Distinguished Colleagues, Ladies and Gentlemen,
I am delighted to be back in Milan and for the opportunity to contribute to this discussion on what is, after all, an extremely important topic for all of us here.
I would like to begin by strongly reaffirming that the United States remains committed to a comprehensive Transatlantic Trade and Investment Partnership (T-TIP) agreement with the EU. T-TIP represents an important way to create jobs and grow the economy, particularly for our small and medium-sized enterprises, and to help our businesses and workers to compete in the global economy. During a speech in Oregon in May this year, President Obama asserted that the right kind of smart trade agreements are “not a contradiction to middle-class economics,” but “part and parcel of it”.
Decision making processes are complicated, and often take time to reach a conclusion. Last month’s vote in the House against Trade Adjustment Assistance, and the postponement of a scheduled vote in the European Parliament on a non-binding resolution on T-TIP demonstrate the complexity of the decision making processes in the United States and the European Union.
However, on both sides of the Atlantic there remains broad support for a comprehensive and ambitious agreement. Negotiators on both sides need the political space necessary to meet the shared ambitions for this agreement.
We understand concerns remain in the EU. Therefore, we need to emphasize that T-TIP will protect a positive regulatory agenda and maintain our respective high standards of living.
You don’t have to take my word for it. Take the word of literally every leader involved in the negotiations: from President Obama to Commission President Juncker and Council President Tusk; from U.S. Trade Representative Froman to Trade Commissioner Malmstrom – not one U.S. or EU official has voiced any interest in weakening standards on either side of the Atlantic, be they environmental, labor, safety, or consumer standards.
President Obama said in March of last year: “I have fought my entire political career and as President to strengthen consumer protections. I have no intention of signing legislation that would weaken those protections.”
T-TIP gives the United States and the EU an opportunity to set the standard for future regional and global deals that reflects our shared support for rules-based trade, high standards, and regulatory transparency and accountability. Many critics argue that our discussions regarding ways to bridge divergences between our regulations and standards will mean lowering of standards in the EU. On the contrary, this agreement allows us to deepen our economic relationship without compromising health, safety, environmental, or consumer protections on either side of the Atlantic. By leading on these issues, we can launch a race to the top, rather than be subject to a race to the bottom that we cannot win and should not run.
In the United States, the idea of negotiating a free trade deal with the EU, a region that shares our values and the high standards of health, safety and environmental protections is not particularly controversial. We remain convinced that T-TIP will be extremely beneficial to the EU, and we will continue to make our case to the European public. At the end of the day, what matters is that we achieve a good deal, one that promotes the interests of people in both the United States and Europe, and that can serve as a model for the rest of the world.
To be clear, just because we will ensure T-TIP will support our regulatory objectives, does not mean we can’t make progress in reducing unjustified or ineffectual measures. Here T-TIP has tremendous potential to not only generate economic dynamism by facilitating trade, but can also enhance our respective regulatory regimes by bringing greater transparency and rigor.
Agriculture and T-TIP
I should stress that rural economies are, of course, critical to the overall economic health of all us. Trade and market access are vitally important to each of our agricultural sectors. Trade supports well-paid jobs and drives economic growth across our respective countries.
The United States and the European Union are far more alike than they are different when it comes to agricultural and rural issues, and we both stand to benefit substantially from a T-TIP package that includes strong action for agriculture.
American farmers and ranchers are proud of their rural roots, a sentiment that they share with their European counterparts. They value hard work and appreciate the significance of their role as protectors of the land. Both are unwavering and adaptable in the face of ever-fluctuating and increasingly severe weather and the unpredictability presented by climate change. Both are highly productive and are helping to feed the hungry around the globe.
We believe that we need to embrace diversity of farming operations: small, middle-sized, and large; organic, conventional and those that use modern agricultural technologies; those who sell their products at local farmers markets and those who export products for sale across the globe. We should be making space for all forms and all types of agriculture, provided that science tells us they are safe, to maximize our ability to feed a growing population in the face of growing resource constraints.
In order to survive, indeed to meet the challenges of a growing global population while living within our resource constraints, our farmers and ranchers must be adaptable, innovative and flexible. And while our production methods may differ, our end goal is the same – safe, nutritious, affordable and abundant food. We must strive to create new marketing opportunities for our farmers and ranchers so that they can sustain and grow their business and, in turn, foster economic growth in our rural areas.
This is why we need to be sure that agriculture is appropriately addressed in T-TIP negotiations. The opportunities for agriculture in the European Union and the United States inherent in T-TIP are too good to pass up. In 2014, the United States continued to be the EU’s top market for agricultural products as it has been for many years, and the EU remains an important market for U.S. agricultural exports. From an economic stance, it clearly makes sense that agriculture be an important part of our bilateral trade agreement.
Over the past 20 years, EU food and agricultural exports to the United States increased dramatically from just over $7 billion in 1995 to more than $19 billion in 2014. From what I hear from European stakeholders, there is strong interest in expanding sales in the world’s most attractive market. In the same period, however, U.S. exports to the EU have stagnated, accounting nearly $12.6 billion in 2014. The EU is a great market for U.S. soybeans and almonds, products that Europe has to import. It is not a great market for our other products, where we run into market protections. It is clear that there is significant room for increased agricultural trade between the United States and the European Union, and T-TIP gives farmers on both sides of the Atlantic the opportunity to expand markets.
Reducing barriers to trade in T-TIP will be especially beneficial to the small and medium-sized businesses that are the backbone of our respective economies. In the United States we have expanded support for small and mid-sized farmers and ranchers to ensure that they can access capital, credit and other resources. Many of these farmers are looking for new market opportunities to sustain and grow their operations. However, for many of these businesses, the barriers to exporting are just too high. We need to focus on the goal of eliminating all tariffs and unwarranted non-tariff barriers that can price smaller businesses out of the export market. We also need to focus on reducing the impact of the differences in our regulatory and standard-setting systems. For companies on both sides of the Atlantic, this is perhaps the most promising – and challenging – area for cooperation in T-TIP. The United States and the European Union have the strongest regulatory protections in the world, and nothing we do through T-TIP will undermine this. Regulations serve a vital role in protecting food safety, animal and plant health, the environment and other appropriate protections that our citizens expect. However, we must prevent the emergence of unnecessary regulatory differences that often result in “behind the border” obstacles that can negatively impact market access, increase costs to manufacturers and producers and stifle innovation. There are steps that can be taken to better align our regulatory and standard-setting processes by improving transparency, participation and accountability. The U.S. – EU organic equivalency agreement, which took effect three years ago, is a good example of how we recognize each other’s systems and facilitate trade to the benefit of both sides.
Science should be the common language between us and the basis for deciding what is safe and legal. From there, let the producers decide how they want to farm and the consumers decide on how they want to eat, rather than having choice made for them by unnecessary regulatory restrictions.
We won’t always agree on specific production methods, and we don’t have to. There is room for diversity in agriculture, just as there is room for an assortment of choices in our market places. It is not our role to tell consumers which products to purchase to put on the table. Rather, it is our responsibility as governments to provide a wide array of choices, based on what science tells us is safe, and allow the consumer to decide.
But our concern goes beyond farmer and consumer choice in the European Union and the United States. There are other factors that we cannot ignore. Although the world has made progress in solving problems such as malnutrition and food security in recent years, 850 million people in the world are still hungry. Global population continues to grow, and as the negative impact of climate change looms on the horizon we need to do more. The experts believe that we need to increase productivity by 60 to 70 percent by 2050 to feed a world population of 9 billion people. The answer to this problem is to increase productivity through technological innovation. To meet the challenge of 2050, within a period of 35 years we will have to achieve the same level of increased innovation in food production as that achieved over the last 10,000 years.
If we are serious about global security we must be equally serious about the science that will allow us to be as productive as possible in the most sustainable way. It is no secret that Europe has historically been more skeptical about agricultural biotechnology and genetically modified foods than has the United States. I also acknowledge that there are different points of view in both the European Union and the United States on issues such as labeling of genetically engineered products. However, the proposal made by the European Commission in April this year to allow EU Member States to opt out of using scientifically approved agricultural biotech events for non-scientific reasons flies in the face of responsible policy making and would, if allowed to be implemented in law, present a serious threat to combatting the global challenges that lie ahead of us.
As U.S. Agriculture Secretary Tom Vilsack pointed out in his interview with the Financial Times in May this year:”…if you’re going to establish a trade relationship and you are committed to open trade, you are committed to a science-based system… The consumer can make the choices in the context of an open market…” Like Secretary Vilsack, I think that the EU should let the market decide.