Atlanta, 7 March 2014
Ladies and gentlemen,
I am delighted to be with you at this great institution, the Georgia Institute of Technology, in this great city of Atlanta, the innovative heart of the Southern American economy.
I come from another great institution, the European Union, that brings together 28 individual countries in a partnership for prosperity and peace.
And I’m here to talk about building a third, the Transatlantic Trade and Investment Partnership – which seeks to harness open markets to deliver innovation and prosperity to people on both sides of the Atlantic.
The ties between Europe and America are older than the United States itself.
Even today, a third of Georgians claim ancestry from a member country of the European Union.
And many on both sides of the Atlantic will remember the vital role this state’s airmen and women, aircraft and shipbuilders played in America’s support for Europe in the Second World War and in the Cold War thereafter.
These close ties – and others like them across the United States – are the bedrock of today’s transatlantic relationship.
But even as we take the time to appreciate the past, we must also focus on the future of our relationship.
As strongly as our history links us, we need to keep building new ties every day.
Because the connections between Europe and the United States that are so important for our societies and economies today, will be even more important in the changed world of the 21st century.
That is true for all parts of this country and for all the Member States of the European Union. Georgia – the economic and innovation hub of the Southeast with huge investments from European firms – is no exception.
And that fact is what the Transatlantic Trade and Investment Partnership recognizes.
I will talk to you this morning about what this negotiation aims to achieve and what that means in terms of opportunities for both sides, and Georgia in particular.
The goal of the Transatlantic Trade and Investment Partnership are clearly spelled out in its name.
The European Union and the United States want to boost trade and investment across the Atlantic to deliver growth and jobs for our people – and that includes this State of Georgia.
How is this going to work?
Well, since the negotiations were launched eight months ago, our teams of trade negotiators have been working intensely – hard, detailed work that will continue until we are finished.
The reason it is so challenging is that they are trying to examine and remove as many of the obstacles to doing business across the Atlantic as they possibly can.
That involves some of the oldest trade barriers, like customs duties.
Tariffs on most goods traded across the Atlantic are low. But even low tariffs are important when 700 billion dollars of trade is involved.
We shouldn’t forget that almost 18% of Georgia’s exports go the European Union already. Eliminating tariffs on them will benefit people here directly.
And for some products tariffs are higher. That’s the case for many agricultural products – always and still a vital part of this State’s economy. If we can reduce the impact of these tariffs that will benefit farmers here.
The same for the car sector, which faces high industrial duties in the European Union. Eliminating those tariffs would directly benefit firms here.
But in today’s integrated transatlantic economy. We need to go beyond tariffs.
So negotiators are also looking at ways to free up trade for services companies – like airlines, finance, shipping and the digital economy.
One of the most important trends in both our economies is the rising importance of services, as many activities that were once part of manufacturing are carried out by services companies. This means that not only are services increasingly significant themselves, they are also essential for trade in goods. In terms of the real value added our economies, roughly half of the exports from both Europe and the United States are services today.
And for a State like Georgia, which hosts the headquarters of Delta Airlines, Home Depot and First Data, this fact may not be much of a shock.
Our aim for this deal is to improve market access as well as tying down existing openness, for companies like these.
We are also looking to open up opportunities in government procurement. The benefits here are two-fold. Like it or not, governments – whether national, regional or local – are some of the biggest spenders in our economies.
Georgia alone spends around 10 billion dollars a year.
So opening access to government procurement markets means many new business opportunities for exporting firms – whether that’s paper or transport equipment – both big Georgia exports.
At the same time, opening procurement markets helps governments spend our money better because we get a bigger choice of goods and services at cheaper prices.
Ronald Reagan said that a taxpayer was someone who works for the government but doesn’t have to take the civil service examination.
If that’s the case then it’s in everyone’s interest that the government gets the best value for our money – and that goes for taxpayers here in Georgia too.
Beyond these issues of access to markets, our negotiators are also looking for ways to reaffirm and strengthen our rules on intellectual property rights, on trading in raw materials and energy and on how customs process goods at the border.
But the most important part of this negotiation, and what makes it unique, is regulation.
The European Union and the United States are among the most heavily regulated societies in the world. There are good reasons for this. We regulate to keep our air clean, to keep our banks solvent and to keep our microwaves from exploding.
But the differences between our regulations on both sides of the Atlantic do create costs for business.
If a pharmaceutical plant – like the new one Baxter is building just west of here in Covington – has to be inspected twice by European and American inspectors that takes time and money.
If a company that makes car parts like Robert Bosch – which has operations in this region – has to have two production lines to make different car parts for each market, that costs time and money.
If a medical device firm like Siemens – which has several sites in and around Atlanta – has to make its products traceable in two different ways that also costs time and money.
And we all know what can happen when the regulation of financial services goes wrong. The European Union believes that this agreement can create a new framework for transatlantic regulatory cooperation in this area. That doesn’t mean repeating discussions we’ve already had in international bodies like the G20 but rather having an institutional framework to ensure our rules work together – in order to prevent future crises.
So what we are doing in this negotiation is trying to find ways to make our regulation more compatible, while making sure we keep our food as safe, our air as clean and our microwaves as non-combustible as possible.
We are doing that by looking at the way we make regulation – to make sure it’s open and that regulators cooperate. But we are also looking at the specifics of current regulation of sectors like the ones of I’ve just mentioned.
These three areas – market access, rules and regulation – are what this deal is about in substance.
And they allow us to see clearly some of the benefits of a deal like this.
But there are three more points worth making about the benefits from this agreement.
The first is that we are not just talking about big business. In fact, small companies are hurt more by barriers to international trade than multinationals.
Why? Because they don’t always have the resources to get around those barriers. So this deal, by reducing trade costs across the board, would bring greater benefits to smaller firms than larger ones.
And given that smaller companies – like the ones that this University does such a good job of creating – tend be the most innovative that will be a boost for the dynamism of our whole economies.
If a new company is born with access to the whole American market, we can say it has had a very good start in life.
But while the US market is big, there is one economic area on the planet that is even larger – both in terms of number of consumers and in terms of its economic size. That is the internal market of the European Union. Our 500 million citizens have a combined income of almost one fifth of the world GDP.
So if our new start-up also has access to the European market, we would have to say that is has been born with a silver spoon in its mouth.
The second point worth making is on investment.
In most sectors of our economies, investment barriers are low. This is one of the reasons investment between the US and Europe is so intense already. And why European investment in Georgia already supports around 80,000 jobs.
This deal will deepen that successful relationship even more.
Where barriers do remain we will certainly try to remove them – like in airlines for example, where it is difficult for Europeans to invest on this side of the Atlantic.
But it is important to understand that all of the other provisions of this agreement will also boost investment.
In a world of global value chains – where products are produced in a series of steps, in many different locations, often in many different countries – investment and trade are deeply interlinked.
If we can boost trade with this agreement – and, by the way, economists have estimated an increase of more than 30% in Georgia’s exports to the EU as a result of it – then we will also boost foreign direct investment.
The final point worth making concerns the strategic aspect of these negotiations. What we are doing here is strengthening a partnership between the two largest economies in the world today for the changed world of the 21st century.
Two aspects of the new global economy are essential to understand what we are doing – the degree of its integration and the change in its overall balance.
The degree of integration – through the value chains I already mentioned – means that strong, clear international trade rules are more and more important for local economies. Small changes in government policies half a world away in Asia can affect workers here in Georgia.
We have a good global rulebook for trade in the form of the World Trade Organisation. And it is very good news that the United States and the European Union worked with our counterparts from other countries to put the WTO back on track last December in Bali.
But even if we do everything on the WTO’s agenda today, there will still be gaps in that global rulebook. Because, as you have seen, it is not just other governments’ policies on tariffs that affects people here in Atlanta. It can also be the way they regulate to make sure our medicines are safe or the way they protect intellectual property rights – or fail to!
Good international rules on these kind of issues will be difficult to achieve because they are complicated. You want to open markets but you have to do that in a way that keeps people protected from risks to their health or to the environment.
But if we can get agreement on an overall approach between the two largest economies in the world we will be moving in the right direction.
However, the changing balance of the global economy – with the rise of new powers in Asia, Latin America and soon in Africa – means that agreement between us will not be enough.
We will need a negotiation at the global level too.
In negotiations like that, the fact is that we will in future have much less weight than we do today. By some estimates, our combined share of world output could drop by as much as half by 2050.
That means we will each be less able to continue to champion the rules–based international system that has underwritten the world economy over the last 60 years.
We will also – individually – be less able to push for global rules that are based on high standards for health, the environment, labour and consumer protection.
On all these issues the reality is that the EU and US would be better off pulling together. The Transatlantic Trade and Investment Partnership is an important way of doing that.
Ladies and gentlemen,
For all these reasons, we need to seize the opportunity of the Transatlantic Trade and Investment Partnership to build new ties between the European Union and the United States.
The agreement will directly lead to more jobs and more growth in communities here in Georgia, across the Unites States and across the European Union.
It will not be an easy negotiation. Because for all we share in common we do have our differences. We will both have to make changes if we want a good result.
That means we will need to approach this negotiation with creativity and energy, to find the solutions that allow us not only to keep our values intact, but to strengthen them for the future.
The European Union is ready to do its part to achieve that. I hope the people of Georgia are with us.
Thank you very much for your attention.