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The State of the EU and the Priorities of the French Presidency

The State of the EU and the Priorities of the French Presidency

Remarks by François Bujon de l'Estang, Ambassador of France to the United States, at the Chicago Council on Foreign Relations, Chicago, October 25, 2000 Source: French Embassy, Washington D.C.

First of all, I want to thank the Chicago Council on Foreign Relations for giving me this opportunity to speak to you about Europe and France's European policy. The timing is just right as my country is currently holding the six-month rotating presidency of the European Union, the 11th time it has done so since 1957.

François Bujon de l'Estang

I also want to acknowledge the presence here of the Consuls General of the various European union member states, who are here today at the invitation of the French presidency and of our Consul General in Chicago, Jean-René Gehan.

I would like to begin by emphasizing--and I will return to this point--that Europe is of course moving ahead with integration, so there's no need to give in to pessimism or euro-skepticism, a syndrome that I am sure is quite alien to an enlightened business audience like this one, but which I encounter frequently inside the beltway. [We also have to recognize that it's been fueled anew by the decline in the Euro. Notwithstanding the fact that, over the past few years, the European Union has created its internal market, launched the euro and begun establishing a European defense]. The state of our union is good, or at least much better than many people like to characterize it.

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, that it will be judged according to how well it carries out this task.

In order to leave some time for discussion, I will evoke the state of the European Union and the major challenges Europe is facing (1), give you an overview of the priorities of the French presidency (2), and finally, review the relationship between the EU and the United States (3).

1. The state of the European union

Europe is relentlessly moving ahead and pursuing its integration in virtually every domain. New common policies are being implemented across the board. Everybody is knocking at the EU's door and wants to be part of it. In many respects, Europe is becoming the common reference for all the businessmen and citizens of the continent. So we must be doing something right.

1) before I go into the most recent developments in European integration--and I will try not to inflict too many historical details on you--let me just say a few words on the path we have taken since 1957, when the common market was launched.

It is considered good form, and not just in the United States, to criticize Europe for its slowness to act, to change, to make decisions. All too often, our union is described as a cumbersome machine run by thousands of faceless technocrats in Brussels.

The reality is quite different. Over the past 43 years, European integration has led to some extraordinary advances: reconciliation between France and Germany, for example, is a fait accompli, and in fact nothing happens without an agreement between our two countries. Western Europe is living in what we could almost describe as perpetual peace. More recently, Europe achieved economic integration, establishing a huge single market, the most open one in the world. The old bugaboo of a "fortress Europe" has been seen to have no basis in fact--something that all American businessmen are well aware of.

2) 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 1st, 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 83 cents. 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 figure are there to prove it. They also point out, and again quite rightly, that the depreciation of 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 its infancy illnesses: 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 Unions' 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 actual economic circumstances, as Europe is presently enjoying solid growth, and showing excellent economic fundamentals. So what we are talking about is indeed one these recurrent irrational phenomena that all too frequently take hold of markets. It therefore resists any rational analysis and may get worse before it gets better. Maybe, at some point, a coordinated and sustained intervention form 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, get its act together more convincingly, and show that it is for real. It must, in other words, make some difficult decisions, and make both enlargement and institutional reform a success, demonstrating along the way its strong determination to keep moving forward.

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 certainly not, as I sometimes hear in Washington, 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 rapid reaction force on a crisis theater. It has well-established trade weapons means, increasingly efficient diplomatic means, but for the moment no military means at its disposal as an institution. I believe that, although this may not be its stated objective, increasing Europe's military capabilities will also strengthen, not weaken, both NATO and the transatlantic link.

More specifically, we will focus during the upcoming months on moving the capabilities process forward so that by 2003 we will be in a position to declare that the so-called "Helsinki headline goal" has been met [i.e. that the EU is in a position to deploy 60,000-80,000 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 Brussels on November 20, will be a milestone event in this regard.

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.

3) Naturally, this is not happening without considerable internal debate on the future and 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. We can say a few words about that in a little while, if you wish. So the debate has been re-opened. It is important, and healthy, because it is a matter of defining the model of European integration for the future. It will not be resolved in the short term, and will stay with us and develop as we go along.

2. The priorities of the French presidency

Like Mr. Jospin, who addressed the National Assembly on May 9, President Chirac presented the priorities of our presidency to the European Parliament on July 4. 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. In this regard, I want to stress the extraordinary attraction of the European union for countries that don't yet belong to it. All of the former so called "east-bloc" countries are candidates, and now that the situation in the Balkans is growing brighter with Mr. Kostunica’s victory over Milosevic, who bears responsibility for so much bloodshed in the region over the past 10 years, prospects for a rapprochement between the EU and the Balkans are becoming a reality.

Our institutions, conceived in 1957 for the "little club" consisting of its six original members, is already experiencing operational difficulties since we grew to 12, and particularly to 15, members. The Amsterdam treaty in 1997 did not help us resolve this issue.

If we want Europe to work, to continue to move forward, to make decisions, our institutions must be reformed. That is the aim of the new intergovernmental conference (IGC) that is in progress and will conclude its work at the European Council meeting in Nice from December 7-9.

It deals with five subjects: the size of the commission, which cannot continue to grow along with the enlargements; the necessary extension of the vote to the qualified majority of the council; the re-weighting of votes, which should go hand in hand with the extension of the qualified majority; the establishment of a strengthened and effective cooperation clause allowing certain member states to develop new solidarities within the treaty, without obliging everyone to take part; and the development of an EU charter of fundamental rights, which had not yet been done.

As you will realize, we're touching on sensitive issues here. The question goes to the heart of the European project since what we're doing is organizing the institutional operating of the Union, and more than that, dividing powers and jurisdiction among states, European bodies and member states.

In this instance, the debate is actually rather similar to the ones that fueled the negotiations before 1997, before the Amsterdam Treaty was signed. In a nutshell, it puts the large member states at odds with the smaller states. [In Amsterdam, the smaller states refused to give up their representation on the Commission and lose their influence in the decision-making process in the Council (in terms of the relative weighting of votes].

Three years ago, the Union had to put off reforms for want of agreement. This time, with the prospect of enlargement looming, we can no longer afford to delay settling what are called the "leftovers" from Amsterdam.

Until recently, we had to admit that not much progress had been made. The European council that was held mid-October in Biarritz gave us reasons for hope. The EU charter of fundamental rights has been approved, and important progress has been registered on two of the four remaining subjects: the extension of the qualified majority vote and the establishment of a strengthened cooperation clause. The two last subjects --the re-weighting of votes and the size of the commission--remain problematic but there is hope here as well that progress can be achieved before nice and during this European council meeting. The French presidency has already let it be known that it will reject any second-rate agreement. Enlargement has to be prepared at the institutional level in satisfactory conditions. A poor agreement or a less than satisfactory one in Nice simply won't help. And proper preparation is in the interest of the candidate countries themselves; they wouldn't want to join an entity on the verge of paralysis.

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 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 greenhouse gases emissions....

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 gives priority to the Balkans (with the EU/Balkans summit in November), the Mediterranean (with the Barcelona IV ministerial meeting) and Asia (a summit with the ASEM has just taken place in Seoul last week).

3. Transatlantic relations Healthier than meet the eye

Before I conclude, I'd like to say a few words about relations between the European Union and the United States. I need hardly remind you that the start of the European project in the fifties owes much to US support (the Marshall Plan, the OEEC and now the OECD). The transatlantic relationship was institutionalized ten years ago (the 1990 declaration, the new Madrid agenda in 1995). It now covers all facets of a relationship that is close in every area (political, commercial, cultural) and unequaled anywhere. Yet the EU and the US are major partners and close allies, but they are also competitors in the economic field and therefore the sky is not always uniformly blue over the Atlantic.

1) High-profile disputes

So... The relationship between the EU and the US is obscured by trade disputes. Naturally, the media plays them up of course there have always been disputes between Europe and America, but I must admit that their number and scope has increased over the past few years. 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 international regulations does not help and has become a subject of major concern.

The emergence of new social issues and new technologies is giving rise to new difficulties as evidenced by the difficult discussions we are having 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).

Some issues fall under traditional commercial rivalries in the usual sense of the word such as the community banana regime on the European side and on the American side, the regime of foreign sales corporations and 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

Notwithstanding all this, we shouldn't lose sight of the main picture. The trees must not hide the forest. The disputes I've just mentioned represent barely 1 percent of our trade. 3 percent if we include the fsc. We should always 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. We are becoming more and more interdependent. 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.

We have, above all, global common interests, a shared responsibility for global affairs and for 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. 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 two weeks from now. The risk of politicizing these disputes or adverse moves (such as the Carrousel legislation) still exists and may complicate our task.

Politically, we must promote an ever-closer consultation & 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 twice-yearly summits don't always lead to hoped-for results. There's a predominant impression that important decisions are made elsewhere (i.e. at the UN security council, the G8, or NATO). That is not entirely false, 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 dialogues 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 notice that the US 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.


I'd just like to make two 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.

2) The emergence of an increasingly integrated Europe, characterized by its solidarity, is of course in the US 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 legal means such as the WTO. Most important, we must relativize these problems, put them in perspective, 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 be successful in promoting 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).