An address by Harald Leibrecht, Coordinator of Transatlantic Cooperation at the Federal Foreign Office, August 31, 2012, New York City
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Ladies and gentlemen,
as the Coordinator for Transatlantic Cooperation I would like to discuss with you some ideas on how we as transatlantic partners can work more closely together in order to stimulate growth.
I would like to start this day with an optimistic quote. Former U.S. President Ronald Reagan once said: “There are no great limits to growth because there are no limits of human intelligence, imagination, and wonder.”
I don’t want to enter into a discussion about the limits to growth – I want to talk about the potential there is for growth and how we can tap this potential. A lot of intelligent and creative people live on both sides of the Atlantic. The big question is how we can provide the right framework for this creativity, for entrepreneurship to flourish. Now, in the election year of 2012, economic growth and ways to stimulate it are at the top of both presidential candidates’ agendas.
Today I’d like to talk about challenges to the transatlantic economy and new opportunities.
Right now, the biggest challenges we are facing on both sides of the Atlantic are the debt crises.
In the U.S., uncertainty is growing about how to tackle the growing deficit. What is going to happen at the end of the year when we approach the so-called fiscal cliff?
We know that here in the U.S. there are concerns about how the European debt crisis is being handled and about its potential impact on the U.S. economy. I can assure you that the German Government is firmly committed to a Europe that tackles the root problems of debt, deficits, anemic growth, and economic divergence. There is no miraculous solution – no big bazooka – to solve every problem at once. Germany is promoting a combination of consolidation, structural reforms, and well-targeted growth stimuli to overcome the crisis. The 120 billion euro “compact for growth and jobs” recently approved by the European Council is a key element. We cannot achieve sustainable growth by spending money that we do not have. We also need fiscal discipline and monetary stability. Therefore, Germany strongly opposes deficit spending measures and a loose monetary policy.
While Germany recognizes its role and responsibility, we have to stress that Germany cannot solve the problems of the European economy on its own. The German Government is firmly committed to ratifying the European Stability Mechanism, the ESM. We expect that the Federal Constitutional Court will issue a positive ruling and that the ESM will become operational this fall.
Eurobonds and other forms of joint liability are not viable solutions to the crisis at hand. They would give rise to moral hazard and excessive debt, and would reduce efforts to implement structural reforms.
Europe will overcome the crisis only if we draw the right conclusions from the crisis and take the next step towards “more Europe.” This means building a closer political union and in the long run moving towards some kind of a United States of Europe. A strong and prosperous Europe will then be an even more attractive partner for the U.S.
What we both need now is visionary and determined leadership for a joint project that can boost growth on both sides of the Atlantic. The U.S. and Europe are each other’s most important markets. Let me just remind you of the numbers:
EU-U.S. merchandise trade reached 636 billion USD in 2011.
European investment amounted to 72 percent of total foreign direct investment in the U.S. in 2010.
Affiliates of European majority-owned companies employed 3.5 million Americans in 2010.
We already have a good and effective regulatory forumin place: the Transatlantic Economic Council. Over the last year the TEC has delivered a number of valuable and concrete results for business:
We have made sure that our programs for partnership between customs and companies are mutually compatible.
We have come closer to common standards for electric vehicles.
We have agreed on common principles for open investment policies.
The TEC will remain a crucial platform for our cooperation in the future, but for even closer cooperation and better results we need new strategies.
The EU-U.S. High-Level Working Group on Jobs and Growth has made the right proposal: A comprehensive transatlantic trade and investment agreement would establish a true transatlantic marketplace. EU and U.S. leaders endorsed this idea at the G20 summit in Mexico in June.
The United States and Europe should aim for a new, comprehensive transatlantic agreement that covers all relevant economic issues, particularly including the following pillars:
First, tariff elimination. The goal would be to get as close as possible to the removal of all duties on transatlantic trade in industrial and agricultural goods.
Second, services liberalization. An effective agreement would open services markets that are currently closed and put in place a framework for better cooperation between regulators. It would address the barriers to international competition, including those that still exist at the sub-federal level on both sides of the Atlantic.
Third, public procurement. An effective agreement cannot ignore the fact that companies whose business depends on procurement represent 25 percent of European GDP and 31 million jobs.
Fourth, regulatory cooperation. The agreement would have to include a mechanism for addressing our regulatory differences on both food and non-food products.
Finally, an effective agreement would also establish state-of-the-art rules in key areas like competition, trade facilitation, labor, the environment, and intellectual property.
A strong outcome to the negotiations ahead of us could not only strengthen transatlantic ties, but also encourage a forward-looking multilateral trade liberalization agenda.
I know this is not an easy task, but if we really want to make a difference we need to have an ambitious agenda.
Germany is not only a strong advocate of further EU-U.S. economic integration. We also want to boost bilateral cooperation. Workforce training, for instance, is a field where we can further promote the exchange of best practices.
We have been closely following the debate in the U.S. concerning policies to strengthen manufacturing industries. We are proud that President Obama commended the cooperation of Siemens and other German companies with community colleges and local authorities in his last State of the Union address.
We welcome the interest U.S. stakeholders are taking in German experience in promoting innovation, strengthening SMEs, and providing high-quality vocational education. Throughout the U.S., German and American companies have identified workforce skills as a key challenge to their success. It is a decisive factor in investment decisions.
The dual system of vocational training is one of the reasons for Germany’s economic success. It provides sound qualifications for high school graduates.
The German Embassy in Washington, D.C., has therefore launched a “Skills Initiative” to identify and spread best practices in sustainable workforce development in the U.S. The initiative brings German and American businesses together with local education/training providers to develop the training programs best suited to businesses’ needs.
Secure, affordable, and sustainable energy is of the utmost importance to both our economies. Therefore a transatlantic growth agenda should also tackle the following questions: How can we become less dependent on fossil fuels? How can we speed up the transition to renewable energy? How can we promote the development and use of clean technologies?
Our present energy supply structures will have to be radically transformed in the medium to long term. With the right policies to revamp our energy systems, a huge potential for innovation, growth, and employment can be tapped.
Did you know that in Germany, 380,000 jobs have been created in the renewable energy sector? To put things in perspective: This is around the same number of people as work directly in the assembly of automobiles!
Bilaterally, the U.S. and Germany initiated the “Transatlantic Climate Bridge” a few years ago. It aims to strengthen collaboration between the U.S. and Germany on climate issues, spur the development of renewable energies, and ensure energy security.
I firmly believe that we should intensify this collaboration, especially at the state level. The efforts of several U.S. states to increase the share of renewables in the energy supply to 30 percent by 2015 shows a huge potential for cooperation.
Ladies and gentlemen, I just presented three agenda items I consider most promising for our transatlantic growth agenda: free trade, workforce training, and green growth. This agenda does not need to be promoted only by governments. Business and civil society will be equally important in giving the decisive push to one issue or the other. I count on your support and look forward to the discussion.