Valdis Dombrovskis, EU Commission Executive Vice-President for an Economy that Works for People, Acting EU Commissioner for Trade
Speech at BusinessEurope event “EU-US: How to build a positive agenda”
Brussels, virtually 14 September 2020
Thank you for your introduction Markus, and many thanks to BusinessEurope for hosting this event.
We have worked together hand in hand over the last 6 years on social dialogue, and I look forward to this new opportunity to build up our great cooperation.
Let me say on behalf of the European Commission that we very much appreciate BusinessEurope’s recent proposal on how to re-build a positive agenda for transatlantic relations. This publication brought a welcome injection of ideas and energy to the debate.
We agree with many of your suggestions, and we certainly value your long-standing commitment to promoting positive and vibrant transatlantic relations.
We share this commitment fully, and we have a roadmap in place to make it happen.
I was honoured to be entrusted with the Trade portfolio by President von der Leyen, and subject of course to receiving the approval of the European Parliament, I look forward to delivering positive outcomes for our ambitious EU trade agenda.
I would also like to take this opportunity to thank my predecessor Phil Hogan for his strong contribution and I would like to wish him well for the future.
We are here today to discuss how we can build a positive EU-U.S trade agenda. But before talking about the future, I want to remind you that we are certainly not starting from scratch.
The economic data tells a very compelling story:
The transatlantic relations is the most significant commercial flow in the world, with trade in goods and services worth over €1. trillion annually, or over €2.5 billion per day.
American companies create jobs, innovation and wealth on both sides of the Atlantic every day.
And European companies do the same thing.
Investment in both directions remains very strong: in the last decade, the EU attracted over 58% of total US foreign investment, meaning that US companies choose to invest more in the EU than in all other markets combined.
Transatlantic supply chains permit companies on both sides to operate smoothly and efficiently.
This incredible trading relationship is built on a platform of certainty and trust, allowing our economic operators to invest and plan with confidence, securing 16 million jobs on both sides of the Atlantic at last count.
During my own time at the European Commission I have enjoyed an excellent and fruitful cooperation with the U.S. on developing a shared agenda on economic and financial affairs.
I have seen with my own eyes how the EU and U.S. can find areas of mutual interest and benefit, and this is the approach I will always take in my transatlantic outreach.
Of course, transatlantic relations are underpinned by a deep historical bond, which goes far beyond economics and finance.
This is by far the most important diplomatic, economic, political and security relationship in the world. We are united by so many things. We have so much in common.
And while it is true that, yes, there are some divisions and tensions at the present time, which have a real negative impact and which we need to take very seriously, these issues are dwarfed by the things we share.
So the top priority for the European Union, and certainly one of my top priorities as Commissioner-Designate for Trade, is to solve existing disputes, restore a positive momentum and a positive narrative to transatlantic relations.
Our recent deal on reducing tariffs is a very significant step in the right direction.
It shows that with good will and political effort, we can find common ground and deliver win-win outcomes.
This agreement will increase market access on both sides, covering several hundred million Euros’ worth of trade.
These reciprocal reductions in duties are the first reductions of this type that we have negotiated in more than two decades.
So while in economic terms it is quite a small deal, in political terms, I feel justified in saying that this is a quite big deal!
There will be a reduction of U.S. tariffs on European exports worth around $160 million a year. This includes products, such as crystal glassware, and lighters.
On our side, the EU will eliminate tariffs on imports of U.S. live and frozen lobster products, estimated to be worth $111 million a year.
Beyond the economic win-win, we want to use this deal as a springboard for greater things. We want to continue improving bilateral economic and trade opportunities. There is scope for so much more in our relationship.
We do, however, need to resolve our outstanding disputes. In particular, we remain committed to tackling the sensitive issue of civil aircraft subsidies. This has been the biggest trade disagreement between us for some time, and let’s be honest – both sides would benefit from taking this issue off the table.
The Covid-19 pandemic has had a hugely negative impact on global air travel, affecting both airlines and manufacturers, so the urgency to find a solution to this issue has only increased.
On the European Union side, our priority is to negotiate a settlement that resolves the existing subsidy issues while at the same time shaping future subsidy disciplines for the sector as a whole.
That is why the July announcement by the governments of France and Spain is so important. By agreeing to ensure full compliance in the WTO aircraft dispute, the European Union and the so-called “Airbus Member States” – France, Spain and Germany, together with the UK – have taken a significant step forward.
This should open the door for the U.S. to drop its countermeasures on EU exports and it gives us a real opportunity to settle this long-running dispute quickly. The alternative is not attractive. The award on the Boeing case is imminent, which would allow the EU to impose duties on our side. Instead of imposing tariffs, I want to find solutions.
I have already spoken to United States Trade Representative Lighthizer and I look forward to working closely with him in the coming weeks.
I made the point to Ambassador Lighthizer that transatlantic cooperation is needed more than ever, given the Covid-19 pandemic and its devastating impact on the global economy.
It makes very good sense that the EU and U.S. should act together to ensure global economic recovery. For this, we need more trade, not less.
Accordingly, we should work together to strengthen the multilateral system. This will give the world the best possible chance to recover quickly from Covid-19.
The EU is more committed than ever to reforming the WTO – for us, this is an even bigger priority after Covid-19.
A strong WTO can help to rebuild a truly resilient global economy; an economy that protects workers, companies and supply chains; an economy that does more to drive climate action and digitalization; yet also an economy that safeguards international trade, keeping our markets open and discouraging import and export restrictions.
When it comes to WTO reform, the EU and U.S. broadly have the same diagnosis, although we sometimes have different views about the best cure.
A solution will only come about if we work together. We both agree, for example, that China must do its fair share to renew the multilateral system, and show a willingness to go further in opening up and maintaining a level playing field.
We have already shown that we can find areas of agreement with the US, such as the trilateral agreement between the EU, U.S, and Japan on how to move forward on industrial subsidies earlier this year.
And we are keen to go even further and build on these achievements. We notably adopted a white paper dealing with the distortive effects of foreign subsidies in our European single market in June of this year.
Of course, we are faced with other global challenges where it is in our strong mutual interest to find common ground.
The digital space is one such challenge.
The Covid-19 crisis has accelerated the digital transformation of our societies, and the EU is working hard with our partners to develop an international consensus on the taxation of digital services.
We continue to believe that the best way forward is through a global solution at the OECD, not through unilateral measures. We remain fully committed to the OECD process and to working with the U.S. there.
We hope for progress at global level, hoverer if not – we will move ahead with a proposal for digital taxes in the first half of next year.
I also believe it is vitally important to engage with the U.S. on the trade-related aspects of the European Green Deal, including climate change.
And I feel sure that we can do more in the area of regulatory cooperation, finding ways to work together to uphold our common values and set standards in appropriate areas.
Ladies and gentlemen, I would like to offer a warning before I conclude on a hopeful note.
We are living in a time of extraordinary challenges and difficulties. This is a time for keeping our friends close and remembering the alliances that really count.
There are still some ongoing disputes between the EU and U.S. and in my view, we are very well advised to fix these quickly. Leaving things unresolved for too long is never a good option, as the famous Latvian writer Reiņa Kaudzītes said: “a rusty nail is difficult to pull out”.
Instead, we should build on our recent agreements to recharge the batteries of transatlantic cooperation.
We should find areas of common ground, both in our bilateral relationship and – just as importantly – at the global level.
We are all aware that other global players are waiting in the wings to take advantage of any void in transatlantic leadership.
Right now the world needs free and fair trade more than ever.
Our job as policymakers is to put the right structures in place to allow our businesses to trade their goods and services freely, fairly – and fast!
We have a global pandemic and economic shutdown on our hands and trade can help to speed up the recovery.
Of course, to make this happen, our global structures need to be relevant and fit for purpose. In Europe, this continues to be our guiding light. Multilateralism is in our DNA, because the European Union is the ultimate proof that cooperation between countries, rules-based relations and multilateralism work.
Realistically, no successful multilateral initiative to restore open, fair and rules-based trade can be done without the EU and US together leading the effort.
As Trade Commissioner I will continue to reach out to our American friends and I hope we can make real progress on building a positive transatlantic agenda.
Valdis Dombrovskis is the EU Commission Executive Vice-President for an Economy that Works for People and acting EU Commissioner for Trade.
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