Thank you Karen. It is a pleasure to join you today. I would also like to thank Sean Mulvaney, Director of the Economics Program at the German Marshall Fund and Jean Pisani-Ferry, Director of Bruegel for organizing this conference. The German Marshall Fund does outstanding work promoting transatlantic dialogue. I am very pleased to have this chance to tell you about what we are doing with Europe.
The U.S.-European economic relationship is one of the central drivers of the world economy. To put it in perspective, the value of U.S. goods and services exports to the EU is over five times the value of our exports to China. Europe is the most important "foreign source" of jobs in America. European-owned firms in 2007 employed roughly two-thirds of the 5.5 million U.S. workers on the payrolls of all foreign firms operating in the U.S. combined. In fact, the majority of foreigners working for European-owned companies outside of the EU are Americans.
With U.S.-EU trade such an important driver of economic growth and jobs, my colleagues and I in the Administration intend to take a very hands-on approach to developing our economic relationship with Europe and with the EU in particular. I cannot emphasize enough the importance of making further efforts to remove barriers to commerce between the United States and Europe. And this is not only in America's interest, it is in Europe's as well. For this reason the Administration is focusing on things that can be done to strengthen transatlantic economic ties and remove obstacles to more robust growth. Multilateral Work with Europe
Achieving a successful outcome in the WTO’s Doha Round remains a top priority for this Administration. Multilateral liberalization makes sense. The United States and the EU have relatively open markets – we want other markets to be more open as well. And the most efficient way to achieve this is through the WTO. We need the Europeans to help us promote an ambitious, balanced conclusion to the WTO talks.
Similarly, we want to work with our European partners and the European Union on numerous other multilateral fronts: from devising a new global financial regulatory and supervisory structure through the G-20 and Financial Stability Board, to promoting effective development assistance with the EU as the world’s largest donor, to improving supply chain security through the World Customs Organization. The Transatlantic Economic Council
In the past three years, we have coordinated important parts of our bilateral agenda with the EU through the Cabinet-level Transatlantic Economic Council, the "TEC." The Transatlantic Economic Council provides a way for our most senior economic policy-makers to cooperate and engage in joint work on regulation, investment, intellectual property protection, innovation, and trade and security.
The most significant obstacles to trade between the United States and Europe result from regulatory differences. Regulators in both Europe and the United States aim essentially for the same results: strong protections for our citizens.
One way we are seeking to minimize the impact of regulatory divergences on trade and investment is to examine closely our respective approaches to regulation. The TEC has spurred new discussions on our respective approaches to risk analysis, cost-benefit analysis, and the assessment of the economic impact of regulation on economic activity. We have also discussed regulatory approaches in particular sectors, including the food, drug, chemical, automotive, and electronics sectors.
A core function of the TEC is to encourage our regulatory agencies to collaborate, wherever possible. We are working to create the expectation among our regulators that part of their job is to cooperate with their transatlantic counterparts. Regulatory cooperation would not just benefit trade – it can also promote more effective regulation. When we both face increased imports from areas where regulatory systems are still weak, for example, we can ill-afford to have our regulatory enforcement assets inordinately focused on products from places we trust to be safe. And by cooperating, we can increase the returns on the scarce public funds devoted to our respective regulatory budgets. While differences in perspective and regulatory processes will likely never be completely overcome, at this time when we most need innovation, we should be able to rely on each other for ideas to address common problems.
We have already agreed on common approaches to science based risk-analysis and to amend U.S. and EU regulations to ensure consideration of international impacts to key regulation. More specifically, we have, for example, simplified the procedures for transatlantic approval of low-demand or “orphan” drugs. We have much more to accomplish, but the Administration is committed to working with our European partners to reduce unnecessary regulatory divergences.
Looking forward, we will be sharpening our focus within the Transatlantic Economic Council on promoting innovation in emerging sectors, such as nanotechnology and e-health, which will be critical to our competitiveness in a globalizing world. The TEC has recently launched a high-level Innovation Dialogue to further these efforts. And the Commerce Department has requested input from stakeholders for new areas to cover in these efforts.
Additionally, if the U.S. and EU can agree on common approaches among ourselves in some of these areas, they can serve as a model for other nations. Together we can provide an incentive for others to embrace our approaches rather than impose standards that could be less rigorous or impede American, and European, access to their markets. For example, the Consumer Products Safety Commission and European representatives from the Directorate General for Health and Consumer Protection meet jointly with the Chinese to discuss quality assurance for toys and electrical equipment.
Under the TEC framework we also work to open investment opportunities with the EU. The transatlantic investment relationship is currently valued at over $3 trillion, and its impact on trade flows is evident from the fact that so much U.S.-EU trade is intra-firm. Support for the rights of American investors abroad, not just in Europe but elsewhere as well, is an important objective. We will want to work with both Members States and the Commission to ensure that our investment relations, the foundation of the transatlantic economy, remain strong.
We are looking forward to our next TEC meeting, but before we meet, we will have a lot of work to do with our European partners. We will need to deepen the level of cooperation and complete the objectives I have mentioned here. I discussed the future TEC agenda with the Commission’s Director General for Trade David O’Sullivan last week and Commerce Deputy Secretary Hightower and I will meet with the incoming European Trade Commissioner and TEC chair Karel De Gucht in Davos later this week to move this agenda forward. U.S.-EU Energy Council
We also place enormous weight on collaborating with the EU on developing energy technologies, both to reduce demand for hydrocarbons and to cut greenhouse gas emissions. In November we inaugurated the U.S.-EU Energy Council, under the leadership of Secretaries Clinton and Chu and their European counterparts. In addition to its work on energy security, the Energy Council will seek to stimulate transatlantic cooperation in energy research. It also will look at the policy and regulatory issues that have the potential to hinder trade, as our technology and responsible energy use continue to progress. A prime example is the issue of interoperability standards for the range of electronic devices communicating on the "Smart Grid," as we continue to modernize the electrical grids in the United States and Europe. Aviation Negotiations
Another promising area for transatlantic integration efforts is aviation. The 2007 U.S.-EU Air Transport Agreement has been a major success, benefiting airlines, travelers, shippers, communities, and the broader economies on both sides of the Atlantic. The agreement expanded Open Skies to all 27 EU member states, stripping away protectionist restrictions. Both sides committed in the agreement to second-stage negotiations aimed at further liberalization. The second-stage negotiations began in May 2008, and we have made progress across a range of important issues, including security, regulatory cooperation, and the role of the Joint Committee established by the 2007 agreement. We completed the sixth round in Washington a little more than a week ago. I am optimistic that we will reach a second stage agreement that includes benefits for both sides before the end of this year. Development
We have also agreed to reinvigorate our cooperation on development with the EU in order to improve the quality and effectiveness of our assistance. In the face of growing challenges to efforts to achieve the Millennium Development Goals (MDGs), sustainable economic growth and poverty eradication, it is more important than ever for the U.S. and the EU, the leading providers of development assistance, to work together on some of the world’s most pressing development issues.
We have therefore decided to re-launch our ministerial level coordination to advance and guide our policy work as well as the achievement of results in the field. We will focus our initial cooperative efforts on three common priorities: food security and agricultural development, climate change and the Millennium Development Goals.The Institutional Framework
At the same time we are pursuing an expanding economic agenda with Europe, we have seen significant institutional changes. The entry-into-force of the Lisbon Treaty has given the EU a permanent President of the European Council as well as a High Representative for Foreign Affairs and Security Policy. I am pleased to report that High Representative Ashton made her first visit as High Representative to the U.S. to meet with my Secretary last week, and covered a broad array of issues from the crisis in Haiti to the Balkans to Iran. These new positions, along with the European External Action Service, the new diplomatic service that the EU is starting to build should increase continuity and coherence in EU policy.
In the economic area, the European Parliament's increased authority in setting the EU budget will also be an important factor. Stronger European Parliament authority over agriculture policy, and the exercise of new Parliamentary authority to approve or disapprove trade agreements, will also be of high interest to the United States.
As with so many other areas impacted by the Lisbon Treaty, the relationships and the dynamics are essentially being rewritten as we speak. But the clear message of these EU institutional changes for U.S. economic policymakers is that we will need to increase our engagement--both we in the Administration, and U.S. legislators--with the EU's elected legislators. We have a reasonably strong understanding of activities in key European Parliamentary committees, such as in work on climate change, chemicals and pesticide regulation, telecommunications, and a range of other areas. But more work remains to be done, and the importance of that work will grow as the Parliament’s role grows.
Ties and contacts between U.S. and EU legislators should also strengthen as the European Parliament's authority broadens. We in the Administration welcome inter-parliamentary engagement, both informally and under the Transatlantic Legislators Dialogue.Conclusion
The introduction of the Lisbon Treaty and the seating of the new Commission will introduce positive changes in the U.S. economic engagement with the EU. At the same time, the U.S. and the EU must define a transatlantic economic agenda that make the relationship more productive by eliminating barriers and refraining from recrimination to help both sides to enact policies that promote transatlantic trade and investment to create new jobs and speed recovery from the financial downturn. The U.S. and EU--which together account for over half of global GDP--will continue to play a leading role in advancing global economic governance, even as the major developing countries assert greater influence through the G-20 and other channels.