THE TRANSATLANTIC ECONOMY 2012July 28, 2012
Thank you, Roger, for that kind introduction. It is a pleasure to be here today.
I want to thank the European American Business Council and the Center for Transatlantic Relations at SAIS (“sice”) for hosting this event – and particularly to Dan Hamilton and Michael Maibach (“may-bahk”) for their leadership on these critical organizations. You are all providing an invaluable service for businesses on both sides of the Atlantic.
I also want to thank my counterpart from the House side, Congressman Dan Burton, for co-hosting this event with me.
I want to welcome the transatlantic business leaders and Embassy officials here today. I know a few of the businesses here have a particularly strong presence in my home state of New Hampshire – including Autodesk. I hope the rest of you will follow their lead and relocate some offices to New Hampshire.
It is hard for me to believe that this is my fourth time speaking at this annual event. Each year, it becomes more and more evident just how important the transatlantic relationship is to America’s economy. I think this is something businesses and state governments have inherently understood for quite some time.
As a former Governor myself – having listened closely to businesses in my state about the markets that were most critical to them – I led the first ever trade mission outside of North America to Europe back in the late 1990’s. To this day, European ties to businesses in my state of New Hampshire continue to run deep. As your publication points out, New Hampshire businesses sold $1.1 billion worth of goods to Europe in 2010. Today, three of the top six export markets are in Europe, and cross-border investments mean thousands of jobs in my state.
There has been a lot of talk in recent months about our shifting focus towards Asia. There is no doubt that developing economies in Asia represent an important, though still risky, opportunity for our businesses; however, we should not overlook the fact that a majority of our businesses still look to Europe when they seek investment and trade opportunities abroad.
Despite continued fiscal challenges, the value of U.S. economic ties with Europe cannot be overstated. Our two economies continue to represent half of world GDP, one-third of world trade, and nearly 75% of global financial services. I don’t need to get into more detail. You all know the numbers. The relative size and depth of our economic relationship with Europe is staggering.
Despite the numbers, I think it has taken crisis to really drive home among policymakers here in Washington the significance of Europe to America’s economy. As your publication states, if there is one lesson to be taken away from 2011, it is that Europe matters to the United States.
Unfortunately, because of the ongoing Eurozone struggles, we have been singularly focused on the negative repercussions of the relationship and concern of further contagion across the Atlantic. We need to do more to focus on positive areas for growth between the U.S. and Europe.
Because of the huge size of our partnership, even small shifts between our two markets can result in substantial growth opportunities for our businesses. I would argue that there is still room for significant economic growth in the transatlantic space. In fact, as many of you know, some studies show that eliminating already low tariffs could boost combined GDP in Europe and the U.S. by $180 billion over five years.
But we won’t get there by sitting on our hands or allowing the relationship to coast on autopilot. We will need to act if we are to create jobs and much-needed growth on both sides of the Atlantic. That is why earlier this year I, along with a number of my colleagues, signed a bipartisan letter to the President commending the establishment of the U.S.-EU High Level Working Group on Jobs and Growth and urging the leaders of the group to be ambitious in their agenda and bold in removing unnecessary barriers to trade.
I was pleased to see the interim report of the High-Level Working Group lay out some of the ambitious ideas that are possible. However, I hope the Group will act with some urgency in the weeks and months ahead and quickly advance its recommendations so that we can get to work on the negotiations as soon as possible. I think the citizens of our respective countries want us to act to promote growth at home, and I believe a strong outcome on the High-Level Working Group could go far in demonstrating we are prepared to tackle some difficult challenges.
Other areas for action in the months ahead include strengthening the Transatlantic Economic Council (or, the “tec”) by focusing on emerging regulatory issues, like electric cars, e-health, and cloud computing, rather than long-contested differences. We should also do more to revamp America’s outdated export control policies. In addition, I hope to explore new ways to establish deeper and more meaningful ties between the European Parliament and the Senate to promote opportunities for mutual growth. My staff traveled to visit with EP leadership in Brussels in December, and last month, I met with the new European Parliament Chair of the Transatlantic Legislators Dialogue. I look forward to engaging on this effort as well.
Finally, it is impossible to talk about the transatlantic agenda these days without mentioning the ongoing problems in Europe. Obviously, this is the most complex crisis Europe has faced since the creation of the Eurozone and the single market.
After some initial resistance, European leaders have begun to chart a long-term path forward. Just this week, we saw European Union leaders release a ten-year road map towards a more genuine economic and monetary union, which includes proposals for more centralized banking, unified deposit insurance, and sharing of the region’s debt burden. As European leaders meet today and tomorrow in Brussels for yet another important summit, I hope they will take this proposal seriously and quickly consider bold actions to meet the challenges before them.
I think there are two lessons we should draw from the crisis.
First, there cannot be an austerity-only, one-size-fits-all solution to this problem. There is not a single cause of this crisis. The fact is that slow growth, a lack of competitiveness, institutional imbalances and high debt have all contributed to Europe’s problems. An austerity-only approach can lead to stagnation and recession that only makes debt and deficits worse. Growth needs to play a part in any solution as we move forward.
The second lesson is that the best thing the United States can do at this time is to get our own long-term fiscal house in order. That will bring confidence back to both global and European markets. We should take note of the way the markets reacted negatively in Europe during last summer’s debt limit stand-off. We simply cannot do that again.
In conclusion, a secure and prosperous Europe and a thriving transatlantic economy are firmly in the interests of the United States. We need a strong Europe, and we need to get back to creating growth and jobs on both sides of the Atlantic. I know each of you here today are committed to this effort, and I look forward to working with you as we take on these challenges.
Thank you for the opportunity to speak today and thank you all for coming.
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