Speech: Remarks to American Chamber’s 2016 Transatlantic Conference (Mar 17, 2016)

It is always a pleasure to be at Amcham. Thank you to the superb team at AmChamEU and each of the Member State AmChams for all the excellent work you do to promote the interests of American companies in Europe.

It is a relief to be here and not have to talk about the U.S. election campaign. As a representative of the US Government, I have to be strictly neutral about the US election campaign. So I’ll simply say this: as a public service we will continue to provide free high-quality entertainment on a 24/7 basis for the whole world, including Europe, for the next 8 months…You’re welcome, by the way.

American columnist Tom Friedman recently wrote in a column that putting “European Union” into the lead of a column published in America is like a “Do Not Read” sign. That has changed last year and this year because what is going on in the EU is important, not only for the region, but for the US and even for the world.

One of my predecessors, Stuart Eizenstat, recently described the EU as “the greatest, most successful experiment in world history, in binding together a former war-torn continent into a peaceful, democratic, free market tolerant group of member states, through shared and pooled sovereignty and mutual respect.” I fully subscribe to that description.

A few weeks ago I had the pleasure of appearing before the House of Commons Select Committee on Foreign Affairs to speak about the impact of Brexit on third countries. I prefaced my remarks by saying that I have believed in the European project for about 25 years. Their faces turned white as a sheet. One of its members said: “Mr. Ambassador, you don’t understand: the EU is a totalitarian super state that has enslaved the UK, and it is time for us to break free.” I don’t recognize that description of the EU.

I have remained a believer in the European project in spite of the 14 years I lived in London before arriving here. On one typical rainy day in London, when I was rushing for a bus, I saw the headlines of a tabloid newspaper claiming that a terrible plot of the European Commission had been exposed. Out of curiosity, I rushed to the newspaper stand to buy a copy. The story claimed that the European Commission had been plotting to merge Southern England into Northern France to create a new country with its own flag and anthem.

No, the article was not written by Boris Johnson, but it could have been. I got to know Boris at Oxford and we lived in Brussels at the same time in early 1990s when he was writing articles for The Daily Telegraph about the devilish plans of The Commission to abolish the curved cucumber and the prawn flavored cocktail crisp. For those of you who don’t know, the prawn flavored cocktail crisp is a highlight of British cuisine.

I am reminded literally every day that the United States and the European Union are essential partners in a turbulent world. On almost every significant regional and global issue of concern the EU is playing a key role. That is one of the reasons the US favors a strong UK in a strong EU. Brexit would be bad for the EU, the UK and the U.S. It is totally legitimate for us to deliver this message in light of the significant impact Brexit would have on core U.S. interests and on U.S.-UK relations.

Here are a few brief examples of how the US and EU continue to work together, even in the face of the complex and proliferation challenges facing the EU. I have just returned from Washington where I attended our annual chiefs of missions conference. Never before has there been such focus on and concern about the European Union.

The US and EU have been partners in implementing sanctions around the world. We quickly announced and repeatedly renewed, in close partnership with the European Union, a set of extensive sanctions against Russia in response to Russia’s illegal annexation of Crimea and aggression in Eastern Ukraine. We will be seeking a renewal of the sanctions against Russia in July in light of Russia’s failure to fulfill all of its obligations under the Minsk Protocol.

We have worked closely with the EU on the historic climate change agreement in Paris and on the historic agreement limiting Iran’s nuclear ambitions.

We are collaborating closely on improving Europe’s energy security by diversifying supply and transmission routes. It is of crucial importance that Russia stop being able to use energy as a political weapon to divide and weaken Europe. That is why we and many EU Member States continue to express grave concern about Nordstream II, a politically motivated project, to undermine Ukraine’s independence and enhance the energy insecurity of EU Member States in Central and Eastern Europe.

We are working together more closely than ever before on development assistance and humanitarian aid by ensuring that our efforts are complementary and not duplicative. We are coordinating our efforts so that each party can focus on its areas of expertise.

We are also seeking to share our experiences in the field of migration, including border control, identification of refugees, processing, resettlement and integration. The U.S. is the largest funder of humanitarian aid to those displaced by the Syrian crisis and played a key roled in the deployment of NATO in the Aegean to assist Greek and Turkish navies to stem the tide of refugees.

The US and Europol, the EU’s law enforcement agency, have been reinforcing their collaboration, for example in cracking down on online child sexual exploitation, human smuggling, drug and weapons trafficking, cyber crime even counter-terrorism.

We are making significant, even surprising, progress with the EU on the security front. The US and EU have signed an agreement enabling the Department of Defense to share confidential military information with the EU military staff and to sell goods and services to the EU military missions in Africa. We will also be stepping up cooperation with the European Defense Agency.

We are working closely with the European Commission on its key projects, including the Digital Single Market and Capital Markets Union. These are the right areas of focus, with hugely beneficial consequences for both sides of the Atlantic. With regard to DSM, we don’t know what new technologies will develop in the coming years. We do know, however, that how the United States and the European Union can coordinate now on these issues will determine whether we end up building incompatible regulatory frameworks that stunt growth, or instead are able to harness the promise of new technologies for the good of Americans and Europeans alike.

And, of course, the US and the EU have worked closely on their international trade agenda, including on the recent breakthrough to significantly expand the coverage of the Information Technology Agreement that eliminates tariffs on $1 trillion worth of trade in high-tech products among 54 economies. We are also spearheading negotiations on the Environmental Goods Agreement and the Trade in Services Agreement.

TTIP remains a key priority. I have spoken about TTIP over 70 times in half of the EU’s member states. I have had the pleasure of seeing TTIP opponents dressed as giant chickens and Trojan horses; I have heard them drown out debate with stirring renditions from Les Miserables. I have followed with interest the effort to crowdfund 100,000 euros on wikileaks to obtain a leaked version of a non-existent TTIP agreement. And I’ve read with interest the solemn declarations of opposition to TTIP from two Brussels municipalities.

This is no time to slow down; this is the time to redouble our efforts. You’ve already heard a lot about the outcomes from the 12th round of negotiations several weeks ago. Our common goal is to reach by this summer an advanced stage of text consolidation across the board, narrowing down our differences to only the most sensitive issues and putting us in a position to potentially complete the agreement in the second half of the year.

Not surprisingly, there are some difficult discussions. Several weeks ago we exchanged initial offers on government procurement. One of the reasons the discussions are difficult is that the EU believes, incorrectly in our view, that the EU government procurement market is far more open than ours. We disagree; many studies share our view, including one from Professor Patrick Messerlin of Sciences Po who concludes that “the EU public procurement markets are definitely not more open than those of its main partners.” Under the World Trade Organization’s Agreement on Government Procurement (WTO GPA) the United States provides as much or more guaranteed access to EU suppliers as the EU provides to U.S. suppliers.

The United States covers federal and sub-federal procurements worth approximately $320 billion.  Federal procurements are worth at least $200 billion, and sub-central procurements are worth approximately $120 billion.  By comparison, the EU estimates it covers approximately $333 billion worth of procurements at all levels of government, but only guarantees U.S. suppliers access to $158 billion. EU companies have been highly successful in winning procurement contracts in the United States for road construction, engineering, high-speed rail projects, and much more.

A 2011 report prepared for DG Internal Market and Services noted that only 1.6 per cent of total procurements by EU member states were awarded to firms operating and bidding from another member state or a non-EU country. Of that 1.6 per cent, 88 per cent were awarded to economic operators in another EU member states. Only 1 per cent was awarded to US suppliers. That means that US suppliers competing for direct cross-border procurements secured only about 0.016 per cent of total EU procurements.

Another difficult area remains, of course, agriculture. U.S. agricultural exports reached over $155 billion in 2014, but only $12.9 billion of those exports went to the EU. In inflation-adjusted terms, American agricultural exports to the EU are only one-third the level they were in 1980. But they are growing fast to every other part of the world. EU agricultural exports to the U.S. have soared – from about $6 billion in 1995 to over $25.1 billion in 2014. We sell more cheese to Trinidad and Tobago than we sell to the EU.We have a $12 billion trade deficit with the EU in agricultural trade because we are priced out with high tariffs or shut out from many of the areas where we are competitive! And yet every week I hear complaints from the European Commission, including from Commissioners Hogan and Andriukaitis, about unsatisfactory EU access to our agricultural markets!

Given the importance of agriculture to most of the 50 U.S. states, it is hard to see the U.S. Congress approving a T-TIP agreement that does not address this disparity. The National Milk Producers Federation recently issued a statement that it opposes moving forward with T-TIP because the negotiations have not shown signs of addressing its core concerns. That is a worrisome development. The European Commission has a choice: either it can continue to pretend that the U.S. is the problem on agriculture, or it can actually start addressing the glaring imbalance.

The third area where we need to see real progress is on principles governing transatlantic data flows. We will insist in TTIP that cross border data flows and data processing may take place free from discriminatory terms and trade distorting conditions, with exceptions limited to legitimate public policy objectives and only in full compliance with the WTO General Agreement on Trade in Services. With cloud computing blurring jurisdictional boundaries, we need to make sure that data protection doesn’t become a disguise for data protectionism.

Our trade promotion authority from Congress directs the administration to ensure that our negotiating counterparts do not restrict cross-border data flows. In a recent speech (accessible on the USTR website), Deputy Trade Representative Holleyman has set forth the twelve rules we will follow in our trade agreements to ensure an open internet-enabled economy.

TPP also promotes a free and open Internet, and includes cutting-edge rules to promote Internet-based commerce. The agreement also includes strong rules that make sure the best innovation, not trade barriers and censorship laws, shapes how digital markets grow. The parties to the agreement specifically agree not to require that TPP companies build data centers to store data as a condition for operating in the TPP market. TPP helps preserve the single, global, digital marketplace.

You as stakeholders cannot, must not withdraw or disengage from the T-TIP discussion.  Yours is a critical voice in ensuring that your customers, suppliers, and employees are aware of the facts of what T-TIP is and isn’t. The study by the World Trade Institute, commissioned by AmChamEU is a good study and makes clear the potential opportunities in each Member State. We need your help in making sure the general public understands that.

In the field of data privacy we have recently made significant progress. On February 2 we announced an EU-U.S. Privacy Shield agreement, to replace and strengthen the former U.S.-EU Safe Harbor framework that was invalidated by the Court of Justice in the Schrems case on October 6, 2015. At the end of February we released a set of documents that together constitute the Privacy Shield Framework.

The Framework includes a strengthened set of enforceable protections for personal data transferred from the EU. It provides transparency regarding how participating companies use personal data, vigorous government oversight, and increased cooperation with EU data protection authorities. It offers EU individuals access to multiple channels to address any concerns regarding participants’ compliance with the Framework, include free dispute resolution and binding arbitration, and it ensures a continuing level of protection consistent with Privacy Shield Principles when personal data collected under the Framework is transferred to third parties. The Framework also makes it easier for EU individuals to understand and exercise their rights.

The documentation includes a draft adequacy decision by the Commission. In contrast to the invalidated Safe Harbor decision from 2000, this decision is a lengthy and detailed explanation of why the US ensures an adequate level of protection for personal data transferred from the EU. In particular, it concludes that access by public authorities is limited to the extent necessary to meet national security or law enforcement requirements and that it provides sufficient remedies and oversight.

Before it becomes final, this framework will undergo required review by the Article 29 Working Party (which is due to finish its review by the end of March 2016 and is likely to publish its opinion in mid-April), the European Data Protection Supervisor and the Article 31 Committee of Member States. The framework also requires approval by a “qualified majority” of the Member States in the Council.

The U.S. Congress recently passed the Judicial Redress Act, a law that would grant foreign (including EU) citizens protections that U.S. citizens enjoy under the 1974 Privacy Act. The legislation in turn clears the way for the United States and the European Union to sign a long-stalled agreement on protecting personal information exchanged between US and EU Member State law enforcement authorities. Having passed the Judicial Redress Act to directly address European concerns, the U.S. Congress is anticipating EU approval of the agreement without delay to further advance the rebuilding of transatlantic trust.

So as you can see, there is a full and varied agenda. I remain hopeful that we can make progress on most of the issues I’ve described.

If you take one thing from my remarks today, let it be this: The transatlantic partnership is relevant.  It is vital. It is constantly adapting.  It is based on shared values, and it has the potential to make a positive impact on every global challenge we face today—and more importantly, to how we address these challenges tomorrow.  Each one of you has a role to play in strengthening and broadening that partnership.  I thank you for the work you are doing every day, at the EU level and in each of the Member States.  It is essential to the continued vibrancy and growth of the transatlantic economy and, by extension, to the overall health of the transatlantic relationship.