Speech by President Barroso: "a eu-us partnership for growth and jobs"

President of the European Commission

AECA

Ambassadors,

Ladies and gentlemen,

It is a pleasure to be here and to share with such a distinguished audience some views on the EU-US relationship, in particular in the context of the growth and jobs initiative that was launched in November last year at the US-EU summit in Washington.

As many of you know, a strong transatlantic relationship is a subject which is as close to my heart as it is for the American European Community Association.

And, as you can imagine, to spare no efforts to stimulate economic growth and jobs creation in Europe is at the top of my priorities in the European Commission.

At a time when the crisis has hit us hard, in Europe and also in the United States, I strongly believe that Europeans and Americans have a greater stake than ever before in each other's economic success.

More than ever we need a renewed transatlantic partnership and common actions in support of our common values and interests.

The relationship between the United States and Europe is without any doubt the most important and the closest partnership between major powers in the world. And from the very early days of the European project, it has played a key role in the development of what is today the European Union.

I always stress the fundamental importance of our common values like democracy, freedom, respect of human rights, social justice and rule of law. And when our democracies are going through a very serious economic crisis, to uphold these values is more important than ever. These are not just statements; these have also policy implications. That is why I am happy that just recently the European Parliament agreed with our proposal for the so called PNR, Passenger Name Record because it was something that was possible to establish with the United States precisely because we have common values and because we are equally determined to fight terrorism.

The crisis is a test to the capacity of open and free societies to tackle very serious challenges, internal and external. It is a test to our prosperity and ways of living. I expect that we will succeed in overcoming it because I firmly believe in the merits and in the strengths of open societies. We have faced many challenges in the past, and we have always been able to come out stronger.

So I expect us to come stronger again out of the current difficulties, by seizing this opportunity to reform, based on the common values that I just mentioned.

The transatlantic partnership is all the most important as we are living in a world that is developing at an unprecedented speed and with important geopolitical and geoeconomic transformations. In this new geoeconomic and geopolitical global context, we need to reform and to renew this transatlantic partnership. It is not enough to live out of our common successes of the past. We need a vision for the future. A new Atlanticism for the 21st Century.

Change is occurring not only in our global environment but within the European Union too. It is now a much more integrated and enlarged community with new effective capabilities and stated ambitions.

One of the consequences of the crisis has certainly been to speed up European integration and this is in fact probably not evident when you read the press. But if one looks into the facts the reality is that there were never in the past so many powers and competences put at the European level as we have today. In fact some of these were simply unthinkable just two years ago. And now the Member States, because of the crisis, because they are much more aware of the level of interdependence, they have agreed for these new steps in the European integration.

In fact we have taken bold steps to tackle the question of sovereign debt and strengthen euro zone governance, improve financial supervision and stabilise public finances. But we need to combine fiscal consolidation with growth. As the Commission has been saying for some time, and I am happy that now apparently our voice is better heard and understood.

With the Europe 2020 strategy our European blueprint to get the economy back on track over the course of the decade, we have started the necessary structural reforms to enhance our competitiveness. At the heart of the difficulties in Europe is the problem of competitiveness, there are of course some financial issues that we have to tackle, but the real core issue is the issue of competitiveness. Not only among the Member States but also when we compare with the other parts of the world.

We must make sure that innovation and investment create a new European dynamics and we are focussing our efforts on growth enhancing measures and jobs creation.

And I believe that, in spite of all the difficulties, we are on the right track. Of course I have to tell you very openly that the European Commission would have preferred the response to be quicker, and to be sometimes bolder. That is our role as the Commission. But at the same time, - and our partners around the world should understand, we are very open about this - that the European Union by definition is a Union of independent, sovereign Member States – 27 Member States, 17 in the Euro area – so of course we have to work on the basis of compromise. And this is a price we are ready to pay because we believe that democracy is at the root of our societies.

So the reality is, despite many criticisms, that we are doing the right thing if you look at the medium term, through a root-and-branch reform of our budgetary and economic policies. And, beyond “the sound and the fury”, we are making good progress in laying firm foundations for strong economic recovery and sustainable growth.

The need for sustainable economic growth, underpinned by sound economic policies, is today one of the strongest common interest between the two sides of the Atlantic.

No need to remind you that from an economic standpoint Europe and the United States are extremely connected. We are still the most integrated economies in the world, among the major players, and we remain at the heart of the world economy.

Let me give you a few figures that illustrate this widespread connection.

The EU and the US account together for about half of the entire world GDP and for nearly a third of world trade flows.

The transatlantic economic relationship remains the most important commercial and investment artery in the world. For goods and services, we are mutually our biggest trading partners with more than €650 billion of annual trade in goods and services, or €1.8 billion per day. The EU goods exports to the US are about three times higher than those to China and seven times more than to Japan.

Some 15 million jobs are linked to the transatlantic economy.

We also enjoy unrivalled levels of mutual investment stock reaching over €2 trillion. Total US investments in the EU is three times higher than in all of Asia while EU investment in the US is eight times higher than our investment in India and China together.

So, let's be open about this. Of course we are not trying to put things in comparison, because we are not against any other part of the world, but the reality is that, contrary to what many people see and read today in the media, the European Union - United States relationship remains by far the biggest economic relationship in the world. And of course both of us, the United States and Europe are doing more with the emerging economies and getting more engaged, but this should not obfuscate the importance of our relationship.

Some very telling examples: US firms are investing more here, in Belgium - a country with a population of around 10 million -, than in China or India. US investments into Brazil, China and India taken together are less than half of US flows to the Netherlands alone. These are the facts. Investments are thus a key driver of the transatlantic relationship, contributing to growth and jobs on both sides of the Atlantic.

With the Transatlantic Economic Council, created in 2007 - and I am proud of being one of the signatories of the agreement which created the Transatlantic Economic Council, together with the American President and the then President of the Council of the European Union, the Chancellor of Germany, Mrs Merkel - we are further strengthening our transatlantic economic ties. We are promoting innovation, streamlining regulations, promoting the elimination of barriers to trade and investment, which also benefits the global economy as a whole. I want to underline this point, because when two of the major economies try to settle things together, that does not mean that we are doing it against others.

For instance, last year we have agreed a set of fundamental regulatory principles for trade in information and communication technology (ICT) services which we will jointly promote in our respective negotiations with other countries.

We also agreed this month on an ambitious set of principles to create stable, predictable and transparent investment regimes, with a view to strengthen international investment markets.

And because our car industries are key to our economies, supporting some 25 million jobs on both sides of the Atlantic, and electric vehicles are a key growth sector in the United States and in Europe, the Transatlantic Economic Council is working on creating common ground to advance the development of joint approaches in standardisation for electric vehicles and their connection to the grid infrastructure.

That said we can do more and better. And especially we can integrate the very positive work of the TEC into a broader and more ambitious vision.

Beyond a commonality of values and interests we have to forge stronger common concrete actions to address the problems we face.

If we want to fully benefit from all the potential of our relation we need to look at specific initiatives. This - I believe - is the time to inject a new lease of life in the EU-US economic relationship. This is the time for world-shaping decisions. And leaders on both sides of the Atlantic cannot miss this historical opportunity to inject a real impetus to the transatlantic economy.

That is why at the last European Union-United States Summit we directed the Transatlantic Economic Council to set up a joint High Level Working Group on Jobs and Growth.

This initiative aims at looking into all options to enhance bilateral trade and investment with a specific focus on the creation of jobs and growth, which is of course a key objective on both sides of the Atlantic.

And I am pleased to see the full engagement of both parts and the positive development of our joint work, which also includes consultations with business representatives and with legislators on both sides. I know that this initiative has triggered a strong support from the business community as a whole. Several of you have been promoting it and I am grateful for this.

I can tell you that the process is going smoothly. A first series of meetings took place in January in Washington; and they have been followed by intense negotiations between working groups and top officials from both sides.

The next deadline is a joint interim report to Leaders by the end of June before a final report by the end of the year.

I am really looking forward to this report because I consider this initiative to be a major one. I am fully convinced that there is considerable untapped potential for boosting growth and jobs on both sides of the Atlantic.

For instance, a third of transatlantic trade consists of intra-company transfers. This means that we have a considerable interest in seriously addressing the problem of unnecessary “behind the border” non-tariff barriers to trade in all categories and in enhancing our regulatory and standards-related cooperation.

This exercise has to be carried out in an open minded and result-oriented way. We have to be both ambitious and realistic.

I have been in contact with President Obama, also on our jobs and growth initiative, and we will certainly continue to discuss it, in particular when we meet for the G8 Summit in Camp David and NATO Summit in Chicago next month. This shows a commitment at the highest political level.

Quite a lot can be done by the European Union and by the United States if we are prepared, all of us, to address the difficulties and not lose sight of the significant mutual benefits. I believe a broad free trade agreement may be the best route to follow, and this idea is getting more and more support among our Member States.

Our ability to overcome our differences and to fully take up the advantages offered by the transatlantic economic space could send a strong signal to the world in terms of openness, because we are seeing unfortunately some very negative evolutions in some parts of the world. I don't need to remind you of some of the decisions that recently caused a lot of alarm in Europe, and beyond Europe in all open economies.

A stronger transatlantic partnership will build on the rules underpinning the multilateral and open economic system. We are very committed to multilateralism thus enabling us to better engage other partners. I believe in this American – European leadership. It is crucial to fight protectionist pressures and economic populism and I hope that the leaders have the courage and the intelligence to resist any of these pressures and tendencies.

A stronger transatlantic partnership will also be able to extend multilateral governance to new economic areas. To flourish, European and American companies need clear rules and clear standards. The discipline introduced by multilateralism is indispensable for the healthy development of economic activities and for global prosperity.

In the 21st Century, the transatlantic partnership must be at the same time more domestic and more global oriented.

More domestic in the sense that its potential must be explored to stimulate growth and create more jobs. This is of course a priority for the leaders in the United States, but also at national level in all our 27 Member States. And I want to underline the global factor, because the world is changing so fundamentally and because it is so important to have, for the world, principles and rules that are open, that are able to give certainty to the development of the global economy and to contribute to a better and more just world order.

Thank you very much for your attention.