Speech by President Barroso: "A new era of good feelings"
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1 EUROPEAN COMMISSION José Manuel Durão Barroso President of the European Commission Speech by President Barroso: "A new era of good feelings" Bloomberg & European American Chamber of Commerce Conversation /New York 12 April 2013 SPEECH/13/315
2 Ambassadors, Distinguished guests, Ladies and Gentlemen, Dear friends, Is it indeed a great pleasure for me to be here in the European-American Chamber of Commerce in New York in this event organised by Bloomberg. There is a period in American history, around two hundred years ago, that is known as 'The Era of Good Feelings'. It was a time when political parties put aside the deeply-felt differences between them, when politicians in Washington buried the hatchet and shared with their ever more vocal citizens a sense of national purpose; a time of peace, of reconciliation and prosperity. This Era of Good Feelings started in Europe, with an agreement signed in a place not far from Brussels, the Treaty of Ghent of 1814, that ended the war between Britain and the United States. At a time when we are about to negotiate an unprecedented trade agreement between the EU and the US, it's good to remember that the reason why the British finally accepted the terms of peace was not merely military, moral or diplomatic but largely economic. Britain came to realise it needed American markets more than anything, and that peace, rather than an obstacle, was a key enabler of trade and joint prosperity. In fact it was one of the founding stones of modern free trade. Let us make sure that the Transatlantic Trade and Investment Partnership, two hundred years later, will be a trade agreement of the new generation, inaugurating an era of XXIst century free trade deals. Let us hope that, once again, it is the start of a new era of prosperity, purpose and, above all, of good feelings. There are certainly good feelings between the United States and Europe. Our partnership, which has such a long and rich tradition, has developed into the most prosperous and dynamic economic bond in the world ever, and it still is, accounting for nearly half of global GDP and almost one third of world trade. A phenomenal 2.7 billion dollars' worth of trade flows between the two of us on a daily basis. Over 3.7 trillion dollars is invested across the Atlantic, creating powerful links between companies and researchers, creating business and employment opportunities on a scale that remains incomparable. For decades, this bond between the two most developed economic blocs in the world has been the driver for growth and jobs on both sides of the Atlantic. It has set the example for economic openness and entrepreneurship elsewhere. And it will continue to do exactly that in the future. That is the logic behind the Transatlantic Trade and Investment Partnership on which negotiations should begin before the summer. 2
3 The agenda for these negotiations is clear, the ambition is certain. We have made thorough preparations that have mapped out the way ahead. Conventional barriers to trade in goods, such as tariffs and tariff-rate quotas, are obviously on top of the list. Even if these are already fairly low at the moment - transatlantic tariffs are between 3.5% and 5% - - because of the massive trade flows involved, even the slightest reduction has considerable impact, and we want to get as close as possible to the removal of all duties, with a special treatment for the most sensitive products. Non-tariff barriers, regulatory issues or 'behind-the-border' measures are even more important, because these are even more costly to businesses and consumers alike. Indeed, such barriers are estimated to be the equivalent of a tariff of between 10 and 20% on traded products. Currently, producers often have to comply with two sets of rules and go through two procedures on either side of the Atlantic, both aimed at the same result - for instance raising safety standards and limiting the environmental impact of cars, or increasing health and hygiene standards for food. We want to cut such unnecessary costs and shorten delays for businesses. But rest assured: unnecessary costs and procedures only. We, on both sides, will not compromise on our high levels of health and safety standards, on consumer and environmental protection. Our citizens and our societies would not allow that to happen. That is what makes these issues so complex, so we need to be realistic. We will not be able to eliminate all regulatory divergences in one round. For that reason, we aim to negotiate what you could call a 'living agreement' - one that not only removes the main trading obstacles of the past, but that looks just as much towards the future: working on the prevention of regulatory barriers; establishing mechanisms that enable a further deepening of economic integration over time; enhancing cooperation for the development of rules and principles on global issues of common concern. We will work towards new, global standards for business. And we should set the benchmarks of an open, modern trade policy as well. If the agenda and the ambition are undeniable, so are the potential benefits of such a deal. If we manage to come to a comprehensive agreement, the overall gains could add up to a 0.5% increase in GDP for both sides. We need that growth more than ever. Our businesses need more opportunities, and our citizens need those jobs more than ever. Therefore, the political push for a transatlantic free trade zone has never been this powerful. Let us seize this opportunity. Let me briefly mention the multilateral impact of this trade deal as well. All too often, we hear that this type of agreement is another nail in the coffin of the WTO, that bilateralism on this scale means the end of multilateralism. That should not be the case. That will not be the case. 3
4 In fact, regional agreements have paved the way for multilateralism in the 1990s, when the signature of the North Atlantic Free Trade Agreement and the integration of the European Single Market set a new standard and gave a new impetus for trade liberalisation. Regional efforts made multilateral discussions more manageable. And once that train was underway, everyone was anxious to be on it, leading to a multilateral breakthrough in the Uruguay Round. Free trade needs leadership, and it was the transatlantic partnership that delivered it - then as now. The European Union, for one, will continue to be the most forceful and vocal supporter of any balanced and ambitious deal that can be reached within the WTO.The European Union has resumed its bilateral FTA negotiations in 2006, when it was clear that unfortunately a deal on Doha would not be forthcoming. And the trade agreements that we have initiated and concluded should be seen as a stepping-stone for future liberalisation, not as a stumbling-block. Agreements that are 'Doha-plus', that tackle issues which are not ready for a multilateral settlement and that go much beyond multilateral commitments. The already highly developed and integrated transatlantic trade and investment relationship, by its very nature, is part of that sphere and therefore not in competition with multilateral discussions. Indeed, we are expressly committed to using these negotiations to go beyond bilateral issues, taking advantage of our combined weight to strengthen the multilateral trading system. For instance, we will cooperate to strengthen the protection of Intellectual Property Rights; we will together assess possibilities to deal with social and environmental aspects of trade and sustainable development; and together, we will tackle trade-related aspects of customs and trade facilitation, competition and stateowned enterprises, raw materials and energy and so on. Trade liberalisation needs global political engagement, and with this effort both the European Union and the United States have given a clear and constructive signal: we believe free trade has a future, and we are willing to invest in it. We take this step at a time of economic crisis, as a way to get through the crisis, and I want to take this opportunity to say a few words about Europe's evolution as a result of the financial crisis which is often misunderstood and usually underestimated, our effort. Our economy was hit particularly hard by the global economic downturn. And yet, as an economic bloc, we will emerge from it stronger, more united and more competitive than we were before. The crisis has forced us, more than ever, to reassess our economic policies, to fundamentally revise our public finances and to deepen our economic and monetary union in a way that we were unable in some cases unwilling - to do before the crisis. Our economic fundamentals remain strong. Europe is still the largest economy in the world. With over 500 million consumers, it represents a 12.6 trillion economy. Only the United States is in the same league, worth 11.3 trillion, while even China remains considerably smaller, at 4.6 trillion. 4
5 We have managed to hold our own in the face of strong competition from emerging economies. Europe has a manufacturing trade surplus of almost 300 billion euro, five times as large as it was in Sometimes people tend to forget this, that even in the crisis, Europe is in fact increasing its surplus. Our services surplus has expanded to over 100 billion euro. And our agricultural trade has shifted from a deficit to a surplus. Europe remains the world's largest importer of both manufactured goods and services. And not only do we still have the largest stocks of foreign direct investment abroad, we are also the largest host of foreign direct investment in the world. If you compare our overall public finances to those of the US and Japan, you come to a surprising conclusion: in terms of the debt-to-gdp ratio, the European average of 82.5%, even if it is too high, is decidedly better than the United States', which is almost 103%, or Japan's, whose debt is close to 230% of its GDP. I don t underestimate the current difficulties; and as I ve been saying very often, we should not be complacent with them. And there are still many challenges ahead. But we are making progress, in spite of all the difficulties. WE have seen the recent developments in Cyprus. And let me tell you, I m very happy with the results of today s Eurogroup meeting where the programme for Cyprus was confirmed and approved for all members of the euro area. I was also noting with satisfaction the agreement on the extensions of maturities for Ireland and Portugal, which will help those countries in their so far successful steps to re-enter the markets. There are in fact some difficulties; there were always responses. And I really believe we are now better equipped to face any kind of accidents. We had to build the life boat in the middle of the storm and, while not entirely finished yet, I believe this lifeboat is sufficiently strong to face the headwinds. And if we go further on the road to real economic and monetary unification, as we are doing, if we further strengthen the credibility of our reform efforts, we will be building the most solid of boats based on our common interdependence and our combined strengths. I believe that the EU-US trade negotiations are a game changer and can be the start of a new era. They will further intensify the economic relationship between the United States and European Union, two economic giants eager to be as successful in the future as they were in the past. They will add to the international push for trade liberalization, hammering out a new framework for open, transparent and balanced trade that fits the realities of the global economy. But most of all, they will reaffirm the global role and responsibility of both partners, which goes much beyond economics. Together, we share a world view based on democracy, human rights and the rule of law. We share an engagement and the ambition to cooperate across borders, to think and act multilaterally, to look for global solutions to global problems. We can only support and advance that world view if we are consistent and bold in applying it, even in times of crisis. Especially in times of crisis. 5
6 That, for me, is what is at stake. Margaret Thatcher, who passed away last week, once said that EU and the US are different because Europe is a product of history and America is a product of philosophy. Our common aim should be to write the next chapter of what is in fact now a common history, forged by a sense of sharing the same principles and values. I thank you very much for your attention. 6
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