I am delighted to be here talking about this important topic.

I'll cover two themes today: First, I’ll look at the shared values that underpin the transatlantic relationship. Secondly, I’ll examine concerns that our two continents may be drifting apart, and ask whether some of the disputes between the U.S. and Europe that we have witnessed in recent years are in fact a reflection of a growing “values gap” between the U.S. and Europe.


Shared Values

It is often said that the U.S. and Europe share the same values. Our common history and common systems of democratic governance and market economies have built a bond that runs deeper than cooperation between the governments of the day.

As far as it goes, this is true. Europe and the United States share more in common than perhaps any two other regions of the world. Our core values include democracy, a commitment to the importance of the individual, of respect for basic human rights, the rule of law, tolerance, and an appreciation of diversity. Both sides of the Atlantic share a strong belief in the role of free trade and competitive markets to improve the daily lives of our citizens.

More than Just Shared Values: Common Action

But the strength of our relationship is, and must be, about much more than shared values. It is not our values that make the transatlantic relationship so important. The relationship matters because we derive from these shared values common objectives, and because we have the capabilities to achieve them.

To continue to go forward, then, transatlantic ties need to build on our common values. We must also move ahead on common action.

And we have. For two generations, from the Kennedy Round to today’s Doha Round, the U.S. and Europe have been in the forefront of efforts to dismantle barriers to free trade.

For half a century, we stood toe-to-toe against the Soviet Union’s alternate system of values – and prevailed.

After the fall of the Berlin Wall, we toiled side by side in Eastern Europe to support those countries ambitions to build democracies and strong, vibrant market economies. Those efforts were critical to bringing about the historic enlargement of the EU earlier this month.

In the Balkans, American and European troops have taken the point to bring stability and put an end to brutality. Increasingly, those troops are giving way to other professionals from both sides of the Atlantic who are taking on the difficult task of building new societies in Southeast Europe.

Some day, perhaps even by the end of this decade, we will be welcoming them into our premier transatlantic institutions – NATO and the EU.

In Africa, we are working side by side to tackle humanitarian crises, battle the diseases that are ravaging the continent, and supporting those who call for democracy and freedom.

At this summer’s U.S.-EU summit, I hope we will be able to agree on a new priority effort for the transatlantic relationship as we work together to support those voices in the Middle East calling for economic, political and social reform.

And increasingly, we are also turning our attention to the new threats to our core values posed by terrorism, organized crime, and the spread of weapons of mass destruction.

Economic Ties: A Powerful Stabilizing Force

Fundamental to our relationship is a $2 trillion dollar U.S./Europe trade and investment relationship, the largest such relationship in the world.

The United States, Canada, and the current 15 members of the European Union combined account for almost 60 percent of global GDP.

U.S. affiliates in Europe employ six million workers, and European companies employ four million workers in the U.S..

Of the $5 trillion dollars in foreign assets owned by U.S. companies, nearly 60 percent are in Europe.

Europe accounted for half of total global earnings of U.S. companies in 2001, as measured by U.S. foreign affiliate income. U.S. income of European affiliates rose more than five-fold in the 1990s to nearly $26 billion.

In fact, U.S. assets in Germany alone -- $300 billion in 2000 -- were greater than U.S. assets in all South America

It is for this reason that the U.S. supports the EU’s Lisbon goals to make the EU the (second)-most competitive society in the world. We welcome the competition. A stronger, more competitive Europe will also benefit the U.S.

We need to work together on "smart regulation," and to do some serious thinking about an early warning system on new regulations to avoid some of the spats we have encountered lately.

We are also the backbone of the world trading relationship. Transatlantic trade accounts for and over one-third of global trade. We should continue to work to reduce the trade and regulatory barriers that hinder the free flow of goods and services between our economies.

Strong and open economies in the U.S. and Europe not only help our own citizens, but those of developing countries as well. This is also why we are working hard with the EU and other countries to ensure a successful outcome to the Doha Development Agenda.

This incredibly important trade and investment relationship has proven a stabilizing force in the overall relationship in recent years of tensions over Iraq, Kyoto, and the International Criminal Court.

Shared Values Does Not Mean Identical Values

We are putting our shared community of values to work for our own good, and the good of mankind. For me, however, a “community of values” does not mean holding identical values. Rather, it means that we have shared structures where we talk -- and even disagree with each other.

What is critical, however, is that we work together so our dialogue occurs in an atmosphere based on tolerance of diversity, mutual respect, and appreciation for that which we hold in common.

Likewise, where the U.S. and the EU have different policies I would not automatically attribute them to different values.

Is There a "Values Gap"?

That said, there is a growing wave of voices that say that the U.S. and Europe are drifting apart precisely because of a growing “values gap.” This is a serious allegation, and I think we need to examine it seriously.

Clearly, despite all that binds us together, there are also differences between Americans and Europeans. Alexis de Tocqueville chronicled some of these American cultural differences two centuries ago.

Today, cultural stereotypes of my country abound: Americans have a "can-do attitude," are "workaholics" and "entrepreneurs," they are "individualistic," "religious, "socially conservative," and "patriotic" or even "nationalistic."

It is worth taking a look at these differences, old and perhaps emerging, and how they play out in our current relations with the EU:

Entrepreneurial Spirit

At the risk of stating the obvious about my own country, the United States is an energetic, pluralistic multi-ethnic society that continuously reinvents itself. It is a magnet for the “young and the restless,” and we have a long tradition of welcoming the entrepreneurial and adventurous from all over the world – including Europe.

This difference plays out in a number of current issues, where Europeans seem favorably disposed towards regulatory mechanisms that Americans believe stifle entrepreneurial freedom, whether we are talking about fewer or shorter work days, social support regimes, or the REACH proposals for the chemical industry.

Risk Acceptance

Americans are also more willing to accept risk in their everyday lives. This also helps explain disputes over such things as the "precautionary principle" that underlies our differences over biotechnology, from beef hormones to GMO's.

The challenge is to move from this difference in values to finding a practical solution. Here, it seems to me, we should rely on another of our shared transatlantic values: our faith in science. If we can adopt a common approach -- that any regulation be based on sound scientific evidence -- I am hopeful that we can make progress.

Acceptance of Change

Related to risk acceptance, Americans are in general readier to accept change.

We are more comfortable with uncertainty, we place less emphasis on job security and on social safety-nets except for the very poorest in our societies.

We are highly mobile; we move around our country and the world and are much more likely to shift jobs.

I cite this as an example of where a difference in values does not necessarily create transatlantic tensions. But it may also underline why European nations have not been as successful as the U.S. in transforming their economies, or meeting the ambitious Lisbon objectives that have been set out for the continent.

Reliance on Technology

Based on our history, Americans remain open to believing in technological solutions to existing problems. This, in my view, underpins the U.S. reluctance to stifle current economic growth in favor of an environmental regime like the Kyoto Protocol.

Instead, while pursuing prudent measures to reduce greenhouse gas emissions, we prefer to work on developing new technologies such as hydrogen power that will allow our peoples to enjoy growing prosperity while still protecting the planet we live on.

There is an irony here: while I believe Americans are generally more open to risk and to technological solutions, one related issue where Europeans are more willing to accept risks and put their faith in technology regards nuclear power. But this, too, might help us better understand the disagreement between the two sides of the Atlantic over the Kyoto Protocol, since Europe can only conceive of meeting Kyoto targets due to its robust reliance on nuclear energy.

Religion as a Part of Daily Life

The first pilgrims to the United States from Europe were people of deep religious beliefs. As part of the constitution debate, Europeans today are struggling with whether to include language about the Christian heritage of the continent – a clause fundamentally incompatible with America’s vision of separation of church and state.

Yet the irony is that Europeans today have largely abandoned the church, while Americans continue to give faith a central place in their daily lives.

Europeans become uncomfortable when President Bush proclaims his profound faith, his reliance on God's support and guidance, or speaks of an axis of evil. Not so in America.

Our modern history has reinforced the American view that it is crucial to confront evil head on, whether this be Hitler’s Holocaust, Stalin’s forced collectivization, Pol Pot’s genocide, or Saddam Hussein’s brutality and aggression.

Perceptions of Threat

Although it is not really a question of values, in this post 9/11 world, our different perceptions of threat might also be a factor behind a growing gap between Europe and the United States. For Americans, we remain a nation "at war" with terrorism. This is not just rhetoric. It means that we see this as an all-out campaign, in which no sacrifice is too great.

But most Europeans, even after Madrid, do not share this same sense of urgency.

Spanish authorities have apparently done much to roll up those behind the Madrid bombings because of evidence traced through a cell phone and its SIM card. But the same SIM registration process that allowed this success in Spain is illegal elsewhere in Europe, and resistance to change is widespread.

Steps that seem common-sense to the U.S. in our shared effort to protect our citizens and commerce from terrorists, such as better screening of travellers using Passenger Name Record data or advanced clearance of shipping containers, have instead become the source of transatlantic disputes.

I would resist explaining this as a difference in values, but still believe we need to address these issues head on if we are to avoid further strains in transatlantic relations.

Iraq Prisons Scandal

There is one other issue of shared democratic values that I must, unfortunately, touch upon today. The onslaught of daily news requires me to do so. I am referring to the revelations about abuse of Iraqi prisoners by U.S. forces in Iraq.

Far from revealing differences in American and European values, however, I believe these horrible images reinforce, in the end, how much we are alike. Americans, like Europeans, have been repulsed by what they have seen. My fellow citizens, like Europeans, have recoiled in horror, and expressed their outrage that this could have been done by those entrusted to wear the uniform of the United States. We are all distressed by these scenes. They are deplorable. They are unacceptable.

America remains committed to the rule of law. My country is devoted to the concept that every human being -- even in times of war -- should be treated humanely and with dignity. Americans are intent on learning the whole truth, and will bring those who are responsible to justice.

In so doing, however, I think it is also important not to lose sight of what Iraq is all about. We all agree on the overall goal: to put in place a functioning democracy, restore security and help the Iraqi people build a new nation for themselves and to give them their sovereignty back.

U.S.-EU Cooperation: Global Engine for Growth and Change

I have spoken a fair amount today about some issues that divide us, because it is important to understand what they are -- and that they are not insurmountable.

I strongly believe that that which binds us together is far deeper and more profound than any centrifugal strains in the opposite direction.

When the U.S. and the EU are together, it is difficult for others to force a united transatlantic community to do things that it doesn't want to do.

Opponents of democracy and rule of law sometimes seek to exploit this by trying to play the U.S. and the EU off against each other. Thoughtful leaders on both sides of the Atlantic must ensure this does not happen.

The U.S. and EU working together are a global engine for economic growth. When we are together politically and diplomatically we are also a global engine for the promotion of democracy, human rights, the rule of law, tolerance, and appreciation for diversity and belief in the role of competitive markets to improve the daily lives of our citizens – the values that continue to underpin our Transatlantic ties.

We can be partners in fighting global terrorism, and in fighting world poverty also.

Even during this most recent period of difficult political strains in the transatlantic relationship, the deep economic ties between Europe and the United States have been a source of stability. We have either resolved -- or are close to resolving -- disputes over Galileo, Sarbanes-Oxley, steel safeguards, passenger name records, and container security. This is a striking record of achievement.

We cannot take our cultural, political and economic ties for granted. They must be continually renewed.

History made us friends. Commerce made us partners. Confronting common threats has made us allies.

I am convinced the Union that is emerging on this continent, bound as it is to America by these ties of history, commerce, friendship, and purpose, will be stronger and more capable than ever before.

We welcome this transformation, and look forward to working with Europe as we face the future together.