Trade in the Transatlantic relationship
In this speech to the US Chamber of Commerce, on 11 February 2005 in Washington DC, EU Trade Commissioner Peter
Mandelson argues that there remains a fundamental community of values and interests between Europe and the US. He
describes trade and investment as the bedrock of the EU US relationship. He calls for the EU and the US to work together
in the world and to strengthen their bilateral ties - giving leadership on the Doha round and improving the environment
for transatlantic business.
Key Themes:
Expressing strong support for the recent comments of Secretary Rice on the importance of a strong relationship between
Europe and the US, Mr Mandelson argues:
• This is a time of potential renewal for the US and the EU: “There is a sense of determination on both sides to
give new life to the partnership between Europe and the United States. There is no structural division. But we need to
think about our relationship and how to adpt it to changing circumstances.”
• At the heart of the US-EU relationship is the world’s largest important trading relationship: “The political
relationship between us is underpinned by an immensely strong economic partnership. Trade and investment are the bedrock
of Transatlantic relations”.
• The great challenge for trade in 2005 is progress towards a successful Doha round: “Without doubt the biggest
challenge in the trade policy sphere is to bring to successful fruition the Doha Development Agenda. The international
trading system benefits us all. We need the Doha Round to succeed in order to reinforce the system. We need to be
ambitious and we need to show a sense of urgency. I want to work during 2005 for balanced progress across the board: on
agriculture, on industrial goods, on services and on trade rules. All this needs leadership. Europe and America still
need to give that leadership to international trade talks”.
• On bilateral economic relations “We need to come up with an agenda we can work on with a heavy emphasis on the
regulatory dimension - be it in financial markets, trade in goods or trade in services. I think we need to take a fresh
look at the idea of mutual recognition of services as a complement to what is going on in the Doha Round, with
particular reference to licensing and recognition of professional qualifications across the Atlantic.”
As you know this is my first visit to Washington in my new job. I was pleased to be able to come here before Bob
Zoellick leaves his position as United States Trade Representative. He has made an outstanding contribution in that role
and I am delighted that he will still be alongside us in the State Department. And, it goes without saying, I look
forward to working very closely with his successor.
The first thing I have learnt about working with the US on trade is the vital role of Congress. That is why in this
short visit I have spent most of my time on the Hill. This has been both illuminating and rewarding – if at times
challenging!
I have also been able to meet some of the key figures in the second administration of President Bush. I am delighted
that the President himself will be visiting Brussels in less than two weeks.
Coming to Brussels is the best move he could make. That will follow the visits of Secretaries Rice and Gutierrez. I was
pleased to be able to meet Condi Rice in Brussels on Wednesday before taking the plane to come here.
The current high level of Transatlantic activity tells us something. There is a sense of determination on both sides to
give new life to the partnership between Europe and the United States and to put behind us the strains that arose from
differences over Iraq.
The political bond between Europe’s democracies and America is deep. In the 20th Century we saved the world from fascism
and then from communism. America’s power was essential for this. America’s steadfastness then made it possible for
Europe to be reunited.
We in Europe have not, I hope, forgotten the debt we owe.
But our partnership has made an uncertain start to the 21st Century. Iraq was the most obvious cause of differences. But
there have been others, such as how to respond to climate change. The differences of our societies and political
cultures have been ruthlessly examined by Kagan and others. There is a fashionable argument that we are fundamentally
and structurally diverging.
I can understand that argument. Our societies are not identical. Our values sometimes lead us in difficult directions.
Whether it is in attitudes to the death penalty or GMOs. Our self images are necessarily different: the United States is
after all a remarkably powerful nation. The European Union is a complex and innovative co-operative system of 25
different nation states.
But it is short-sighted and superficial – and just plain wrong – to argue that on what really matters, Europe and
America are divided. Our fundamental values remain close. Our belief in democracy, the rights of the individual,
economic, political and religious freedoms.
Although we no longer face a single, obvious political or military opponent, the threats to our security are still
threats we share. We may not always agree on the urgency of a particular threat, nor on how best to counter it. But we
do agree that terrorism and proliferation of weapons of mass destruction are the dangers we must confront, and that we
need a combination of “hard” and “soft” power to do so.
And equally, as we look forward, we identify the same agenda of wider issues facing humanity, such as poverty,
migration, resource shortages and climate change. These are all issues which no one nation, neither the United States
nor any nation of Europe can address alone. We shall need to address them together, including through the UN and other
international institutions.
Those are long term issues. Right now, we have a common will, whatever the past differences, to build a stable democracy
in Iraq. We all want to try again for a settlement between Israel and the new Palestinian State. I congratulate Condi
Rice on the impact her activism is already having here. We have a common goal to prevent the Iranian government
developing nuclear weapons – even if not all Europeans and all Americans see eye to eye on how best to pursue this –
while making sure we keep abreast of what’s happening amongst the people of that country. And we have a shared interest
in building new strategic relationships with countries such as China and India, even if here too, we have differences in
particular areas of policy.
So this is my point. At the deep level – at the strategic level – there really isn’t a structural division between
Europe and America. There is still a structural unity underpinned by shared values and similar interests. The simple
truth is that neither of us has a partner in the world anywhere near as close or as important as the other. And in this
uncertain world I think we all appreciate how important it is to have partners.
But we have to think about our relationship and how to adapt it to changing circumstances. We need the vision to renew
it.
Because the relationship we need has to be equipped to deal with issues which are very different from those we faced
only 20 years ago.
I want our future partnership to be more balanced and to be complementary. In international affairs, in foreign and
defence policy, Europe needs to be more united and more willing to take a role in global leadership. At present, Europe
has fine words and a large(ish) wallet. We need to build stronger foreign policies and defence capabilities to
contribute to the security challenge. We are working on this, for example through the European Security Strategy which
was published a couple of years ago. We have a way to go.
The United States for its part should feel able to share leadership with Europe. I believe that it would be helpful if
America were able to signal more clearly – as the President is signalling – a wish to work with Europeans on a broad
global agenda. This is an agenda in which European influence and soft power can complement America’s more direct and
tangible power.
These actions – stronger policies in Europe and a greater American readiness to share leadership – can, I believe, be
mutually reinforcing. They are also mutually dependent: we will not have one without the other. It is not a question of
chicken and egg. It is a question of hatching two eggs simultaneously.
What is really important is that Europe continues to be strong and united. We have recently taken a major step in
enlarging the European Union to include 10 new countries, many former satellites of the Soviet Union. Inevitably it will
take us time to adapt. But Europe will not be stronger if the consequence of enlargement is a dilution of our
integration and ability to forge common policies. I hope that when President Bush visits us he will restate the
historical support of America for European integration. This is the strongest signal he could send of support for what
we are doing to reunite our continent in democracy and economic development, and to build a Europe more capable of
assuming its global role.
The new Commission of which I am a member, led by Jose Manuel Barroso, has an important part to play. European political
strength, unity and social progress can only be achieved on the back of economic growth and confidence. This is the
mission of the European Commission. We have recently published five year strategic objectives which commit us to work
for growth and jobs in the European Union. We have reviewed the so-called Lisbon agenda of measures designed to energise
the European economy. We have committed ourselves to a push for economic dynamism as the only way of underpinning our
broader political goals for social protection and a better environment. We are conscious that Europe has not matched the
economic innovation of the United States. We want to do better.
This is important because the political relationship between us is underpinned by an immensely strong economic
partnership.
Trade and investment are the bedrock of Transatlantic relations – outside and beyond the sphere of political relations.
It is driven by individuals and businesses, by NGOs and other actors in civil society, by investors, savers and
pensioners.
I want to build on this. Both in working with the United States on issues of broad international economic policy, and in
working to strengthen our own bilateral trade and investment relationship.
Without doubt the biggest challenge in the trade policy sphere is to bring to successful fruition the Doha Development
Agenda. The international trading system benefits us all. It gives us a stable environment based on common rules.
However much we may sometimes resent those rules, they are better than the law of the jungle.
We need the Doha Round to succeed in order to reinforce the system. My aim is to help bring it to completion before US
negotiating authority expires in 2007.
We need to be ambitious and we need to show a sense of urgency. I want to work during 2005 for balanced progress across
the board: on agriculture, on industrial goods, on services and on trade rules.
On agriculture, the European Union is reforming its Common Agricultural Policy. This was necessary and I support it. The
rewards will be enormous, making possible our offer to cut trade distorting subsidies by nearly two thirds, to eliminate
export subsidies, and to offer improved market access on all products. We look to others to match this, including the
United States. In particular we need to see how the US plans to reduce and discipline agricultural domestic support and
export credit. This will enable the EU and the US to lead agricultural talks by example to a successful conclusion.
And if we are to make serious progress at the Hong Kong Ministerial in December we need to shift gears so that other
areas catch up with agriculture. On industrial tariffs I want to see a more intensive negotiating process leading to
real progress on the tariff reduction formula. In Davos in January we had good discussions on this and there are some
interesting ideas around which may help us.
On services, I think the EU demonstrated its ambition through its offer of June 2003. We are ready to adjust that offer
in May this year to take account of points that have been made to us. But we need the US and other developed countries
to look hard at their own offers if we are to obtain serious commitments from the more advanced developing countries in
particular. Those countries have a lot to do if the round on services is to succeed.
In the area of rules, we need to move fast on anti-dumping. More and more developing countries are building trade
defence regimes. And many of those new rules don’t respect the agreed disciplines and are liable to be used for
protectionism. Unless we reach rapid agreement on how to handle this issue, the opportunity for reform will be lost and
countries across the world will lock in unsatisfactory and restrictive regimes damaging world economic growth.
Another area of trade rules which is important for the EU is geographical indications. So far there has been zero
progress, despite what is agreed in the Doha Round mandate. Europe needs some flexibility from the US and the Cairns
Group on this issue.
All this needs leadership. Europe and America still need to give that leadership to international trade talks. But we
also need to be subtle. The days when Europe and America could fix the deal are long gone. The Group of 20 led by
Brazil, India and China, is now a major player. The Group of 90 ACP countries is, rightly, pressing its demands.
Negotiations are complicated because they have to be genuinely owned by all.
This is why development is so important in the Round. If we are to succeed we have to produce benefits for rich and
poor. More than ever before the agenda for the poor is crucial. To achieve international buy in to the global trading
system which will enable it to survive and flourish, we have to harness international trade policy to wider efforts in
2005 to promote development and eliminate poverty. That means supporting efforts in the UN as we review the Millennium
Development Goals and supporting the pro-development agenda of the British G8 Presidency.
Last week in London I set out a comprehensive agenda of ways in which trade could serve development in 2005. I am going
to work for this agenda over the year ahead and I invite the United States to join me. The headline issues on my agenda
include pressing for further market access for exports from poorer developing countries; more recourse to special and
differential treatment; a rules and standards agenda in trade which favours development; support for reform of rules of
origin.
Another priority is to continue to expand WTO membership. The experience with China shows how beneficial this can be. I
hope that when we meet in Hong Kong in December we can welcome into the WTO four important economies that remain
outside: Russia, Ukraine, Saudi Arabia and Vietnam.
With Russia and Ukraine the European Union has completed its bilateral negotiation. I hope very shortly to be able to
move forward in negotiation with Saudi Arabia.
Last but not least, the economic relationship between Europe and America. Starting with the disputes. In our
relationship I have found that people tend to focus on the negative. That’s normal, particularly in the media. Our
bilateral trade is enormous. Inevitably there are disputes, and because Europe and America are big, our disputes are big
news. They are important, and they are very political. In my short time in the job I have already understood that they
absorb disproportionate amounts of energy.
We must set ourselves the objective of handling these disputes in a way that prevents them from dominating our agenda.
In the roughly two and a half months I have been in office the bulk of my discussion with Bob Zoellick has been
dominated by civil aviation subsidies. More than the Doha Round. More than how to deal with poverty in Africa. More than
how we can use trade to underpin progress in the Middle East Peace Process. I think this is a pity.
I am pleased on aircraft that we have been able to agree a framework for negotiation. It will be difficult to turn this
into a solution of the problem but I am determined to try. Because I believe that we have to work constructively for
fair solutions to these problems. My inclination is to negotiate where possible and to use formal dispute settlement
only as a last resort. Of course the formal dispute settlement gives us an essential framework for negotiation and in
every sense it is invaluable. But it cannot absolve us of political responsibility. I come to this job determined to
solve problems where I can. I want to liberate our political energy in the pursuit of positive objectives.
So I am not going today to run through the litany of bilateral disputes. They are familiar to all of us. Sometimes they
seem to generate more heat than light. Just let me assure you that, while I will defend European interests and rights
with absolute conviction and determination, as you would expect US negotiators to do on their side, I will do so in a
constructive spirit, seeking positive outcomes.
But in our bilateral relationship what interests me far more is the potential for further growth in trade and
investment. At the EU/US Summit in Ireland last summer we agreed to consult widely on ideas for how we can improve
things.
On the Europe side we are now beginning to digest the results. What this shows is that our stakeholders want us to
address a new trade policy agenda. They don’t want us to work on tariff reduction bilaterally in a Transatlantic free
trade area when we can do it multilaterally through the Doha Round. What they want us to do is remove regulatory and
administrative burdens which affect competitiveness on both sides of the Atlantic. They want better regulation and more
convergent regulation.
We need to come up with an agenda we can work on with a heavy emphasis on the regulatory dimension - be it in financial
markets, trade in goods or trade in services. We need to look at other problematic areas like the relationship between
trade and security in the post 9/11 world. And we need to keep going on familiar issues like public procurement and
intellectual property, making a concerted effort on difficult points on both sides. And I think we need to take a fresh
look at the idea of mutual recognition of services as a complement to what is going on in the Doha Round, with
particular reference to licensing and recognition of professional qualifications across the Atlantic.
Let’s start with what is easier and try to build momentum. Those who have been around the course several times tell me
that there is nothing new under the sun in Transatlantic trade negotiation. It may be true, (though I doubt it is) but
it is no excuse. We need to take on forces of habit and vested interest.
This is where I am going to stop. This has been a most valuable visit to Washington. It has brought home to me the
complexity and diversity of our agenda. It has shown me how political Transatlantic trade is. But while I do not
underestimate the difficulties, I have a sense of hope: that we are understanding better the nature of the political
challenges that face us; that we understand also how essential it is to use economic and trade policy instruments to
address the new global agenda in foreign policy; that we seize the opportunity to make progress in 2005 on the Doha
Round; and that we can inject new momentum into our own bilateral relationship both in solving disputes and in
generating greater well-being.
Those are the aims that I want to contribute to in the five years ahead.