today, and I’d especially like to thank your president, Ambassador Thomas Niles, who has provided astute leadership throughout his illustrious diplomatic career and continues to do so here at the United States Council for International Business. I am reminded that the EU traces its heritage back to a partnership of business and diplomacy. Our founding fathers Jean Monnet, whose family owned a Cognac business, and Robert Schuman, who served as France’s foreign minister, joined forces to push forward the idea of European unity. Since then, the EU has continued to benefit from the inspiration and hard work between these sectors, and I am heartened to see Ambassador Niles continuing that tradition on this side of the Atlantic.

I. State of the Transatlantic Relationship 

It would be a privilege for me to speak to such a distinguished gathering of business leaders anytime, but I am especially glad to have this opportunity during such a critical time for transatlantic relations. Never before have we been so close economically yet appeared more divided politically. And after more than half a century, during which Americans and Europeans transformed shattered cities into thriving metropolises and stood shoulder-to-shoulder against oppression, we now find our relationship at a crossroads.

Before I discuss our situation today, I think it’s important for us to remember some of the major signposts that have guided our relationship so far:

Tomorrow marks the fifty-sixth anniversary of George Marshall’s famous address at Harvard in which he outlined his plan to save Europe from its spiraling economic deprivation. In one of his crucial points, he told Americans that neither countries nor doctrines were the enemies faced by the postwar world, but rather hunger, poverty, desperation and chaos. Later, when he accepted the Nobel Peace Prize, he reminded his audience in Stockholm that “democratic principles do not flourish on empty stomachs.” Both remarks refer to a theme Marshall tirelessly revisited throughout his time as Secretary of State—that the US must correct “the tragic misunderstanding that a security policy is a war policy.”

In 1962, President John F. Kennedy, speaking in Philadelphia on July 4th, argued that the Declaration of Independence “stressed not independence but interdependence—not the individual liberty of one but the indivisible liberty of all.”

He then went on to outline the United States’ hopes for European unification. “We do not regard a united Europe as a rival but as a partner,” he said. “We believe that a united Europe will be capable of playing a greater role in the common defense, responding more generously to the needs of poorer nations, of joining with the United States and others in lowering trade barriers, resolving problems of commerce, commodities, and currency, and developing coordinated policies in all economic, political, and diplomatic areas. We see in such a Europe a partner with whom we can deal on a basis of full equality in all the great and burdensome tasks of building and defending the community of free nations.”

And in 1989, President George Bush predicted to an audience in Mainz Germany that, in the face of the Transatlantic Alliance, the Cold War’s days were numbered. “The world has waited long enough,” he declared. “The time is right. Let Europebe whole and free.”

We all now know how history unfolded in each of these cases: the Marshall Plan revived the European economy; European unification is a work in progress, gradually creating the partner Kennedy hoped it would; and the Cold War ended in the most far-reaching peaceful transfer of power in recorded history.

The common theme here is the seeds of freedom, democracy and enterprise that were sown on the battlefields of Europe and cultivated and fostered by Europeans with the help of America have grown into orchards of bountiful prosperity. And we have both benefited greatly from the fruits of this endeavor.

The economic numbers speak for themselves:

Today, the combined EU and US GDP is around 60% of the world total, although we constitute some 10% of the world’s population;Together we command almost 40% of world trade, and our bilateral economic relationship is worth just short of $3 billion dollars per day in trade of goods, services and foreign direct investment.

But as impressive as these numbers are, they reveal only part of the picture. We have become much more than trading partners—we’ve become vital stakeholders in each other’s societies. Many here today know this intimately—for you this isn’t just some concept trumpeted in Brussels or Washington. Your companies have spent real dollars building factories, setting up foreign affiliates, funding research, creating jobs in the European market and European companies have come here and done likewise.

A recent study commissioned by the Johns Hopkins School for Advanced International Studies reveals how deeply integrated the EU and US economies are, highlighting the investment stocks that have accumulated on both sides of the Atlantic, the sales and earnings they are generating and the enormous number of direct and indirect jobs they are supporting. Its conclusion is that the EU and the US economies already operate to a very large extent as one single transatlantic economy: “globalization is happening faster and reaching deeper between Europe and North American than between any other two continents.”  

Allow me to list just a few of their statistics in support of this:

● In 2000, Europe’s investment stake in the US grew to a stunning $835 billion, which represented 75% of all European investment abroad and roughly 60% of all foreign direct investment in the United States.

● Meanwhile, the US investment stake in Europe grew to $640 billion or roughly half of all US investment abroad, and in 2001, this investment yielded half of all foreign earnings for US companies in 2001.

That’s the big picture. A few examples that provide a more localized frame of comparison include:

● The US ploughed twice as much capital into the Netherlands during the 1990s than they placed in Mexico.

● US assets in Germany alone were greater than total US assets in all of South America.

● And US affiliates sales in Germany were ten times those in China.

● Finally, there is more European investment in Texas alone than all US investment in Japan.

Of course, Europeans and Americans don’t invest in each other to feel good about the transatlantic relationship—we do it because it’s smart business and is profitable for both of us. But we are able to do it because of the committed efforts of leaders on both sides to prepare the way for such a partnership to grow and flourish.

II. Risk of Spillover: If the trees were to die, the fruits will vanish

Currently, we find ourselves at a geopolitical crossroads in our relationship. The conflict in Iraq has most clearly exposed a rift, which may be explained—but not excused by—miscalculations made on both sides.

Although this rift emerged from our differences on Iraq, its origins date back to the deep political changes that have taken place since the beginning of the 1990s:  the fall of the Soviet empire in the face of the steadfast US military bulwark and the beacon of freedom and prosperity beckoning from Europecaused two major geopolitical shifts. One, the US emerged as the unopposed, dominant world military power. And, two, the peoples of Eastern Europe set their sights on joining the community of free and democratic European nations. But there was also a third effect: the Soviet demise removed our common enemy, which, for decades, had served as the glue that kept the Alliance together.

Furthermore, during this period the process of European integration gained momentum, and the EU has gradually become an economic entity capable of competing successfully with the US in most areas.

These developments gradually have led to a readjustment in the two partners’ perceptions as to what should be their respective roles in the world.

In Europe, a growing desire has developed for the EU to assert itself and strengthen its role on the international scene in a way commensurate with its size and economic power, while admittedly we have not yet given ourselves the adequate tools to fully exercise such a role. Our ongoing Constitutional Convention, due to complete its work by the end of the month, seeks to address this challenge as we become a Union of twenty-five members with a population of more than 450 million people.

On the US side, President Bush’s Administration has put a greater—almost dogmatic—emphasis on the notion of national interests and sovereignty, which has led in some areas to significant reorientation of US policies, some of which have shocked European conceptions. Then came “September 11,” and the fight against terrorism has become understandably the central element in US foreign policy. While the Europeans shared the objectives, a number of them disagreed on the means. You know what followed.

One of the Administration’s post 9-11 themes has been President Bush’s famous blanket statement, “you’re either with us or you’re against us.” Some Europeans were caught off guard by the implication of this—believing that, since the beginning of the transatlantic alliance, we have always been with the United States. And instead, the sentiment has been translated in some quarters of Europe as, “get in line and keep quiet.” This is hardly the language of partnership. After encouraging its growth and development, the US cannot expect a powerful, independent EU to share its every opinion. Furthermore, America cannot benefit in the long term from a fractured and inert EU.

It is important to remember that international relations must be able to withstand intense pressure from many sources, and the speed with which those pressures mount has multiplied exponentially in the age of satellite television and the Internet. Occasionally, issues can get blasted into space and must be guided safely back to earth—in such cases the network of agreements and the lines of communications that bind us together act as a shield that deflects the tremendous heat generated by reentry and keeps the relationship from disintegrating. Not to put too fine a point on the metaphor, but it might not take too many chinks in the shield before we could find a disaster on our hands. 

We, therefore, must be aware that this rift in our relations may not be simply the product of a temporary crisis. It has deeper roots and could linger, with the risk that it could spill into other areas and create chinks in our shield against division. We must resist the temptation of the sound bite in favor of the sobriety of sound reasoning. “Freedom fries” and other such slogans sound good on the nightly news, but they promote damaging falsehoods and a divisive climate. The Transatlantic Relationship is too important for both sides of the Atlantic, but also for the rest of the world, to leave it in a state of disrepair and vulnerability. Therefore, we should strive to promote a tone of humility and respect rather than focusing on showmanship and lecturing each other.

III. How to revive and protect the relationship

So how do we keep the relationship on track while attempting to address the difficult and complex issues we face? Perhaps the key is to remember how much more powerful we are when we work in concert than when we work unilaterally. In fact, the level of our ultimate strength lies in direct proportion to the level of our cooperation.

The EU’s External Affairs Commissioner Chris Patten recently emphasized this point in a speech before the European Parliament. He said:

“Most of the things we want to achieve as Europeans, we are more likely to be able to achieve if we are able to work with the United States. It is equally the case that most of the things America wants are more likely to be achieved if America can work with the European Union, and finally it is inarguably the case that the world is better served in terms of prosperity, in terms of security, in terms of stability when America and the European Union work together. So the future of transatlantic relations is a matter of real concern to all of us.”

Indeed, transatlantic relations especially concern you, the business community. Your interests are best served when the US and EU work together at the bilateral and global levels to provide a reliable and calculable business environment.

On the bilateral front, we can already see several successful examples of our cooperative efforts. Together we have gotten rid of many of the classic trade barriers—tariffs, quotas and prohibitions—and our success is reflected in the statistics I mentioned earlier. But now we need to expand our cooperation to regulatory frameworks, where we currently face some difficult issues.

One example that you may be familiar with is the Sarbanes-Oxley legislation, which establishes new rules on corporate governance. On a number of points, these rules contradict EU member states’ legislation or duplicate it. Other examples are our differences on genetically modified organisms (GMOs) or the new set of rules on chemicals, which the EU is in the process of elaborating. Further liberalization implies that we eliminate, or reduce, these differences.

On those relatively rare but highly publicized occasions where we do have high-profile disagreements, such as GMOs or Foreign Sales Corporations or steel, we must not let them corrupt the healthy state of the overall relationship. We must contain their effects and work to solve them in a timely manner.

Cooperation on the regulatory front should be welcomed by businesses engaged in transatlantic trade, and this is where the business community can, and does, play a crucial role. Since many of you deal with these issues on a daily basis, you are often far ahead of policymakers in understanding what must be done. Through such organizations as the Transatlantic Business Dialogue (TABD), which will be “relaunched” in the context of the EU-US Summit later this month in Washington, and the Global Business Dialogue on Electronic Commerce (GBDE), the business communityhelps guide the liberalization process, suggesting priorities and possible ways forward in addressing complex regulatory issues.

Financial services also represent an increasingly important aspect of our bilateral relationship. A maturing EU regulatory framework in financial services highlights the crucial importance of a serious EU-US regulatory dialogue, particularly as we all recognize the need to build confidence in the financial markets and set high standards of corporate governance. The goal we are trying to achieve is an integrated transatlantic capital market.

The successful launch of the euro has provided a major boost in this area, with twelve of our member states and 307 million of our citizens all sharing the same currency. The dollar remains the main international currency, but the euro has become the world’s second-leading currency. Those of you who opened European bank accounts in the last year know that the euro has reached its highest level against the dollar since its January 1999 launch date. Its stability, which reflects the generally sound economic fundamentals of the euro area, as well as the on-going transformation of our national financial markets into broad, deep and liquid pan-European financial markets, has made it attractive to domestic and foreign investors. Of course, it has also created a much better environment in which to do business.

Just as the EU member states dared to embark on the project to create the euro, the US and EU need to take the bold steps required to create a transatlantic economic relationship that acts, not just as a stabilizer, but as an engine for the rest of the relationship.

It is with such a “super-charged” transatlantic partnership that we will make the most progress on the issues confronting us on the global front. I’ll briefly list a few of these:

· Stopping the proliferation of weapons of mass destruction: Certainly, the case of North Korea must be resolved. We must have a shared analysis of threats and shared strategies to counter these threats.

· Fighting terrorism: Everyone recognizes that this can only be solved through international cooperation. As the bombings in Riyadh and Morocco recently made clear, this is an issue that will require our continued close cooperation.

· Addressing the problems of the Middle-East: We must continue to push forward the peace process and increase our efforts to help the countries throughout the region to cope with the fallout from the war in Iraq.

· Strengthening the multilateral trading system: Through our joint efforts in the Doha Development Agenda, we are working side-by-side to build a new world trading agreement that will further open markets, improve conditions for trade and build capacity in developing countries.

· AIDS in Africa: We welcome President Bush’s recent proposals in this area, but we need to ensure that our efforts are coordinated so that together they will have the greatest impact and ultimately rid the continent of this terrible scourge.

In the short term, I see hopeful signs coming out of the G-8 summit in Evian earlier this week and look forward to more constructive discussions at the EU-US Summit in Washington—the result of both I hope will be the restoration of a more positive climate in our relations. You, the business community, certainly can play an important role in this respect by raising your voice with governments to bring them back to a better understanding of where our common interests lie.

CONCLUSION

In conclusion, let me refer to one more page of history. In 1914, when Europe stood as the undisputed center of the world, Sir Edward Grey, the British Foreign Secretary, remarked as the First World War broke out:

“The lights are going out all over Europe and I doubt we will see them go on again in our lifetime.”

Tragically, he was right. Indeed, they did not flicker back on for all Europeans for seventy-five years. During the interim, its people endured two world wars, the horrors of genocide, the temporary success of totalitarian regimes and the harsh division of the continent. However, thanks to America’s leadership and commitment and Europe’s ability to put aside old hatreds and work together that we have at last seen “the lights” of freedom and democracy illuminated for all Europe’s peoples. Now that they are back on, I am confident that we will not see them go out in our lifetime.

Thank you.