Abstract
Despite the ascendance of other regions in the world, the transatlantic relationship remains paramount. The cultural, historic and economic links between the US and Europe are strong and important. Notwithstanding the strength of these bonds, Europe has lost currency for US foreign policy as it has moved its focus to Asia. This can be attributed to the lack of coordination on the part of the Europeans and preoccupation with the EU's institutional debate. Now that the Lisbon Treaty has been ratified, the institutional debate is in the past and the EU must redouble its efforts to strengthen the transatlantic partnership. Going forward, the only way that the transatlantic partnership can be strengthened and for prosperity on both sides of the Atlantic to be assured is the removal of all trade barriers and the introduction of the free movement of goods, services, capital and labour across the Atlantic.
I am completely convinced that the Atlantic link is crucial to both Europe and America. Throughout my political career, I have advocated for a strengthened Atlantic partnership, for the benefit of both sides of the Atlantic. The ties between Europe and America are deep, go back centuries in history and today find clear expression.
Historically speaking, neither the United States nor the Latin American nations can be properly understood without Europe. The history of the United States cannot be disassociated from the history of the United Kingdom or the history of Spain. Most of the Latin American nations were actually part of the Kingdom of Spain until somewhat less than two centuries ago; some of them until 1898. Our shared roots run deep. When it comes to Europe, it is not possible to understand contemporary European history without taking into account the role the United States has played. For the last 50 years, the Atlantic relationship has been central to the security and prosperity of our people. We must remember that thanks to the Atlantic link, it was possible to defeat the totalitarian ideologies that destroyed Europe in the twentieth century: National Socialism and Communism. The vital momentum provided by our American allies made it possible for us Europeans to build our common project, the European Union. In my opinion, the European reality has been possible precisely because it has been Atlantic; because it has been built upon the support of our American allies, an irreplaceable guarantee of our security and our freedom.
This Atlantic link is based on clear ideas: freedom, democracy and the need for a united Europe. The United States and the European Union share the common values of commitment to democracy, respect for human rights and individual liberty, promotion of peace and collective security as well as a belief in economic freedom; values that are at the core of our civilisation. Many other friendly countries also share these values.
Moreover, not only do we share the same principles and objectives, but we face the same threats as well, threats which can and ought to be dealt with through common action so they can be countered most effectively.
First, Europeans and Americans face the threat of Islamic terrorism. As I have just mentioned, I am convinced that global security threats are more effectively dealt with through joint action than on an individual basis. The Atlantic link is a crucial aspect of the fight against Islamic terrorism.
Second, Europeans and Americans share the same concerns regarding global challenges to humankind, such as pandemics. Both Europeans and Americans have a strong commitment to global free trade and the fight against poverty.
Third, the European Union and the United States are concerned about global warming. Both regions need to improve energy efficiency, promote diversity in their energy sources and ensure a safe and secure energy supply. The United States and the European Union need to improve their domestic energy supply arrangements by reducing their dependence on external energy sources.
In spite of the need for renewed Atlantic cooperation in all these fields, over the last few years there has been an increasing trend to accept what we might call the ‘Atlantic drift’. There are those who believe that Europe should become a counter-weight to the United States. Many believe in running away from our American allies rather than working together with them. I do not share that view: I believe in unity and cooperation; I believe in an unbreakable partnership between both sides of the Atlantic.
But, sadly, we must accept the fact that Europe is losing ground in the international arena, and that Europe is no longer a priority on the US agenda. In my opinion, the current situation can be blamed on two factors: an internal one, which is due to Europe's own mistakes; and an external one, which is the rise of emerging powers like China and the new role they play in the world.
If we focus our attention first on Europe, we notice that the European Union is not nearly as dynamic, vibrant, open and productive as it used to be and should be. It seems that the European process is stalled; it has been stuck for a long time in sterile debates and is trapped in immobility, wasting energy on some diffuse musings that pay no attention to reality. It seems we have forgotten that the goal of European institutions is to serve Europeans. The European Union is not an end in itself; it is an instrument that has been assembled in order to build a better future for all its members. We have lost sight of the true goal of the European project, and have entangled ourselves in endless institutional reform that began after the Treaty of Nice and in which we have employed the best of our energies.
On this front, I hope that the approval of the Lisbon Treaty will put an end to this institutional dispute. It is time for Europe to get back to work and, within an agreed framework, undertake the necessary measures to improve the lives of Europeans: measures and reforms that have been put aside for too long already, especially on economic issues.
The economy is the engine of the world as well as the engine of Europe. A booming economy brings jobs, wealth and welfare to the people. The economy is the cornerstone of the European dream. But for many years the European economy has not been growing at the desired pace. The Europe that once created jobs, brought prosperity to its citizens and was a booming example of wealth creation is in decline. It is true that we are suffering times of global financial and economic crisis, but not everything can be blamed on this. For years now Europe has not been growing at the same rate as have our American friends, for example, nor can Europe's productivity be compared with that overseas. The crisis in Europe has very much to do with wrong monetary policies, bad regulation, negligent supervisory policies and, above all, the lack of political will to implement reforms. As I said before, Europe has been wasting its energy on futile debates instead of putting in place much-needed economic reforms.
I believe in a Europe that is open to the world and is able to launch a major agenda of reforms, a Europe that is capable and willing to compete in a globalised economy. The overhaul of the welfare state, securing our energy supply, labour market reform and education are the major issues which must be faced if Europe wishes to prosper and play a role in tomorrow's world. Last year, the think tank I currently chair, FAES (Foundation for Social Research and Analysis), published a comprehensive report entitled ‘Europe: Proposals for Freedom’, aimed at making a thoughtful and constructive contribution to the ongoing debate on the future of Europe.
On the other hand, we have China and the new US priorities. In recent years, due to China's spectacular economic boom (and that of other Asian countries), this region has gained considerable importance in the decision-making processes of major international actors. China is currently the second-largest national economy in the world and is the main creditor of the United States. It also constitutes about one-fourth of the total global population. The main reason for this incredible leap in prosperity is that these developing countries, with low per capita income and huge concentrations of poverty inherited from the past—the times of autarkic Communism or socialism—are now actually freeing many of their citizens from poverty in a rapid and sustainable way, because they are now open to trade and finance, support free markets and have thus banished central planning.
Consequently, the importance of China and other Asian nations and the continuing dominance of the United States have displaced the axis of the international arena from the Atlantic to the Pacific. Unfortunately, Europe is no longer a key player in international issues (as could be seen in the latest Copenhagen meeting on climate change), but rather the United States and China are the ones leading the action. And, sadly for us Europeans, the United States is paying more attention to this Pacific axis than to us, its Atlantic allies. Europe is not a priority for the current American administration—not anymore. Whether we like it or not, American priorities with regard to foreign policy tend more towards the East than the West. Even more so, we have been wasting our time and squandering our economic potential, which reflects directly on our political influence, because some people have misunderstood the true goals of the European project. Europe's economic transformation is a necessary condition to increase our overall responsibility in tomorrow's world.
However, having stated all these worrisome facts, there is something else which still plays to our advantage and to the benefit of the Atlantic link: the Atlantic market is still, and by far, the largest market on Earth, whether you look at it in terms of trade, investment, labour flows or financial activity. Though the current economic crisis is having a major effect on transatlantic jobs, trade and investment, the transatlantic economy remains the heart of the global economy. In order to illustrate this statement with numbers, let me cite some figures on the transatlantic economy:
From the start of this decade to mid-2008, Europe accounted for over 57% of total US foreign direct investment. Over this decade, six of the top 10 US investment markets have been in Europe.
US investment in either the Netherlands or the UK in this decade has been greater than total US investment in South and Central America, the Middle East and Africa.
US firms invested $26.4 billion in China between 2000 and mid-2008, less than US investment in Belgium and less than half of US investment in Ireland.
Total sales of US affiliates in China have soared over the past decade, but from a low base. Sales of US affiliates totalling $112 billion in China in 2006 were on par with sales in Belgium ($106 billion) and far below those in Germany ($327 billion) or France ($198 billion).
Europe accounts for just over half of the total revenue of US services around the world.
Europe accounted for over half of the total earnings of US global affiliates in 2007 and the first half of 2008. The income of US affiliates from Europe was nearly three times as large as from Latin America and more than double earnings from Asia in 2007.
EU investment assets in the US totalled €934 billion in 2006; in China, the comparable figure was €33 billion—roughly 4% of the EU investment stock in the US.
The European Union accounted for just over 37% of US exports of services and for 39% of US imports of services in 2007.
Of the 9.5 million people employed outside the US by majority-owned US companies in 2006, roughly 43% were located in Europe.
The manufacturing workforce of US affiliates in Germany alone totalled 367,000 workers in 2006, equivalent to the number of manufacturing workers employed in China by US affiliates.
So, although the Pacific is starting to become the centre of the international economy, it still has a long way to go before it overtakes the Atlantic market. Today, the European and American markets are more interconnected than ever. This has been extremely beneficial for both, and has been a key factor in the growth that both continents have experienced over the last 30 years. But as the financial crisis has revealed, this has also made each economy more dependent on the other. For example, the subprime mortgage crisis started in the United States but affected the European economy almost to the same degree. Europeans and Americans have much at stake in each other's economic success. In my opinion, the best way to ensure each other's success is to build an integrated transatlantic market which will bring even more prosperity to its citizens.
In 2006, FAES released a report entitled ‘A Case for an Open Atlantic Prosperity Area’, which advocated for full transatlantic economic integration, a 100% barrier-free transatlantic market. This proposed Atlantic Prosperity Area (APA) would pursue a completely free transatlantic flow of goods, services, capital and knowledge; full transatlantic trade and investment liberalisation, leading to full economic integration between the European Union and the United States, by removing all kinds of trade and investment barriers, especially the regulatory ones, which are at the core of the current disintegration of the transatlantic market. The APA would also be open to any third country wanting to join, if ready and willing to fulfil the conditions set by the Atlantic partners. In order to make this possible, the 2006 report focused on identifying barriers to transatlantic trade and outlined a blueprint of how to succeed in developing the APA, always in need of the ever-essential political momentum.
The proposal to create an open APA is especially useful when it comes to strengthening the Atlantic link within the economic sphere, because it would combine a bilateral agreement and a multilateral development agenda. Both European and American citizens would benefit from increased trade and investment, strengthened competition, greater innovation and higher productivity, which would subsequently lead to substantial and permanent welfare gains in terms of higher growth and more and better jobs. Any other nation wanting to join would also come to benefit from all these advantages.
Europe would, in fact, be the one to gain more from this project. A study on this subject produced by the OECD in 2005 estimated that further transatlantic liberalisation could lead to permanent per capita income gains in Europe of up to 3.5%. This is the equivalent of each worker receiving a year's salary for free. A full year's income throughout a working lifetime: that is what an open Atlantic Prosperity Area could provide.
These benefits would also filter into the broader worldwide community. According to the OECD, trade links would spread the paybacks of reform in the United States and the European Union to other OECD countries, with an estimated increase in per capita GDP of up to 1.5%.
I mentioned at the beginning of my article that the best way to promote our interests—whether promoting prosperity or defending and expanding freedom—is to act together. Strengthening the bonds that link the United States and Europe is a vital requisite for a better world, as well as for our own security and liberty. I do believe that creating an Atlantic area of economic prosperity is an excellent tool to do so. From my point of view, this APA is the perfect structure through which to work together towards wealthier, more open and more dynamic societies in Europe and in the United States. It is the perfect means to reinforce the economic scope of the Atlantic link. It is the perfect system to build more influential nations, in order to counter more effectively the threats that we have to face, and in order to be better able to defend our way of life.
To sum up, I would like to emphasise some of the basic ideas on Europe I have outlined above. First, Europe must stop wasting time, energy and resources on pointless debates and start concentrating on the truly essential issues, such as reinvigorating the European economy, remodelling the welfare state, assuring a stable energy supply and guaranteeing our security and freedom.
The second idea is that Europe is connected to America. Our histories are tied together, and today we share the same principles, values and concerns. We need to heal the wounds the Atlantic relationship has endured in recent times, because they are our own wounds. Europe and America need to work together, act together and stay together as the best way to achieve prosperity, defend our freedom and protect our values.
Finally, in economic matters, I believe the best way to fortify the Atlantic link and to be more prosperous is to construct an Atlantic market, removing all types of trade and investment barriers and pursuing completely free transatlantic flows of goods, services, capital and knowledge.
Europe has been a project based on small but critical steps, in which the search for an ideal did not make us lose a sense of reality. Robert Schuman said that the future of Europe lies in its own hands. This is as true today as it was 60 years ago. Now, as then, we need leaders with determination and courage, who do not accept complacency and are not content with what is easy but rather with what is necessary and good. I hope we live up to this standard.
Footnotes