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The European Union and The United States

The European Union and The United States

Remarks by François Bujon de l'Estang, Ambassador of France, at the World Affairs Council, Houston, September 21, 2000. Source: French Embassy, Washington D.C.

Introduction

First of all, I want to thank the World Affairs Council for giving me this opportunity to speak to you about Europe, France's European policy and the United States. The timing is just right as my country currently holds the rotating presidency of the European Union for six months, the 11th time it has done so since 1957.

Europe is of course moving ahead with integration, so there's no need to give in to pessimism or euro-skepticism, an all-too-common sentiment on this side of the Atlantic. It is fueled by the daunting tasks that lie ahead for the EU and has of course been rekindled by the spiraling down of the euro. But the truth of the matter is that over the past few years, the European Union has made considerable steps forward: it has created its internal market, launched the euro and begun establishing a European defense.

Right now its major challenge is enlargement, but first we must reform the institutions conceived in 1957 for a Europe consisting of six members. This is clearly, and by far, the first priority of the French presidency. And It will be judged according to how well it carries out this task.

In order to leave some time for discussion, I will try to be brief and give you a quick overview of the French priorities for this presidency (1), before evoking the major challenges Europe is facing (2), and finally reviewing the relationship between the EU and the United States (3).

1. An ambitious agenda for the French presidency

There are four priorities:

1) Preparing the future of an enlarged Europe.

This is absolutely the top priority and, as I said a moment ago, the results of the French presidency will be judged on how well it handles this issue. As you know, the move to enlarge the EU is under way. The group, which currently has 15 members, could have more than 25 in the years to come. Our institutions, conceived in 1957 for the "little club" consisting of its six original members, are already experiencing operational difficulties since we grew to 12, and particularly to 15, members.

If we want Europe to work, to continue to progress, to be able to make difficult decisions, our institutions must be reformed. That is the aim of the new intergovernmental conference (IGC) that is presently in progress and will conclude at the European Council in Nice on December 7-9. The main issue is to reform the decision-making procedures by generalizing qualified majority vote and revising the weighing of the votes between member-states : easier said than done.

2) Now, The second priority of the French presidency: placing Europe to a greater degree at the service of growth, employment and social progress.

For the most part, this means pursuing the work begun during the European Councils of Luxembourg in October 1997 and Lisbon in March 2000.

The idea is to better coordinate the policies of member states (economic policies, budget and tax policies...) so that innovation and growth--which has returned to Europe--also help preserve, with some adjustments, a European social model to which our citizens are very attached.

3) The third priority : bringing the Union closer to its citizens.

If we don't focus on their concerns, we run the risk of weakening their political support.

Several issues will be dealt with during the French presidency: improving student and teacher mobility in Europe; justice and domestic security (asylum, immigration, visas, etc.); health safety and the establishment of an independent food authority; maritime security, in the wake of the Erika disaster; the environment and the implementation of the Kyoto protocol on the emission of greenhouse gases....

4) The fourth and last priority : strengthening Europe's role in the world.

This mainly involves the continued implementation of the decisions reached with regard to European defense by the fifteen heads of State or Government at Cologne and Helsinki last year.

With regard to foreign policy, with the help of Mr. Solana, high representative for the CFSP, the French presidency will give priority to the Balkans (with the EU/Balkans summit in November), the Mediterranean (with the Barcelona IV ministerial meeting and first Marseilles summit if possible) and AsIa (a summit with the ASEM).

2. A Europe that is moving ahead

As you see, this agenda is particularly full and rather kaleidoscopic. In fact, it only reflects a Europe that is relentlessly moving ahead and pursuing its integration in virtually every domain. New common policies are being implemented. Everybody is knocking at the EU’s door and wanting to become part of it. In many respects, Europe is becoming the common reference for all the businessmen and citizens of the continent.

1) Significant progress has been made, in recent months, in two strategic areas:

1- The completion of the third phase of the monetary union:

As you all know, as of January 1 1999, eleven members of the European Union decided to pool their national currencies to establish the euro. This coming January 1, Greece will become the 12th country to join what is now customarily referred to as the "Eurogroup".

The introduction of the single currency is a revolutionary decision which has no precedent in history. The aim of the monetary union is clear. It aims to further growth, and by extension employment, on the home front by simplifying transactions, and externally by cutting costs. It should enhance stability in the euro zone by protecting it against the fluctuations of the other great currencies and in the process give Europe monetary independence (Example: Asian crisis 1997-1998).

Americans have long been skeptical about the plan, considered a chimera. Certainly, the launch of the euro on schedule was impressive, but even more so were the efforts made by the European countries to achieve it and meet the stringent Maastricht criteria during a period - The 90S - characterized by recession and high unemployment in Europe.

The debate has changed somewhat in the last few months. from its introductory rate of one euro = $1.18, the euro has slipped significantly and is currently trading at about $0.85. The Europeans have long pointed out, quite rightly, that the drop is not necessarily a bad thing since it helps our exports. The external trade figures are there to prove it. They also point out, and again quite rightly, that the depreciation in the euro is more a reflection of the differential in growth (4.5 as against 3.5%) and in interest rates with the United States even though Europe is doing better and better.

Nevertheless, the European project is still suffering from infancy illness : the euro is a young, new currency and it has to be given time to come into its own . The markets are probing its resistance and probing the ECB and the union's political will. more importantly, monetary union is not supported at this time by a strong political union. It is the first time in history that a major international currency is supported by an independent Central Bank, but not by a Central Government.

The strong sense of the French authorities--and this is reflected in their recent proposals--is that the European Central Bank, which enjoys the complete independence that was wanted, probably needs more "political backing" from the member states, in this instance, the finance ministers of the 11, soon to be 12, Eurogroup members.

As I speak, the spiraling down of the euro continues, and has gone beyond every reasonable measure. It does not reflect the actual economic circumstances, as Europe is presently enjoying solid growth, and showing excellent economic fundamentals. So what we are talking about is indeed one of these recurrent irrational phenomena that all too frequently take hold of the markets. It, therefore, resists any rational analysis, and it may get worse before it gets better. Maybe, at some point, a coordinated intervention from the Central Banks (Associating the Fed and the Japanese Central Bank with the ECB) will be needed. But the EU certainly has to do its homework, clean up its house, and demonstrate that it is for real. It must, in other words, reach the difficult decisions, and make both enlargement and institutional reform a success.

Its credibility is on the line, and with it the ultimate success and viability of the euro.

2- The launching of a real and substantial European Defense project:

The goal here is not, as i sometimes hear, for the europeans to undermine nato or even less to undermine the transatlantic relationship. the goal is to give the European Union the means to carry out a foreign policy. Which means that it must be able to project a RRF on a crisis theater if needed. Although this may not be its stated objective, increasing Europe's military capabilities will also strengthen, not weaken, both nato and the transatlantic link.There is complementarity, and not competition, between NATO and the EU. They are of a different nature. NATO is a defensive alliance. The EU is not, and it is only in the business of building a union, not of building another alliance.

More specifically, we will focus during the upcoming months on moving the capabilities process forward so that we are in a position in 2003 to declare that the EU is able to deploy 50,000-60,000 troops for a year in less than two months, with the naval and air support elements in place. A "Capabilities Commitment Conference" to be held in Paris November 20 will be a milestone event in this perspective.

Although military capabilities are key, both in terms of credibility and of our objectives, we are also working on the institutional elements that need to be put in place to allow the EU to decide and to act, both within the EU institutional framework itself and as far as EU-NATO relations and EU-Third Countries' relations are concerned (first meeting NAC/IPSC; agreement for 2 meetings a year 15/15 and 15/6).

2) Naturally, this is not happening without considerable internal debate on the future and the finality of the EU.

As has always been the case, we must reconcile respect for national sovereignty with the trend toward integration. Opposition between federalists and "confederalists" is as old as the European project itself.

The discussion was re-opened recently in a useful and opportune manner by German Foreign Minister Joschka Fischer in a speech at Humboldt University in which he suggested that the hardcore of an enlarged eu move toward federal institutions. President Chirac himself shared his ideas with the Bundestag on June 27 and suggested that a constitution be drafted for the EU. He also suggested that, in the medium term, we set up a "pioneer group" of states participating in the enhanced cooperations that are supposed to be made possible by the future treaty of Nice. So the debate has been re-opened. It is important, and healthy, because it is a question of defining the model of European integration for the future. It will not be resolved by the current IGC, which doesn't have the mandate for it, and we must be careful to avoid interferences between the short-term effort to overhaul our institutions and the long term vision of a renovated and enlarged union.

3. Transatlantic relations Healthier than meet the eye

I need hardly remind you that the start of the European project in the fifties, owes much to U.S. support (the Marshall Plan, the OEEC now the OECD). The trans-Atlantic relationship was institutionalized ten years ago (the 1990 Declaration, the new Madrid Agenda in 1995). IT now covers all facets of a relationship which is close in all areas (political, trade, cultural) and unequaled anywhere. The EU and the US are major partners, and close allies - but they are also competitors -.

1) High-profile disputes

So... The relationship between the EU and the US is obscured by trade disputes. Naturally, the media play these up. In fact, there have always been disputes between Europe and America. But I must admit that their number scope has increased over the past few years. I see three reasons for that :

1/ The adoption of extra-territorial sanction regimes by Congress in 1996 (ILSA and Helms-Burton), and the propension of congress to legislate without too much consideration being given to multilateral institutions and regulations does not help.

2/ The emergence of new social issues and new technologies is giving rise to new difficulties as evidenced by the difficult discussions we have had on issues of food safety (hormones, GMOs) and the implications of the Internet (i.e., the protection of personal data, and the modes of regulation and taxation).

In all these areas, I want to make it quite clear that the issue is usually not protectionism but a different conception and sensitivity on either side of the Atlantic on issues closely affecting ordinary people (food safety where the Europeans have had some tragic experiences in the past 15 years, the protection of private life where Europeans are asking the authorities to bring in regulation whereas Americans are mistrustful of these for historical and cultural reasons and prefer to rely on self-regulation). What we are talking about here is indeed deep cultural differences.

3/ Some issues fall under traditional commercial rivalries in the usual sense of the word such as the community banana regime on the Europe an side (but the purpose is also to protect the interests of the ACP producer countries which, like our own producers, often don't have an acceptable alternative to growing bananas]; and on the American side, the regime of foreign sales corporations, indirect export subsidies which were recently condemned by the WTO. The EU has let it be known that it is still open to discussing the issue, but first and foremost it is up the United States to modify its system of taxation to be compatible with WTO rules.

2) In a context of exchange and cooperation

But the trees should not hide the forest. We must keep things in perspective and shouldn't lose sight of the main picture. The disputes I've just mentioned represent barely 1 percent of our trade (in value). We have always to keep in mind that The EU and US are each other's main trading partners. We are witnessing ever-increasing trade flows and especially cross-investments and transatlantic mergers and acquisitions. This reflects the growing interdependence of our economies. The creation of the euro is giving American businesses new opportunities by allowing them to move in a unified monetary zone, and will reinforce that trend.

The disputes themselves reflect this growing interdependence of our economies: investments in both directions between Europe and the United States represent more than $1,000 billion, in volume that’s three times greater than the two-way investments between the U.S. and Asia. Europe is the leading investor in the States. According to an EABC report, European investment is the source of 6.5 million jobs in American (more than half of them directly generated by European companies). We find pretty much the same proportions in the case of U.S. investments in Europe. In fact an estimated 50% of transatlantic trade is the result of what you could call in-house trade.

Moreover, We have, above all, global common interests, a shared responsibility on global affairs and on the multilateral system that we need to strengthen.

That is why we should manage the current disputes in a responsible and mature way by resorting to the procedures we established together for this very purpose, :specifically the WTO dispute settlement mechanisms. And at all cost let's keep politics and high drama out of the stakes. It's not an easy task, especially in the current political context in the US, with a major election race ahead. The risk of politicizing these disputes or resorting to directly conflictual moves (such as the Carrousel legislation) does exist and may complicate our task.

Politically, we must promote an ever-closer consultation and dialogue. True the Institutional relationship between the EU and the US set forth by the transatlantic declaration of 1990 and the Madrid agenda of 1995 may sometimes seem a bit ponderous and a little creaky, and the mechanics of biannual summits don't always lead to the hoped-for results. There's a predominant impression that important decisions are made elsewhere (i.e. at the UN, the G8, or NATO). That is not entirely false (and it is true that we do consult and discuss constantly everywhere), but it doesn't do justice to a dialogue that has grown increasingly substantial these past few years, sometimes out of earshot of the media. I am thinking in particular of the dialogue between such non-governmental players as the TABD. But we must promote more contacts between the US congress and European parliamentarians. More generally speaking, I've noticed that the U.S. chooses to engage more and more frequently with the EU as such, an additional indication, if need be, of the latter's growing presence and reality on the world scene.

Conclusion

I'd just like to make three comments by way of a conclusion.

1) The European integration process is moving ahead and the EU is here to stay. I dare say it is losing none of its strength. It now goes the heart of the jurisdictions of its Member States (currency, defense), which explains the resurgence--a welcome one, in a democracy--of the debate on the "finality" of Europe. This is the context for the French presidency over the next remaining three months.

2) The emergence of an increasingly integrated Europe characterized by its solidarity, is of course in the U.S. interest because Europe is a close ally and a major strategic partner. It goes without saying that we will see further areas of dispute. That is part of life, and we have to get used to the idea that we will always live with a certain amount of disagreements and disputes of this type. But it is up to us to resolve our disagreements through such legal means such as the WTO. Most important, we must relativize these problems and never lose sight of the main thing: the density of our exchanges in every area, and the intimate complementarity of the European Union and the United States in the coming multipolar world.

Thus together we will promote democracy, respect for human rights and a market economy.

 

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Directeur de la publication : Joël-François Dumont
Comité de rédaction : Jacques de Lestapis, Hugues Dumont, François de Vries (Bruxelles), Hans-Ulrich Helfer (Suisse), Michael Hellerforth (Allemagne).
Comité militaire : VAE Guy Labouérie (†), GAA François Mermet (2S), CF Patrice Théry (Asie).

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