Thursday, May 25, 2006

The EU and the US: a declaration of interdependence

By Manuel Barosso
, 18 October 2005 SP/05/622

Ladies and gentlemen,

Let me start by thanking the School of Advanced International Studies, its Dean, Professor Jessica Einhorn, and Professor Dan Hamilton for inviting me to speak to you all. Through his distinguished career, Professor Hamilton has done much to promote transatlantic understanding. So it is fitting that he has become the Director of the EU Centre of Excellence Washington DC.

Today, I am proud to join you in inaugurating this centre of excellence, part of a network of ten such centres across the US which are supported by the European Commission. Its research and activities, particularly its successful outreach to the Washington policy community, will be invaluable in drawing Europe and America even closer together. This is an important goal which I want to look at more closely with you.

I’ll begin by quoting a - slightly modified - document which you may be familiar with:

When, in the course of human events, it becomes necessary for two peoples to strengthen the political bands which connect them to each other, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to this co-operation.

Of course I am not the first to try my hand at an EU/US ‘Declaration of Interdependence’. President Kennedy did an excellent job back in 1962. But it is important to ask: what are the causes impelling us towards closer co-operation?

I could start with the usual self-evident truths: our deep historical links; our shared respect for freedom, democracy, human rights and the rule of law; our two-way direct investment stock, worth almost $2 trillion; the 14 million jobs on both sides of the Atlantic which depend on our commercial ties. This is indeed an impressive list. But today there is an even greater cause impelling us to tighten our relationship, and I will return to this in a moment.

First of all, though, a word or two about events back home. There has been a lively market for euro-pessimists recently, thanks to Europe’s sluggish economic performance, the double ‘no’ to the European Constitution, and the ongoing failure of Europe’s leaders to agree on the next financial perspectives.

However, Europe has gone through many difficult periods in the past, and emerged stronger as a result. And it is important, at times like these, not to discount the more fundamental achievements of the European Union.

Sixty or seventy years ago, battles were being fought across the continent which killed millions of Europeans. Attempted genocide lead to the horrors of the Holocaust, a mass murder of Europeans by Europeans. Thirty-five years ago, dictatorships were still ruling many European countries, including my own. Just fifteen years ago the countries in Central and Eastern Europe recovered their freedom. And this year is the tenth anniversary of the massacres of Srebrenica. So when we talk about the power of Europe to spread peace, stability and prosperity, we are not talking about ancient history. In other words, if the EU didn’t exist, we would have to invent it. But the EU does exist. So let me outline how we are renewing it.

First of all, we have refused to allow the current difficulties over the Constitution, regrettable as they are, to become an excuse for paralysis. The world will not stop while Europe engages in a bout of introspection. And there are pressing challenges to tackle in the meantime.

Chief among these is the urgent need to boost growth and jobs, by injecting new vitality into Europe’s flagging economies. The renewed Lisbon Strategy for growth and jobs is not some empty marketing slogan, it is the main priority of my Commission. That is because everything flows from this. More growth and more jobs are the surest way of restoring our citizens’ confidence in Europe. A stronger European economy is also crucial to face up to greater international competition. Growth will make reform of Europe’s economic and social models easier, while at the same time laying strong foundations for our social and environmental ambitions.

We are also agreed on the importance of Europe remaining open to the world. As the largest trading bloc in the world, this is in some ways just enlightened self interest. But there is an element of moral responsibility, too.

Having stumbled across such a successful formula for spreading peace and stability on our own continent, it is only natural to offer our know-how and experience to encourage peace and stability elsewhere in the world. And while the EU’s foreign policy architecture could hardly be described as streamlined, we have nevertheless been chalking up an increasing number of successes in recent years. Let me highlight one or two.

The EU’s commitment to rebuild and stabilize the Indonesian province of Aceh since the tsunami is a good example of our work in post-conflict and post-disaster situations. It has contributed 85% of funding for the Multi-Donor Trust Fund, which is co-chaired by the European Commission. Following an invitation from the Indonesian Foreign Minister, the EU has also played a key role in monitoring the ongoing Aceh peace process.

Now the Commission is putting together a support package to sustain that peace process. One component of this will support reintegration of former fighters of the ‘Free Aceh Movement’. The other component will support the government and local authorities in implementing all aspects of the peace agreement related to governance, the judiciary and consolidation of democracy in the province. This means building up capacity in local and provincial administrations, training police, prosecutors and magistrates, and supporting preparations for local elections scheduled for next April.

Another example is our action in Afghanistan. Obviously, a lot of our activities there are carried out shoulder-to-shoulder with our American colleagues. Some 80% of the troops in the NATO-led International Security Assistance Force come from EU Member States. But we are doing a lot of work independently as well, to help with the reconstruction and political transition process in Afghanistan - albeit in close harmony with the US.

The EU paid half the cost of last year’s Presidential election, and made a substantial contribution to the recent parliamentary and provincial elections. The European Commission is delivering on its €1 billion pledge for 2002-2006, supporting a combination of visible reconstruction, like a major road from Kabul to Jalalabad; tangible benefits for the population, like health services and rural development; and the building up of lasting administrative capacity. In fact in 2004 alone, we rebuilt 120 clinics which treated 400,000 people, built 50 schools and kindergartens, and de-mined 8 million square metres of land.

So if America is now listening to Europe more, I think it is because we have worked hard to be worth listening to. If America is increasingly defining EU/US relations by what we can do together to promote democracy and freedom, it is because we have shown we can deliver results on the world stage. And notwithstanding the referendum results on the European Constitution, there is consistently high support among Europe’s citizens for the EU to play an even larger role in foreign affairs.

In this context, it is not surprising that Europe and America’s bilateral political relationship has led to a lot of good co-operation recently – on Iran, where our co-ordination of policy has been exemplary; on China, with the setting up of a strategic dialogue on East Asia to address economic and security challenges; and on Ukraine and Lebanon, promoting democracy.

Our close co-operation on the broader Middle-East is also a major success story. We have common interests there and a shared vision of where we want to get to. The EU strongly supports the G8 BMENA initiative and the Forum for the Future. And that is above and beyond our unique contribution through the Barcelona process, which is now in its 10th year. The EU spends $3.6 billion in grants and loans to the region each year. From 2007, our spending in the area will include a 10% governance bonus, to reward progress in good governance and human rights. We must ensure that BMENA and the Barcelona process are complementary and mutually reinforcing. But we must not let this new-found focus on our bilateral political relationship distract us from our equally important bilateral economic relationship. It is important to keep a balance.

As books like Deep Integration - edited by Professor Hamilton and Joseph Quinlan here at the Centre for Transatlantic Relations – show, the increasing integration and cohesion of the transatlantic economy is a key feature of the global economic landscape today.

But there are still many obstacles which prevent us from realising the full potential of the transatlantic market. By pushing forward the economic initiative which we agreed at the EU/US Summit in June, we will help prepare ourselves for the economic challenges coming from China and India. Our citizens also need to see that the EU/US partnership works for them.

A couple of priorities I raised with President Bush this morning were the need to finalise the open aviation area agreement, which will benefit both the industry and 40 million annual transatlantic passengers, and the issue of visa-free access to the US for the new EU Member States. All our citizens and businessmen and women need to travel freely to benefit from, and contribute to, the transatlantic market place.

Ladies and gentlemen,

With such a deep and broad partnership holding us together, with our long ties of shared history and kinship, what could I possibly have been referring to at the start of this speech when I spoke of the ‘even greater cause’ impelling us to tighten our relationship today?

Well, it is no exaggeration to say that this cause is the greatest political and economic phenomenon of our generation. It has already lifted millions of people out of poverty and it is changing the geopolitical map. It is, of course, globalisation. It is important to remember that this is not the first wave of globalisation the world has ever witnessed. But it is by far the broadest and the deepest. It is sustained by accelerating technological progress, and its transformation of the world is only just starting.

People standing on the threshold of social and technological revolutions should never make predictions. The chairman of IBM proved this at the dawn of the IT revolution when he said: ‘I think there is a world market for maybe five computers’. So I will not be so rash as to make any forecasts about the type of world which will emerge from the ‘globalisation revolution’.

But one thing I am sure of. The changes it is already generating are profound, rapid and, short of some catastrophe which no-one would wish for, irreversible. Look at China and India, which I mentioned earlier. China is increasing its energy production capacity at the rate of a new power station every two weeks. In 1999, its foreign trade was equivalent to that of the Netherlands, one small EU Member State. In 2002 it overtook the UK. Now China ranks third in the world in terms of its volume of foreign merchandise trade, after the EU and the US. How many of you think it will remain in third position?

If China’s new dynamism is driven by manufacturing, then India’s comes from services. I read recently that there are 2 million new GSM subscribers there every month. India is tapping into a European, indeed, global demand for efficient services.

What does all this mean? It certainly isn’t something to fear. Globalisation is being driven by a very simple human desire – the desire of billions of people to take advantage of new-found freedoms to create a better life for themselves and their families. Who could criticise that?

And if some of our citizens fear globalization, perhaps it is because they think that wealth creation is a zero-sum game. That if someone else is now getting a slice of cake, their slice must be getting smaller. But globalization is a chance to increase the size of the whole cake.

We must challenge those who do not – or worse, will not – understand this. Did the emergence and rise of the USA since 1776 diminish Europe’s prosperity? Of course not! On the contrary, it fuelled unrivalled prosperity on both sides of the Atlantic. There is no reason why China, India or Latin America cannot reap similar rewards from what is going on today.

But globalisation does make the future more unpredictable. It makes it harder for any one country to go it alone. In these circumstances, it is in everyone’s interest to strengthen and support the international community’s multilateral, rules-based architecture. The stability and continuing economic development of the world could depend on it.

The EU and the US, working in partnership, are uniquely placed to offer leadership here. In these times of rapid change, we have a greater interest than ever before in stepping up our relationship in order to provide that leadership. As President Bush said at his inauguration: ‘All that we seek to achieve in the world requires that America and Europe remain close partners’.

We should start with the WTO’s Hong Kong Ministerial in December. The Doha Development Agenda is the most important challenge we face in international economic co-operation. The days when deals were struck in the wings of bilateral EU-US agreements are over. But we do still have a crucial role and responsibility in responding to the aspirations the Round has aroused. And we need a success for multilateral co-operation.

The main area where the EU and US must show leadership is agriculture. In this respect, I very much welcome the recent, constructive steps by the US on agricultural domestic support, and the readiness to match the EU's own willingness to eliminate all export subsidy programmes. Of course, any ambitious deal on agriculture is also subject to improved and substantive new market access opportunities in industrial products and services, in developed and emerging markets. Together, the EU and US must push for this and lead by example.

The Hong Kong Ministerial will also have to show to the developing world that we are serious in addressing their specific concerns. I therefore call on the US to take up a firm commitment to grant duty and quota free access to products from least developed countries. This would be a strong gesture in terms of development and faith in market openness. But the cornerstone of the international community’s multilateral architecture is the UN, which owes its existence to the far-sightedness of the Roosevelt and Truman administrations.

In the report of the bipartisan Task Force on the United Nations, Newt Gingrich and George Mitchell recognised how important it was for the UN to ‘reconfirm its place in today’s transformed international environment’, stating explicitly that ‘an effective United Nations is in the interests of the United States’.

The UN Summit in September was the best moment for that to happen. Unfortunately, the summit can at best be described, as I said at the time, as a ‘mitigated success’. The establishment of the Peacebuilding Commission was evidently a good outcome, and the progress made on development was more or less satisfactory, but the results clearly fell short of our ambitions regarding the Human Rights Council and the environment. Nevertheless, it is important to see the Summit as part of a process and not as the end of one.

The ultimate success of this process will depend on our actions in the months to come, including in the IMF/World Bank annual meetings this autumn on debt; at the WTO Hong Kong Ministerial as I mentioned earlier; and in the UN itself, during the follow-up on - among other things - the Human Rights Council and the Peacebuilding Commission. Once again, joint leadership from the EU and the US could make all the difference.

Ladies and gentlemen,

Strong, multilateral institutions, while more important than ever before, are not an end in themselves. They are simply tools for promoting peace, stability and economic development.

Without them, however, the world would unquestionably be a poorer and more dangerous place. It would also be much harder to deliver effective solutions to those problems that transcend national borders. Problems like climate change. Like transmissible diseases and pandemics. Like international terrorism.

That is why I would argue that while independence from the Old World must have seemed so attractive to Josiah Bartlett and his friends back in 1776, today it is our interdependence that promises so much.

Thank you.

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