Ambassador Gardner at CESI (European Confederation of Independent Trade Unions) Conference

Thank you very much for the opportunity to speak with you today.  From the moment of my arrival in Brussels in March I stated my intention to meet frequently with civil society – including groups representing environmental, youth, consumer and, of course, labor interests. I am convinced that the most significant thing we can do as leaders is to work together to strengthen and deepen transatlantic cooperation across all spheres that define our values and ideals. Labor organizations such as CESI, and in fact all of civil society, can and must play a major role in this effort.

I sometimes feel as though America and Europe are like a husband and wife, who have collaborated, cohabitated and accomplished great things together.  But as the years have passed, we have begun to take each other for granted – focusing more on where we disagree than on the far more numerous areas in which our values and beliefs are aligned.  Perhaps we are forgetting how intertwined and co-dependent we are on each other and we need to take a step back and reflect on our relationship.

Trade between the U.S. and EU in 2013 was over $1 trillion, nearly $3 billion per day. The stock of U.S. foreign direct investment in the EU is $2.4 trillion (more than half our total!), and EU FDI in the U.S. is $1.7 trillion.  U.S. affiliates in the EU provide 4.2 million direct jobs to citizens of EU member states, and EU affiliates in the United States provide 3.8 million jobs to U.S. citizens.  In total, about 13 million American and EU jobs are supported by trade between our two markets.

The world has never known a deeper, more important partnership than between the United States and Europe.  And the impact of this partnership is real, including for CESI’s members.  The transatlantic relationship has fostered massive economic growth on both sides of the Atlantic.  It has brought unprecedented prosperity and made possible much of the social well-being our citizens enjoy.  But, to maintain – and even build on – what we’ve achieved, we need to keep growing.  Without continued economic growth our societies will not be able to afford the level of social well-being we currently enjoy, and which organizations such as CESI have played a role in shaping.

Unfortunately, we must face an uncomfortable fact: Europe is struggling. The OECD recently announced that Euro area growth in 2014 is expected to be an anemic 0.8 percent, which matches the Commission’s projection.  In 2015 they expect growth to rise only to 1.1 percent; even Germany, Europe’s economic locomotive is struggling.  Even where recovery is stronger, it remains largely jobless. Europe’s unemployment rate is stuck at nearly 10.3 percent in the EU 28 and 11.6 percent in the euro area. As you well know, youth unemployment numbers are much higher than that, especially in southern Europe.  In a report last year, the Lisbon Council referred to unemployment in Europe as “a social catastrophe which no rich industrial nation should long tolerate.”  I expect CESI would agree with this statement.  As you’re no doubt aware, in some European countries, these high unemployment figures contributed to extremist political groups increasing their representation in the European Parliament and in member states, too.

We live in an increasingly competitive and integrated world.  China, India, Russia, Brazil and other emerging economies are growing quickly and their voice is becoming stronger in the international fora that set the rules on trade, investment, labor, the environment, and other social issues.  Some of our global competitors do not share our support for rules-based trade and for high labor, IP, environmental and consumer standards.  Many provide significant subsidies and other supports for state-owned enterprises and operate under a different set of rules that tilt the economic playing field in their favor.

The challenge we face is real and the question we need to answer is whether we have the courage and the vision to meet it.  Will we continue innovating and forging new paths to deliver the growth we need, or will we become defensive and cautious, and fearful of change?

Europe’s urgent need for growth is abundantly clear to academics, economists and most policymakers.  But, I’m less confident that many in the NGO world have accepted this fact, and have made the connection that unless Europe can find a way to stimulate growth, Europe’s ability to maintain its high standards of living and to afford its social programs and environmental protection will increasingly be put to the test.  And, no one has done an effective job of explaining this to the European public.

A number of levers for stimulating economic growth in Europe are available to policymakers.  Sustained growth will require structural reforms, supportive monetary policies, and ensuring that the pace of fiscal consolidation is not so rapid that it works at cross-purposes to the recovery, which many believe is already occurring in Europe today.  Completing the single market in services and promoting the digital economy are also important levers for growth. And another opportunity is T-TIP.  By no means is T-TIP a silver bullet, but it is the biggest debt-free stimulus available to Europe to enhance Europe’s growth potential.

We think, and just about every academic analysis done on both sides of the Atlantic agrees, that T-TIP will deliver.  Even if the boost to GDP were half of the European Commission’s own estimates, i.e. a quarter-of-a-percent increase in GDP instead of a half, because we are only partially successful in eliminating non-tariff barriers, there would be a permanent increase in annual GDP in the EU and the United States of around 60 billion euro.

In my view, every discussion of T-TIP in Europe should begin with: what will be the consequences for Europe of continued sustained periods of low or no growth?  And, how will Europe achieve economic growth in the future?  If people do not believe promoting and facilitating more transatlantic trade and investment is part of the solution for bringing growth to Europe, I’d love to hear their ideas for delivering growth.

 

As you are all aware, there have been a lot of myths circulating about what we are seeking to achieve in T-TIP.  I’d like to talk very quickly about some of our actual goals and why they matter, including on labor.

First, T-TIP is not just about big business; it is especially about small and medium sized businesses, the backbone of our economies. Small and medium sized enterprises are expected to gain significantly from T-TIP. Even those SMEs who do not sell directly to the U.S. market may benefit from increased sales to customers who do.  One example is the automobile industry; which most people associate with large multi-nationals.  But in fact, most automobile manufacturers’ suppliers are SMEs.

Our negotiators are working to reduce customs paperwork, perhaps even eliminating it for lower-value shipments.  And we’re working to reduce the amount of time that recipients have to wait for their goods to be released.  Whether in Brussels, Belgium or Brussels, Minnesota, businesses of all sizes stand to benefit from these efforts.  For some businesses, especially small and medium-sized businesses, less customs paper work and lower duties could mean the difference between growing through exporting overseas or remaining confined to local markets.

A second area is on tariffs, a key focus in the T-TIP negotiation.  Although transatlantic tariffs are generally low on both sides of the Atlantic, there are high tariffs in numerous areas that represent significant obstacles to trade.  Even in the instances where tariffs are low, they represent significant costs in high-volume sectors and they can represent obstacles in sectors with low profit margins. According to a well-known study, a transatlantic zero-tariff agreement could boost U.S. and EU exports to each other by 17%.  Tariff reduction can also help reduce the cost of inputs, an important objective in an increasingly globalized marketplace.  Businesses based in Europe face high input costs; their ability to survive in a global supply chain will depend in part on their ability to source goods at the lowest possible price.

A third area is in regulations and standards.  We can only achieve the full potential of T-TIP if we succeed in narrowing the divergence on our regulations and standards, while still maintaining the high consumer and environmental standards we all enjoy.  In some instances we may be able to agree on common standards where the existing differences are modest; in other areas, we might be able to agree on mutual recognition where the standards provide equivalent degrees of protection. Even in those areas where common standards or mutual recognition is not possible, we may be able to achieve significant benefits from eliminating duplicative tests of products and facilities.

Regulatory coherence is the area of greatest economic promise, especially for small firms that often struggle to spend the time and resources managing multiple regulatory requirements, but it is equally the area of greatest challenge.  Some analyses indicate that up to ¾ of the total benefits of a deal will depends on our ability to address non-tariff barriers, specifically the elimination of duplicative or unnecessary hurdles.

Finally, I like to say a few words on labor.  The Obama Administration believes that by improving labor rights through our trade initiatives abroad we can simultaneously uphold and promote U.S. values, strengthen the ability of American workers to have a fair shot at competing on a level playing field in the global marketplace, and help grow a larger middle class in our trading partners that will fuel demand for U.S. goods and services.  I suspect these are sentiments shared by the EU and by CESI.

And, this is why we seek to negotiate high standard labor provisions in all of our comprehensive trade agreements, and to ensure that U.S. trading partners meet their obligations related to worker rights, including through enforcement mechanisms if required.  As a candidate for President, then-Senator Obama said he would renegotiate the North America Free Trade Agreement we have with Canada and Mexico, put labor and environmental standards at the core of trade agreements and make those standards enforceable like any commercial commitment.

That’s exactly what we’re doing in our other major trade and investment negotiation, the Trans-Pacific Partnership (TPP).  We are upgrading our trade relationships, not only with Mexico and Canada, but with nine other countries as well.

As in the case of the three trade agreements already signed into law by President Obama, in TPP we are seeking to include disciplines requiring adherence to fundamental labor rights, including the right to organize and collectively bargain, and protections from child and forced labor and employment discrimination.

We are pressing for regular consultative mechanisms, and a means for the public to raise labor concerns and demand action.  And we are working to include new commitments to address trade in goods produced by forced labor and regarding acceptable conditions of work.

Similarly, we will use the unique opportunity afforded to us in the T-TIP to negotiate obligations that protect worker rights and set a high bar for other trade negotiations in the rest of the world.

In all our trade agreements, including T-TIP, the United States will continue to insist that the commitments we negotiate to protect labor rights are subject to the same dispute settlement procedures and enforcement mechanisms as commercial obligations in our trade agreements. President Obama has made clear that he would not sign an agreement that weakens protections, including for labor, consumers or the environment.

The United States provides broad protection for and enforcement of core ILO labor standards. As a member of the ILO, the U.S. is obliged “to respect, to promote and to realize” the principles contained in the 1998 Declaration. We have not ratified certain standards that we do not conform to exactly an in every way; small variances in approach or exceptions that we have based on our own circumstances and federal system make it unrealistic to seek ratification.

So, despite what the rumors may be, the United States has an excellent track record on labor, both at home and in our trade agreements.

Fundamentally, the transatlantic trade and investment partnership is about providing consumers with more choice and better products at lower cost; it is about growth and jobs necessary to provide work for the unemployed, to fund pensions for our retirees and pay for the health, safety and environmental protections our citizens demand. Much of what we are trying to achieve is actually a natural extension of what we are already doing in our relationship every day and which Europe has already done in creating a single market without tariff walls in which goods and services can circulate freely.

The debate in Europe and the United States on TTIP should be focused on how we can achieve a comprehensive agreement that extends benefits to citizens and businesses on both sides of the Atlantic.  We cannot succumb to misinformation and scaremongering; there is far too much at stake.  While everyone is certainly entitled to make their own evaluation of what we are seeking to accomplish in these negotiations, everyone should not be entitled to their own facts.  This isn’t the first agreement that either of us has done.  Indeed, there are close to 100 FTAs enacted or negotiated that include the U.S. or EU as a partner.  These agreements are public and the information on how we treat issues like labor or public services is clear.

As leaders, we should have the courage to lead and inform. The agreement should be judged according to the merit of its contents when talks are concluded, rather than according to what people imagine it might include. In the meantime, U.S. and EU negotiating goals and numerous fact sheets are available online for those who want to learn what we are seeking to achieve – and what we are not.

Both sides negotiate in their national interests.  But what brought us to the negotiating table on T-TIP in the first place was our shared belief in the mutual benefits to be gained by more open trade and investment: including increased consumer choice, lower prices for high quality goods and services, and economic growth.  I believe that the U.S.-EU relationship will continue to broaden and deepen. This is not an article of faith; our shared values are real.  We have a shared belief that our nations are better off when the other is strong and prosperous, and when we are actively engaged together in the more dangerous, less predictable world in which we live.  Our mutual interests demand a robust global partnership.

T-TIP is a bold and visionary effort whose success would deliver growth and send an unmistakable message to the world on the continued strength of EU-U.S. leadership.  It would signal that our partnership remains vibrant and capable of great things.  And our values, which are reflected in our high consumer, labor and environmental protections, would continue to set the standard for the world to follow.  To achieve this, CESI has a role to play.